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Code · REGISTER · 2005-11-01 · Nuclear Regulatory Commission · Notices

Notices. Notice of meeting

16,095 words·~73 min read·/register/2005/11/01/05-21716·

A research copy — for the controlling text, always check the official state or federal source. Not legal advice.

BILLING CODE 7537-01-U NUCLEAR REGULATORY COMMISSION Rulemaking To Establish a Regulatory Framework for the Expanded Definition of Byproduct Material Established by the Energy Policy Act; Meeting AGENCY: Nuclear Regulatory Commission. ACTION: Notice of meeting. SUMMARY: Section 651(e) of the Energy Policy Act of 2005 expanded the definition of byproduct material as defined in the Atomic Energy Act of 1954, as amended. To comply with the Congressional mandate, the Nuclear Regulatory Commission
(NRC)is changing its regulations to expand the definition of byproduct material to include the following materials produced, extracted, or converted after extraction for use for commercial, medical, or research activities:
(1)Discrete sources of radium-226,
(2)accelerator-produced radioactive material, and
(3)discrete sources of naturally occurring radioactive material, other than source material, that the Commission, in consultation with the Administrator of the Environmental Protection Agency, the Secretary of Energy, the Secretary of Homeland Security, and other appropriate Federal agencies, determines would pose a threat to public health and safety or the common defense and security similar to the threat posed by a discrete source of radium-226. To aid in the rulemaking process, NRC is holding a public meeting with a “roundtable” format (defined further in the body of this notice) to solicit input, that may be useful in drafting a proposed rule, from stakeholders. The meeting is open to the public, and all interested parties may attend. Individuals unable to attend the meeting will be able to listen by teleconference. DATES: November 9, 2005, from 9 a.m. to 4 p.m. Registration is from 8:30 a.m. to 9 a.m.; however, all persons planning to attend the meeting are encouraged to preregister in order to facilitate security check-in on the day of the meeting. ADDRESSES: Nuclear Regulatory Commission, Two White Flint North, Room T-2B3, 11545 Rockville Pike, Rockville, Maryland. FOR FURTHER INFORMATION CONTACT: Leslie Kerr, telephone
(301)415-6272, e-mail *lsk@nrc.gov* , of the Office of Nuclear Material Safety and Safeguards, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001. Questions on the meeting format, including participation in the roundtable, should be directed to the meeting facilitator, Francis “Chip” Cameron. Mr. Cameron can be reached at 301-415-1642 or *fxc@nrc.gov* . To preregister to attend the meeting in person or to participate via teleconference, please contact Jayne McCausland, telephone
(301)415-6219, fax
(301)415-5369, or e-mail *jmm2@nrc.gov* . SUPPLEMENTARY INFORMATION: Section 651(e) of the Energy Policy Act of 2005 (the Act) expanded the definition of byproduct material in Section 11e. of the Atomic Energy Act of 1954 to include certain naturally occurring and accelerator produced radioactive material
(NARM)and required the NRC to provide a regulatory framework for licensing and regulating the additional byproduct material. The NRC is conducting a rulemaking to revise its regulations to expand the definition of byproduct material to include:
(1)Any discrete source of radium-226 that is produced, extracted, or converted after extraction for use for commercial, medical, or research activities;
(2)accelerator-produced radioactive material that is produced, extracted, or converted after extraction for use for commercial, medical, or research activities; and
(3)any discrete source of naturally occurring radioactive material, other than source material, that is extracted or converted after extraction for use for commercial, medical, or research activities that the Commission determines, in consultation with the Administrator of the Environmental Protection Agency, the Secretary of Energy, the Secretary of Homeland Security, and the head of any other appropriate Federal agency, would pose a threat to public health and safety or the common defense and security similar to the threat posed by discrete sources of radium-226. NRC is holding a public meeting on November 9, 2005 to solicit input from stakeholders on the regulation of NARM. The format for this public meeting will be a “roundtable” format. Participants at the roundtable will be the invited representatives of the broad spectrum of interests who may be affected by this rulemaking. The roundtable format is being used for this meeting to promote a dialogue among the representatives at the table on the issues of concern. Although the focus of the discussion will be on the invited participants at the table, an opportunity will be provided for comment and questions from the audience. Questions on the meeting format, including participation in the roundtable, should be directed to the meeting facilitator, Francis “Chip” Cameron. Mr. Cameron can be reached at 301-415-1642 or *fxc@nrc.gov* . An agenda for the meeting will be posted to the NRC's rulemaking website: *http://ruleforum.llnl.gov* . Those planning to attend the meeting are encouraged to preregister for the meeting by notifying Ms. Jayne M. McCausland, telephone
(301)415-6219, fax
(301)415-5369, or e-mail *jmm2@nrc.gov* . If an attendee will require special services, such as services for the hearing impaired, please notify Ms. McCausland of these requirements when preregistering. Individuals unable to attend the meeting will be able to listen by teleconference. For teleconference information, please contact Ms. McCausland. The NRC is accessible to the White Flint Metro Station. Visitor parking near the NRC buildings is limited. Dated at Rockville, Maryland, this 20th day of October, 2005. For the Nuclear Regulatory Commission. Charles L. Miller, Director, Division of Industrial and Medical Nuclear Safety, Office of Nuclear Material Safety and Safeguards. [FR Doc. E5-6021 Filed 10-31-05; 8:45 am] BILLING CODE 7590-01-P NUCLEAR REGULATORY COMMISSION Advisory Committee on Reactor Safeguards; Meeting of the ACRS Subcommittee on Reliability and Probabilistic Risk Assessment; Notice of Meeting The ACRS Subcommittee on Reliability and Probabilistic Risk Assessment
(PRA)will hold a meeting on November 17-18, 2005, Room T-2B3, 11545 Rockville Pike, Rockville, Maryland. The entire meeting will be open to public attendance. The agenda for the subject meeting shall be as follows: Thursday, November 17, 2005—8:30 a.m. until the conclusion of business. Friday, November 18, 2005—8:30 a.m. until the conclusion of business The purpose of this meeting is to discuss the details of the Standardized Plant Analysis Risk
(SPAR)program. The Subcommittee will hear presentations by and hold discussions with representatives of the NRC staff, and their contractors regarding this matter. The Subcommittee will gather information, analyze relevant issues and facts, and formulate proposed positions and actions, as appropriate, for deliberation by the full Committee. Members of the public desiring to provide oral statements and/or written comments should notify the Designated Federal Official, Mr. Eric A. Thornsbury, (Telephone: 301-415-8716) five days prior to the meeting, if possible, so that appropriate arrangements can be made. Electronic recordings will be permitted. Further information regarding this meeting can be obtained by contacting the Designated Federal Official between 7:30 a.m. and 4:15 p.m. (ET). Persons planning to attend this meeting are urged to contact the above named individual at least two working days prior to the meeting to be advised of any potential changes to the agenda. Dated: October 25, 2005. Michael L. Scott, Branch Chief, ACRS/ACNW. [FR Doc. E5-6020 Filed 10-31-05; 8:45 am] BILLING CODE 7590-01-P SECURITIES AND EXCHANGE COMMISSION [File No. 1-06732] Issuer Delisting; Notice of Application of Covanta Holding Corporation To Withdraw its Common Stock, $.10 Par Value, From Listing and Registration on the American Stock Exchange LLC October 25, 2005. On September 23, 2005, Covanta Holding Corporation, a Delaware corporation (“Issuer”), filed an application with the Securities and Exchange Commission (“Commission”), pursuant to Section 12(d) of the Securities Exchange Act of 1934 (“Act”) 1 and Rule 12d2-2(d) thereunder, 2 to withdraw its common stock, $.10 par value (“Security”), from listing and registration on the American Stock Exchange LLC (“Amex”). 1 15 U.S.C. 78 *l* (d). 2 17 CFR 240.12d2-2(d). On September 16, 2005, the Board of Directors (“Board”) of the Issuer approved resolutions to withdraw the Security from listing and registration on Amex and to list the Security on the New York Stock Exchange, Inc. (“NYSE”). The Issuer stated that the Board determined that it is in the best interest of the Issuer to list the Security on NYSE, and is withdrawing the Security on Amex in order to avoid direct and indirect costs and the division of the market resulting from dual listing on Amex and NYSE. The Issuer stated in its application that it has met the requirements of Amex Rule 18 by complying with all applicable laws in effect in the state of Delaware, in which it is incorporated, and provided written notice of withdrawal to Amex. The Issuer's application relates solely to the withdrawal of the Security from listing on Amex, and shall not affect its continued listing on NYSE or its obligation to be registered under Section 12(b) of the Act. 3 3 15 U.S.C. 78 *l* (b). Any interested person may, on or before November 15, 2005, comment on the facts bearing upon whether the application has been made in accordance with the rules of Amex, and what terms, if any, should be imposed by the Commission for the protection of investors. All comment letters may be submitted by either of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/delist.shtml* ); or • Send an e-mail to *rule-comments@sec.gov* . Please include the File Number 1-06732 or; Paper Comments • Send paper comments in triplicate to Jonathan G. Katz, Secretary, Securities and Exchange Commission, Station Place, 100 F Street, NE., Washington, DC 20549-9303. All submissions should refer to File Number 1-06732. This file number should be included on the subject line if e-mail is used. To help us process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/delist.shtml* ). Comments are also available for public inspection and copying in the Commission's Public Reference Room. All comments received will be posted without change; we do not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. The Commission, based on the information submitted to it, will issue an order granting the application after the date mentioned above, unless the Commission determines to order a hearing on the matter. 4 17 CFR 200.30-3(a)(1). For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 4 Jonathan G. Katz, Secretary. [FR Doc. E5-6017 Filed 10-31-05; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [File No. 1-08610] Issuer Delisting; Notice of Application of SBC Communications Inc. To Withdraw Its Common Stock, $1.00 Par Value, From Listing and Registration on the Chicago Stock Exchange, Inc. October 25, 2005. On September 22, 2005, SBC Communications Inc., a Delaware corporation (“Issuer”), filed an application with the Securities and Exchange Commission (“Commission”), pursuant to Section 12(d) of the Securities Exchange Act of 1934 (“Act”) 1 and Rule 12d2-2(d) thereunder, 2 to withdraw its common stock, $1.00 par value (“Security”), from listing and registration on the Chicago Stock Exchange, Inc. (“CHX”). 1 15 U.S.C. 78 *l* (d). 2 17 CFR 240.12d2-2(d). The Board of Directors (“Board”) of the Issuer approved a resolution on July 23, 2003 to, among other things, authorize certain officers of the Issuer to list or delist any of the Issuer's securities on or from any United States or foreign exchange, except to delist the Security from the New York Stock Exchange, Inc. (“NYSE”). The Issuer stated that the following reasons factored into its decision to withdraw the Security from CHX. First, the Issuer stated that the Security only infrequently trades on CHX. Over the past 12 months, shares of the Security traded on CHX represented 2% of the total shares of the Security traded on all national exchanges. Substantially all of the Security is traded on NYSE and in the over-the-counter market. Second, the Issuer intends to continue listing the Security on NYSE. The Security is registered under Section 12(b) of the Act, 3 and the Issuer is subject to the periodic and current reporting requirements under Section 13 of the Act. 4 Third, the continued listing of the Security is costly and unjustified, in the Issuer's opinion, in light of the limited trading volume of the Security. 3 15 U.S.C. 78 *l* (b). 4 15 U.S.C. 78m. The Issuer stated in its application that it has complied with applicable rules of CHX by complying with all applicable laws in the State of Delaware, the state in which the Issuer is incorporated, and by providing CHX with the required documents governing the withdrawal of securities from listing and registration on CHX. The Issuer's application relates solely to the withdrawal of the Security from listing on CHX and shall not affect its continued listing on NYSE of the Pacific Exchange, Inc. (“PCX”), 5 or its obligation to be registered under Section 12(b) of the Act. 6 5 On September 22, 2005, the Issuer filed an application with the Commission to withdraw the Security from listing and registration on PCX. Notice of such application will be published separately. 6 15 U.S.C. 78 *1* (b). Any interested person may, on or before November 15, 2005, comment on the facts bearing upon whether the application has been made in accordance with the rules of CHX, and what terms, if any, should be imposed by the Commission for the protection of investors. All comment letters may be submitted by either of the following methods: Electronic Comments • Send an e-mail to *rule-comments@sec.gov* . Please include the File Number 1-08610 or; Paper Comments • Send paper comments in triplicate to Jonathan G. Katz, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-9303. All submissions should refer to File Number 1-08610. This file number should be included on the subject line if e-mail is used. To help us process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/delist.shtml* ). Comments are also available for public inspection and copying in the Commission's Public Reference Room. All comments received will be posted without change; we do not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. The Commission, based on the information submitted to it, will issue an order granting the application after the date mentioned above, unless the Commission determines to order a hearing on the matter. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 7 7 CFR 200.30-3(a)(1). Jonathan G. Katz, Secretary. [FR Doc. E5-6018 Filed 10-31-05; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [File No. 1-08610] Issuer Delisting; Notice of Application of SBC Communications Inc. To Withdraw Its Common Stock, $1.00 Par Value, From Listing and Registration on the Pacific Exchange, Inc. October 25, 2005. On September 22, 2005, SBC Communications Inc., a Delaware corporation (“Issuer”), filed an application with the Securities and Exchange Commission (“Commission”), pursuant to Section 12(d) of the Securities Exchange Act of 1934 (“Act”) 1 and Rule 12d2-2(d) thereunder, 2 to withdraw its common stock, $1.00 par value (“Security”), from listing and registration on the Pacific Exchange, Inc. (“PCX”). 1 15 U.S.C. 78 *l* (d). 2 17 CFR 240.12d2-2(d). The Board of Directors (“Board”) of the Issuer approved a resolution on July 23, 2003 to, among other things, authorize certain officers of the Issuer to list or delist any of the Issuer's securities on or from any United States or foreign exchange, except to delist the Security from the New York Stock Exchange, Inc. (“NYSE”). The Issuer stated that the following reasons factored into its decision to withdraw the Security from PCX. First, the Issuer stated that the Security only infrequently trades on Archipelago Exchange (“ArcaEx”), the trading facility of PCX. Over the past 12 months, shares of the Security traded on ArcaEx represented 1.2% of the total shares of the Security traded on all national exchanges. Substantially all of the Security is traded on NYSE and in the over-the-counter market. Second, the Issuer intends to continue listing the Security on NYSE. The Security is registered under Section 12(b) of the Act, 3 and the Issuer is subject to the periodic and current reporting requirements under Section 13 of the Act. 4 Third, the continued listing of the Security is costly and unjustified, in the Issuer's opinion, in light of the limited trading volume of the Security. 3 15 U.S.C. 78 *l* (b). 4 15 U.S.C. 78m. The Issuer stated in its application that it has complied with applicable rules of PCX by complying with all applicable laws in the State of Delaware, the state in which the Issuer is incorporated, and by providing PCX with the required documents governing the withdrawal of securities from listing and registration on PCX. The Issuer's application relates solely to the withdrawal of the Security from listing on PCX and shall not affect its continued listing on NYSE or the Chicago Stock Exchange, Inc., (“CHX”), 5 or its obligation to be registered under Section 12(b) of the Act. 6 5 On September 22, 2005, the Issuer filed an application with the Commission to withdraw the Security from listing and registration on CHX. Notice of such application will be published separately. 6 15 U.S.C. 781(b). Any interested person may, on or before November 15, 2005, comment on the facts bearing upon whether the application has been made in accordance with the rules of PCX, and what terms, if any, should be imposed by the Commission for the protection of investors. All comment letters may be submitted by either of the following methods: Electronic Comments • Send an e-mail to *rule-comments@sec.gov.* Please include the File Number 1-08610 or; Paper Comments • Send paper comments in triplicate to Jonathan G. Katz, Secretary, Securities and Exchange Commission, 100 F Street, NE.,Washington, DC 20549-9303. All submissions should refer to File Number 1-08610. This file number should be included on the subject line if e-mail is used. To help us process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/delist.shtml* ). Comments are also available for public inspection and copying in the Commission's Public Reference Room. All comments received will be posted without change; we do not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. The Commission, based on the information submitted to it, will issue an order granting the application after the date mentioned above, unless the Commission determines to order a hearing on the matter. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 7 7 17 CFR 200.30-3(a)(1). Jonathan G. Katz, Secretary. [FR Doc. E5-6019 Filed 10-31-05; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. IC-27120; 812-12934] Gladstone Capital Corporation, et al.; Notice of Application October 25, 2005. AGENCY: Securities and Exchange Commission (“Commission”). ACTION: Notice of application for an order under section 57(i) of the Investment Company Act of 1940 (the “Act”) and rule 17d-1 under the Act to permit certain joint transactions otherwise prohibited by section 57(a)(4) of the Act and under section 17(d) of the Act and rule 17d-1 under the Act authorizing certain joint transactions. *Summary of Application:* Applicants requests an order to permit Gladstone Capital Corporation and Gladstone Investment Corporation, both business development companies (“BDCs”), and certain registered closed-end investment companies, to co-invest with an affiliate in portfolio companies. *Applicants:* Gladstone Capital Corporation (“GCC”), Gladstone Investment Corporation (“GIC”), Gladstone Partners Fund LP (“Partners”), Gladstone Management Corporation (“GMC”) and Gladstone General Partner, LLC. *Filing Dates:* The application was filed on February 27, 2003 and amended on October 24, 2005. *Hearing or Notification of Hearing:* An order granting the requested relief will be issued unless the Commission orders a hearing. Interested persons may request a hearing by writing to the Commission's Secretary and serving applicants with a copy of the request, personally or by mail. Hearing requests should be received by the Commission by 5:30 p.m. on November 21, 2005, and should be accompanied by proof of service on applicants, in the form of an affidavit or, for lawyers, a certificate of service. Hearing requests should state the nature of the writer's interest, the reason for the request, and the issues contested. Persons who wish to be notified of a hearing may request notification by writing to the Commission's Secretary. ADDRESSES: Secretary, U.S. Securities and Exchange Commission, 100 F St., NE., Washington, DC 20549-9303. Applicants: c/o R. Charles Miller, Esq., Kirkpatrick & Lockhart Nicholson Graham LLP, 1800 Massachusetts Avenue, NW., Suite 200, Washington, DC 20036. FOR FURTHER INFORMATION CONTACT: Marilyn Mann, Senior Counsel, at
(202)551-6813, or Mary Kay Frech, Branch Chief, at
(202)551-6821 (Office of Investment Company Regulation, Division of Investment Management). SUPPLEMENTARY INFORMATION: The following is a summary of the application. The complete application may be obtained for a fee at the Commission's Public Reference Branch, 100 F St., NE., Washington, DC 20549-0102 (tel. 202-551-5850). Applicants' Representations 1. GCC is a closed-end management investment company that has elected to be regulated as a BDC under the Act. GCC's investment objective is to achieve a high level of current income by investing in debt securities, such as senior notes, senior subordinated notes and subordinated notes, with particular emphasis on senior subordinated notes, of established private businesses that are backed by leveraged buyout funds, venture capital funds or others. In connection with the transactions in which GCC would purchase debt securities, it would generally expect to receive interests, such as warrants or conversion privileges, in the issuers' common equity, which offer the potential of long-term appreciation. GCC has entered into a combined investment advisory and administration agreement with GMC. 2. Partners will be organized as a limited liability company, limited liability company interests of which will be placed privately with institutional investors, and will be excluded from the definition of investment company by section 3(c)(1) of the Act. Partners' investment objective will be similar to that of GCC. Gladstone General Partner, LLC, is the general partner of Partners. Upon completion of its private placement, Partners will enter into an advisory agreement with GMC and an administration agreement with Gladstone Administration, LLC (“Gladstone Administration”), which is a wholly owned subsidiary of GMC. 3. GIC is a recently organized closed-end management investment company that has elected to be regulated as a BDC. GIC's investment objective is to generate both current income and capital gains through debt and equity investments. GIC has entered into an investment advisory agreement with GMC and has entered into an administration agreement with Gladstone Administration. 4. GMC is an investment adviser registered under the Investment Advisers Act of 1940. The investment advisory agreements between GMC and GCC and between GMC and GIC, among other things, require GMC to make available significant managerial assistance to the portfolio companies of GCC and GIC. GMC may in the future provide investment advisory services to other closed-end management investment companies that elect to be regulated as BDCs or other registered closed-end management investment companies (the “Future Co-Investors” and together with GIC and GCC, the “Investors”). The applicants request that the relief apply to the Future Co-Investors, which will comply with the terms and conditions of the application. 5. Applicants request relief permitting GCC, GIC and any Future Co-Investor to make co-investments with Partners (“Co-investment Transactions”). The requested order will not extend to any transaction in which more than one Investor is a participant. Applicants' Legal Analysis 1. Section 57(a)(4) of the Act prohibits certain affiliated persons of a BDC from participating in a joint transaction with the BDC in contravention of rules as prescribed by the Commission. In addition, under section 57(b)(2) of the Act, any person who is directly or indirectly controlling, controlled by or under common control with a BDC is subject to section 57(a)(4). Applicants state that Partners is under common control with each of the Investors and therefore is subject to section 57(a)(4). Section 57(i) of the Act provides that, until the Commission prescribes rules under section 57(a)(4), the Commission's rules under section 17(d) of the Act applicable to registered closed-end investment companies will be deemed to apply. Because the Commission has not adopted any rules under section 57(a)(4), rule 17d-1 applies. 2. Section 17(d) of the Act and rule 17d-1 under the Act prohibit affiliated persons of a registered investment company from participating in joint transactions with the company unless the Commission has granted an order permitting such transactions. Because certain of the Future Co-Investors may be registered closed-end investment companies, section 17(d) and rule 17d-1 apply. In passing upon applications under rule 17d-1, the Commission considers whether the company's participation in the joint transactions is consistent with the provisions, policies, and purposes of the Act and the extent to which such participation is on a basis different from or less advantageous than that of other participants. 3. Applicants state that allowing co-investment between GCC or GIC and Partners and the Future Co-Investors and Partners will provide a substantial benefit to GCC's, GIC's and the Future Co-Investors' stockholders by making available greater resources that will allow applicants to obtain access to more attractive investment opportunities. 4. Applicants state that the terms and conditions set forth in the application ensure that the terms on which co-investments may be made will be identical, thus protecting the stockholders of any Investor from being disadvantaged. Applicants state that the proposed relief is consistent with rule 17d-1 in that the participation of the Investors will not be on a basis different from or less advantageous than that of Partners. Applicants' Conditions Applicants agree that the order granting the requested relief will be subject to the following conditions: 1. The requested order will not extend to any transaction in which more than one Investor is a participant. 2.(a) If considering an investment opportunity that may constitute a Co-investment Transaction, GMC will make an independent determination of the appropriateness of the Investor's participation in such transaction in light of the Investor's then-current circumstances.
(b)If GMC deems the Investor's participation in any such investment opportunity to be appropriate for the Investor, it will then determine an appropriate level of investment for the Investor. If the aggregate amount recommended by GMC to be invested by the Investor in such Co-investment Transaction, together with the amount proposed to be invested by Partners in the same transaction, exceeds the amount of the investment opportunity, the amount proposed to be invested by each such party will be allocated among them pro rata based on the ratio of each party's total assets to the aggregated total assets of both parties, up to the amount proposed to be invested by each. GMC will provide the required majority (as defined in section 57(o) of the Act) (“Required Majority”) with information concerning Partners' total assets to assist the Required Majority with their review of the Investor's investments for compliance with these allocation procedures.
(c)After making the determinations required in
(a)and
(b)above, GMC will distribute written information concerning the Co-investment Transaction, including the amount proposed to be invested by Partners, to the non-interested directors for their consideration. The Investor will co-invest with Partners only if, prior to the Investor's participation in the Co-investment Transaction, a Required Majority concludes that:
(i)The terms of the transaction, including the consideration to be paid, are reasonable and fair and do not involve overreaching of the Investor or its stockholders on the part of any person concerned;
(ii)The transaction is consistent with
(A)The interests of the stockholders of the Investor; and
(B)The Investor's investment objectives and strategies (as described in the Investor's registration statements on Form N-2 and other filings made with the Commission by the Investor under the Securities Act of 1933, as amended, any reports filed by the Investor with the Commission under the Securities Exchange Act of 1934, as amended, and the Investor's reports to stockholders);
(iii)The investment by Partners would not disadvantage the Investor, and participation by the Investor is not on a basis different from or less advantageous than that of Partners; *provided,* that if Partners, but not the Investor, gains the right to nominate a director for election to a portfolio company's board of directors or the right to have a board observer or any similar right to participate in the governance or management of the portfolio company, such event shall not be interpreted to prohibit the Required Majority from reaching the conclusions required by this condition (2)(c)(iii), if
(A)The Required Majority shall have the right to ratify the selection of such director or board observer, if any; and
(B)GMC agrees to, and does, provide, periodic reports to the Investor's Board of Directors with respect to the actions of such director or the information received by such board observer or obtained through the exercise of any similar right to participate in the governance or management of the portfolio company; and
(iv)The proposed investment by the Investor will not benefit GMC or Partners or any affiliated person of either of them (other than Partners), except to the extent permitted under sections 17(e) and 57(k) of the Act.
(d)The Investor has the right to decline to participate in any Co-investment Transaction or to invest less than the amount proposed to the Investor.
(e)GMC will present to the Board of Directors, on a quarterly basis, a record of all investments made by Partners during the preceding quarter that fell within the Investor's then current investment objectives that were not made available to the Investor, and an explanation of why the investment opportunities were not offered to the Investor. All information presented to the Board of Directors pursuant to this condition will be kept for the life of the Investor and at least two years thereafter, and will be subject to examination by the Commission and its staff. 3. Except for follow-on investments made pursuant to condition 6 below, the Investor will not invest in any portfolio company in which GMC or Partners or any affiliated person of either of them is an existing investor. 4. The Investor will not participate in any Co-investment Transaction unless the terms, conditions, price, class of securities to be purchased, settlement date, and registration rights will be the same for the Investor and Partners. The grant to Partners, but not the Investor, of the right to nominate a director for election to a portfolio company's board of directors, the right to have an observer on the board of directors or similar rights to participate in the governance or management of the portfolio company will not be interpreted so as to violate this condition 4, if conditions 2(c)(iii)(A) and
(B)are met. 5. If Partners elects to sell, exchange or otherwise dispose of an interest in a security that was acquired by the Investor and Partners in a Co-investment Transaction, GMC will
(a)Notify the Investor of the proposed disposition at the earliest practical time; and
(b)Formulate a recommendation as to participation by the Investor in any such disposition and provide a written recommendation to the non-interested directors. The Investor will have the right to participate in such disposition on a proportionate basis, at the same price and on the same terms and conditions as those applicable to Partners. The Investor will participate in such disposition to the extent that a Required Majority determines that it is in the Investor's best interests to do so. The Investor and Partners will each bear its own expenses in connection with any such disposition. 6. If Partners desires to make a “follow-on investment” ( *i.e.* , an additional investment in the same entity) in a portfolio company whose securities were acquired by the Investor and Partners in a Co-investment Transaction or to exercise warrants or other rights to purchase securities of the issuer, GMC will
(a)Notify the Investor of the proposed transaction at the earliest practical time; and
(b)Formulate a recommendation as to the proposed participation, including the amount of the proposed follow-on investment, by the Investor and provide the recommendation to the non-interested directors. The non-interested directors will make their own determination with respect to follow-on investments. To the extent that
(i)The amount of a follow-on investment opportunity is not based on the Investor's and Partners' initial investments; and
(ii)The aggregate amount recommended by GMC to be invested by the Investor in such follow-on investment, together with the amount proposed to be invested by Partners in the same transaction, exceeds the amount of the follow-on investment opportunity, the amount invested by each such party will be allocated among them *pro rata* based on the ratio of each party's total assets to the aggregated total assets of both parties, up to the maximum amount to be invested by each. The Investor will participate in such investment to the extent that the Required Majority determines that it is in the Investor's best interest. The acquisition of follow-on investments as permitted by this condition will be subject to the other conditions set forth in the application. 7. The non-interested directors will be provided quarterly for review all information concerning Co-investment Transactions, including investments made by Partners which the Investor considered but declined to participate, so that the non-interested directors may determine whether all investments made during the preceding quarter, including those investments which the Investor considered but declined to participate, comply with the conditions of the order. In addition, the non-interested directors will consider at least annually the continued appropriateness of the standards established for co-investments by the Investor, including whether the use of the standards continues to be in the best interests of the Investor and its shareholders and does not involve overreaching on the part of any person concerned. 8. The Investor will maintain the records required by section 57(f)(3) of the Act as if each of the investments permitted under these conditions were approved by the non-interested directors under section 57(f). 9. No non-interested director will also be a director, general partner or principal, or otherwise an “affiliated person” (as defined in the Act) of, Partners. 10. The expenses, if any, associated with acquiring, holding or disposing of any securities acquired in a Co-investment Transaction (including, without limitation, the expenses of the distribution of any such securities registered for sale under the Securities Act of 1933) shall, to the extent not payable solely by GMC under its investment advisory agreements with the Investor and Partners, be shared by the Investor and Partners in proportion to the relative amounts of their securities to be acquired or disposed of, as the case may be, by the Investor and Partners. 11. Any transaction fee (including break-up or commitment fees but excluding broker's fees contemplated by section 17(e)(2) of the Act) received in connection with a Co-investment Transaction will be distributed to the Investor and Partners on a *pro rata* basis based on the amount they invested or committed, as the case may be, in such Coinvestment Transaction. If any transaction fee is to be held by GMC pending consummation of the transaction, the fee will be deposited into an account maintained by GMC at a bank or banks having the qualifications prescribed in section 26(a)(1) of the Act, and the account will earn a competitive rate of interest that will also be divided *pro rata* between the Investor and Partners based on the amount they invest in such Coinvestment Transaction. Partners, GMC or any affiliated person of the Investor will not receive additional compensation or remuneration of any kind (other than
(i)the *pro rata* transaction fees described above and
(ii)investment advisory fees paid in accordance with investment advisory agreements with the Investor and Partners) as a result of or in connection with a Co-investment Transaction. 12. The Board of Directors of each Investor will satisfy the fund governance standards as defined in rule 0-1(a)(7) under the Act by the compliance date for the rule. For the Commission, by the Division of Investment Management, under delegated authority. Jonathan G. Katz, Secretary. [FR Doc. E5-6015 Filed 10-31-05; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-52657; SR-Amex-2005-047; SR-BSE-2005-39; SR-CBOE-2005-68; SR-ISE-2005-42; SR-PCX-2005-104; SR-Phlx-2005-27] Self-Regulatory Organizations; Order Approving a Proposed Rule Change and Amendment No. 1 by the American Stock Exchange LLC; a Proposed Rule Change by the Boston Stock Exchange, Inc.; a Proposed Rule Change by the Chicago Board Options Exchange, Incorporated; a Proposed Rule Change and Amendment No. 1 by the International Securities Exchange, Inc.; a Proposed Rule Change by the Pacific Exchange, Inc.; and a Proposed Rule Change and Amendment No. 1 by the Philadelphia Stock Exchange, Inc. Relating to the Definition of Firm Customer Quote Size and Limitations on Sending Secondary P/A Orders October 24, 2005. I. Introduction On April 26, 2005, April 28, 2005, August 29, 2005, August 31, 2005, September 7, 2005, and September 13, 2005, the Philadelphia Stock Exchange, Inc. (“Phlx”), the American Stock Exchange LLC (“Amex”), the Chicago Board Options Exchange, Incorporated (“CBOE”), the International Securities Exchange, Inc. (“ISE”), the Pacific Exchange, Inc. (“PCX”), and the Boston Stock Exchange, Inc. (“BSE”) (collectively, the “Options Exchanges”), respectively, filed with the Securities and Exchange Commission (“Commission”), pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”) 1 and Rule 19b-4 thereunder, 2 proposed rule changes to amend each of their respective rules governing the operation of the intermarket option linkage (“Linkage”) to conform with a proposed amendment 3 to the Plan for the Purpose of Creating and Operating an Intermarket Option Linkage (“Linkage Plan”). 4 Each of the Exchanges is proposing:
(i)To amend the definition of “Firm Customer Quote Size” (“FCQS”) 5 to provide automatic executions for Principal Acting as Agent Orders (“P/A Orders”) 6 sent via Linkage up to the full size of an Options Exchange's disseminated quotation; and
(ii)to eliminate a 15-second waiting period between the sending of P/A Orders. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 *See* Securities Exchange Act Release No. 52401 (September 9, 2005), 70 FR 54781 (September 16, 2005) (File No. 4-429) (“Amendment No. 16”). 4 On July 28, 2000, the Commission approved a national market system plan for the purpose of creating and operating an intermarket option market linkage proposed by the Amex, CBOE, and ISE. *See* Securities Exchange Act Release No. 43086 (July 28, 2000), 65 FR 48023 (August 4, 2000). Subsequently, upon separate requests by the Phlx, PCX, and BSE, the Commission issued orders to permit these exchanges to participate in the Linkage Plan. *See* Securities Exchange Act Release Nos. 43573 (November 16, 2000), 65 FR 70850 (November 28, 2000), 43574 (November 16, 2000), 65 FR 70851 (November 28, 2000) and 49198 (February 5, 2004), 69 FR 7029 (February 12, 2004). 5 *See* Section 2(11) of the Linkage Plan; Amex Rule 940(b)(7); Chapter XII; Section 1(g) of BOX's Rules; CBOE Rule 6.80(9); ISE Rule 1900(7); PCX Rule 6.92(a)(10); and Phlx Rule 1083(g). 6 *See* Section 2(16)(a) of the Linkage Plan; Amex Rule 940(b)(10)(i); Chapter XII; Section 1(j)(i) of BOX's Rules; CBOE Rule 6.80(12)(i); ISE Rule 1900(10)(i); PCX Rule 6.92(a)(12)(i); and Phlx Rule 1083(k)(i). Phlx submitted Amendment No. 1 to its proposed rule change on September 2, 2005. 7 ISE submitted Amendment No. 1 to its proposed rule change on September 7, 2005. 8 Amex submitted Amendment No. 1 to its proposed rule change on September 12, 2005. 9 7 In its Amendment No. 1, the Phlx made clarifying changes to the proposed rule text relating to the availability of Options Exchanges' automatic execution systems. 8 In its Amendment No. 1, the ISE made technical corrections to the proposed rule change. 9 In its Amendment No. 1, the Amex made clarifying changes to the proposed rule text relating to the availability of Options Exchanges' automatic execution systems. Notice of:
(i)Amex's proposed rule change, as amended;
(ii)BSE's proposed rule change;
(iii)CBOE's proposed rule change;
(iv)ISE's proposed rule change, as amended; and
(v)PCX's proposed rule change were published in the **Federal Register** on September 20, 2005. 10 Notice of Phlx's proposed rule change, as amended, was published in the **Federal Register** on September 21, 2005. 11 No comments were received on the proposed rule changes. This order approves the proposed rule changes, as amended. 10 Securities Exchange Act Release Nos. 52428 (September 14, 2005), 70 FR 55186 (September 20, 2005) (SR-Amex-2005-047); 52429 (September 14, 2005), 70 FR 55191 (September 20, 2005) (SR-BSE-2005-39); 52424 (September 14, 2005), 70 FR 55193 (September 20, 2005) (SR-CBOE-2005-68); 52410 (September 14, 2005), 70 FR 55198 (September 20, 2005) (SR-ISE-2005-42); and 52427 (September 14, 2005), 70 FR 55201 (September 20, 2005) (SR-PCX-2005-104). 11 Securities Exchange Act Release No. 52425 (September 14, 2005), 70 FR 55443 (September 21, 2005) (SR-Phlx-2005-27). II. Description of the Proposals The purpose of the proposed rule changes is to amend each of the Options Exchanges' rules governing the operation of the Linkage to conform with Amendment No. 16 to the Linkage Plan. 12 In general, the proposed rule changes will modify the rules of each of the Options Exchanges in two respects. First, the definition of FCQS will be amended to reflect that all Options Exchanges disseminate dynamic option quotes with size. Specifically, each of the Option Exchanges proposes to amend its rules so that the FCQS is calculated based on the size of the disseminated quotation of the Options Exchange receiving the P/A Order. Secondly, the proposed rule changes will eliminate a 15-second waiting period for sending a subsequent P/A Order currently provided for in each of the Option Exchange's rules. Finally, the proposed rule changes will clarify the conditions under which automatic execution is required in response to P/A Orders. 12 Amendment No. 16 to the Linkage Plan is approved separately today by the Commission. *See* Securities Exchange Act Release No. 52656 (October 24, 2005). III. Discussion After careful review, the Commission finds that the proposed rule changes, as amended, are consistent with the requirements of the Act and the rules and regulations thereunder applicable to national securities exchanges. 13 In particular, the Commission finds that the proposed rule changes, as amended, are consistent with the provisions of section 6(b)(5) of the Act, 14 which requires, among other things, that national securities exchanges' rules be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to remove impediments to and to perfect the mechanism of a free and open market and a national market system and, in general, to protect investors and the public interest. 13 In approving these proposals, the Commission has considered the proposed rules' impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). 14 15 U.S.C. 78f(b)(5). The Commission believes that the proposed rule changes should facilitate the conformity of the Options Exchanges' rules to Amendment No. 16 to the Linkage Plan. Further, the Commission believes that the Options Exchanges' proposal to calculate FCQS on the basis of the size of the disseminated quotation of the Options Exchange receiving the P/A Order is appropriate and should facilitate the use of the Linkage for the Options Exchanges. This change proposed by the Options Exchanges, coupled with the proposed elimination of the 15-second waiting period for sending a subsequent P/A Order, should facilitate investors' intermarket access to superior prices disseminated by Options Exchanges other than the one to which the order was initially sent. IV. Conclusion *It is therefore ordered* , pursuant to Section 19(b)(2) of the Act, 15 that the proposed rule changes (SR-Amex-2005-047; SR-BSE-2005-39; SR-CBOE-2005-68; SR-ISE-2005-42; SR-PCX-2005-104; SR-Phlx-2005-27), as amended, are approved. 15 15 U.S.C. 78s(b)(2). For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 16 16 17 CFR 200.30-3(a)(12). Jonathan G. Katz, Secretary. [FR Doc. E5-6028 Filed 10-31-05; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-52673; File No. SR-CBOE-2005-86] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Order Granting Accelerated Approval to a Proposed Rule Change To Establish Certain Fees with Respect to Transactions Executed Through the Intermarket Trading System October 25, 2005. Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”) 1 and Rule 19b-4 thereunder, 2 notice is hereby given that on October 18, 2005, the Chicago Board Options Exchange, Incorporated (“CBOE” or “Exchange”) filed with the Securities and Exchange Commission (“Commission” or “SEC”) the proposed rule change as described in Items I and II below, which Items have been prepared by the CBOE. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons, and is approving the proposal on an accelerated basis. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to enter into arrangements with other national securities exchanges to pass certain fees they have collected from members for transactions executed on another exchange through the Intermarket Trading System (“ITS”). This proposal does not require changes to CBOE rule text. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item III below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose Section 31 of the Act 3 requires each national securities exchange to pay the Commission a fee based on the aggregate dollar amount of certain sales of securities (“covered sales”). Rules 31 and 31T, adopted by the Commission in June 2004, 4 established procedures for the calculation and collection of section 31 fees on such covered sales. Rule 31 requires each national securities exchange that owes section 31 fees to submit a completed Form R31 to the Commission each month, beginning with July 2004. Rule 31T required each exchange to submit a completed Form R31 for each of the months September 2003 to June 2004, inclusive. Each national securities exchange must report its covered sales volume based on the data from a designated clearing agency, when available. The designated clearing agency for covered sales of equity securities is the National Securities Clearing Corporation (“NSCC”). These covered sales are reported in Part I of Form R31, and each exchange is required to “provide in Part I only the data supplied to it by a designated clearing agency.” 5 The data supplied by NSCC for the period September 2003 through August 2004 did not accurately reflect the aggregate dollar value of the covered sales occurring on each exchange to permit reports to be made in accordance with new Rules 31 and 31T. In particular, the data NSCC reported to each national securities exchange included non-covered sales data for sales originating on one exchange and executed on another exchange through the ITS. 6 3 15 U.S.C. 78ee. 4 *See* Securities Exchange Act Release No. 49928 (June 28, 2004), 69 FR 41060 (July 7, 2004) (“Adopting Release”). 5 17 CFR 240.31(b)(5). 6 As a result of this and other inaccuracies in the data reported by NSCC, the national securities exchanges were unable to report accurate information on Form R31, unless they made adjustments to the NSCC data based on data other than that provided by NSCC. On October 6, 2004, the Commission's Division of Market Regulation (“Division”) issued a “no-action” letter advising exchanges for whom NSCC acts as a designated clearing agency under Rule 31, that the Division staff would not recommend that the Commission take enforcement action if a national securities exchange adjusts the data provided by NSCC to accurately reflect covered sales occurring on the national securities exchange. *See* letter from Robert L.D. Colby, Deputy Director, Division, Commission to Ellen J. Neely, Senior Vice President and General Counsel, Chicago Stock Exchange, Inc. (“CHX”), dated October 6, 2004. Section 31 requires that national securities exchanges pay a fee based on the aggregate dollar amount of sales of securities transacted on the exchange. Given the specific language of section 31, the Commission in the Adopting Release for Rules 31 and 31T advised that the current methodology for treating sales of securities that occur through ITS 7 was no longer appropriate and that “it would be simpler and more transparent for each covered [self-regulatory organization (“SRO”)] to report all covered sales that occur on its market.” The Commission further stated: 7 In the Adopting Release, the Commission described the current methodology: “SRO A sends an ITS commitment to a member of SRO B to sell a security, and the commitment is executed on SRO B. Under existing arrangements, SRO A pays the section 31 fee arising from this trade and passes the fee to its member that initiated the trade. * * * [T]he SROs devised this system because SRO B does not have the ability to require members of SRO A to reimburse it for the cost of its section 31 fees.” Adopting Release, 69 FR at 41067. The Commission acknowledges that a covered SRO on which a covered sale occurs as a result of an incoming ITS order may not be able to collect funds to pay the section 31 fee from one of its own members. However, section 31 does not address the manner or extent to which covered SROs may seek to recover the amounts that they pay pursuant to section 31 from their members. Covered SROs may wish to devise new arrangements for passing fees between themselves so that the funds are collected from the covered SRO that originated the ITS order. 8 8 *Id.* The Commission further noted that any such arrangements devised by the SROs would have to be established pursuant to section 19(b) of the Act and Rule 19b-4 thereunder. A subcommittee of the ITS Operating Committee 9 (“Subcommittee”) has had discussions in order to devise new arrangements for passing fees between the ITS participants that
(1)were collected from their members for the months of September 2003 through August 2004; and
(2)are being collected from their members beginning in September 2004 and continuing. This proposed rule change is being submitted by the CBOE with the understanding that the other exchanges participating in the proposed arrangement devised by the subcommittee will be submitting substantially similar rule change proposals. 10 9 The ITS participants are American Stock Exchange LLC, Boston Stock Exchange (“BSE”), CBOE, CHX, National Association of Securities Dealers (“NASD”), National Stock Exchange, New York Stock Exchange (“NYSE”), Pacific Exchange, and Philadelphia Stock Exchange. 10 NASD has determined not to participate in the arrangement for passing fees between exchanges although they participated in many of the conference calls regarding the proposed arrangement. Pursuant to the new arrangement being proposed, each ITS participant exchange determines whether it has received and executed more in dollar value of covered sales than it has originated and sent to each other ITS participant exchange. For example, for the historical period, September 2003 through August 2004, SRO A sent ITS commitments for covered sales whose dollar value was $150 million to SRO B for execution. SRO A collected fees from its members to fund its section 31 obligation for those covered sales executed on SRO B. SRO B, as the executing market center, is obligated to pay the section 31 fee to the SEC. During the same period, SRO B sent ITS commitments for covered sales whose dollar value was $210 million to SRO A. SRO B collected fees from its members for those covered sales executed on SRO A. SRO A, as the executing market center, is obligated to pay the section 31 fee to the SEC. Since SRO A executed a greater dollar value of covered sales from SRO B than it sent to SRO B, the proposed arrangement requires SRO A to determine the amount of the fees collected by SRO B from its members based on the aggregate dollar value of covered sales from SRO B and executed on SRO A through ITS commitments. When invoicing SRO B, SRO A will deduct the amount of the fee it owes to SRO B ( *i.e.* , the fee amount based on SRO A's $210 million in aggregate covered sales less the fee amount based on SRO B's $150 million in aggregate covered sales) and will invoice only for the difference of $60 million. Once the fees have been invoiced and paid for the historical period, the ITS participant exchanges plan to use the same arrangement for the period beginning September 2004 and continuing. It is anticipated that the invoicing process will occur twice yearly to coincide with the March 15 and September 30 payment schedule for section 31 fees set forth in the Act. To implement this proposed arrangement, an ITS participant exchange will require access to the aggregate dollar value of buy and sell transactions occurring through ITS. Under the proposed arrangement for fees collected for the months of September 2003 through August 2004, an ITS participant exchange may choose to use data obtained from the Inter-market Surveillance Information System (“ISIS”) or data that provides comparable information that includes aggregate dollar value of ITS transactions. 11 The ISIS data is sorted by originating market center ( *i.e.* , the sender of an ITS commitment) and receiving market center ( *i.e.* , the market center that executes the ITS commitment). Using this data, each ITS participant exchange can determine on a monthly basis the dollar value of all executed commitments sent to and received from another ITS participant exchange. 11 The NYSE has made available to the ITS participants spreadsheets for each month in the period using the ISIS data. At its meeting on February 23, 2005, the Subcommittee asked the Securities Industry Automation Corporation (“SIAC”) to determine the time and expense involved for SIAC to use the ITS database that it maintains to provide reports of the aggregate dollar value of buy and sell transactions occurring through ITS to the ITS participants. On March 15, 2005, representatives of the Subcommittee authorized SIAC to develop new reports. SIAC is in the process of developing these reports and expects to complete testing by August 31, 2005. Once SIAC can provide this data, it will no longer be necessary for ISIS data to be used. The new reports provided by SIAC will be used by ITS participants in connection with determining which ITS participant exchange will pay the fee for transactions occurring through ITS and which ITS participant exchange has collected the fee from its members. The CBOE believes that the proposed arrangement is a fair and efficient means for passing fees collected at one ITS participant exchange based upon executions of covered sales occurring at another ITS participant exchange. The CBOE acknowledges that the legal duty to report and pay the section 31 fee remains with the ITS participant on which the sale was in fact transacted. 2. Statutory Basis This proposal would establish a process for SROs to enter into arrangements to pass fees they have collected from members for transactions executed on another SRO through ITS. For these reasons, the Exchange believes that the proposed rule change is consistent with the Act and the rules and regulations thereunder that are applicable to a national securities exchange and, in particular, the requirements of section 6(b) of the Act. 12 Specifically, the Exchange believes the proposed rule change is consistent with the requirements of section 6(b)(5) of the Act, 13 in that it is designed to promote just and equitable principles of trade, to prevent fraudulent and manipulative acts and practices, and, in general, to protect investors and the public interest. In addition, the Exchange believes that the proposed rule change is consistent with the provisions of section 6(b)(4) of the Act, 14 which requires that the rules of an exchange provide for the equitable allocation of reasonable dues, fees, and other charges among its members and issuers and other persons using its facilities. 12 15 U.S.C. 78f(b). 13 15 U.S.C. 78f(b)(5). 14 15 U.S.C. 78f(b)(4). B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others No written comments were solicited or received with respect to the proposed rule change. III. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov* . Please include File Number SR-CBOE-2005-86 on the subject line. Paper Comments • Send paper comments in triplicate to Jonathan G. Katz, Secretary, Securities and Exchange Commission, Station Place, 100 F Street, NE., Washington, DC 20549-9303. All submissions should refer to File Number SR-CBOE-2005-86. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room. Copies of such filing also will be available for inspection and copying at the principal office of the CBOE. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-CBOE-2005-86 and should be submitted on or before November 22, 2005. IV. Commission's Findings and Order Granting Accelerated Approval of a Proposed Rule Change After careful consideration, the Commission finds that the proposed rule change is consistent with the Act and the rules and regulations thereunder applicable to a national securities exchange. 15 In particular, the Commission believes that the proposal is consistent with section 6(b)(4) of the Act, 16 which requires that the rules of an exchange provide for the equitable allocation of reasonable dues, fees, and other charges among its members and issuers and other persons using its facilities. National securities exchanges obtain funds to pay their section 31 fees to the Commission by charging fees to broker-dealers who generate the covered sales on which section 31 fees are based. An exchange can obtain most of these funds by imposing a fee on one of its members whenever the member is on the sell side of a transaction. However, when the exchange accepts an ITS commitment to buy, the ultimate seller is a party on another market. The exchange lacks the ability to pass a fee to that seller directly, because the seller may not be a member of the exchange. Under the proposed arrangement, which the Commission understands will be adopted by each of the ITS participant exchanges, 17 the exchange that routed the ITS commitment away will continue to collect a fee from the broker-dealer that placed the sell order. Then, with respect to each ITS participant exchange, the exchange will determine whether it is a net sender or net receiver of ITS trades and send fees to or accept fees from each other exchange accordingly. The Commission believes this is an equitable manner for the exchanges to obtain funds to pay their section 31 fees on covered sales resulting from ITS trades. 15 In approving this proposal, the Commission has considered its impact on efficiency, competition, and capital formation. *See* 15 U.S.C. 78c(f). 16 15 U.S.C. 78f(b)(4). 17 *See* letter from George W. Mann, Jr., Executive Vice President and General Counsel, BSE, and Chairman, Subcommittee, to Michael Gaw, Assistant Director, Division, Commission, dated September 29, 2005. Under section 19(b)(2) of the Act, 18 the Commission may not approve any proposed rule change prior to the thirtieth day after the date of publication of the notice of filing thereof, unless the Commission finds good cause for so doing. The Commission hereby finds good cause for approving the proposed rule change prior to the thirtieth day after publishing notice of filing thereof in the **Federal Register** . In this case, the Commission does not believe a comment period is necessary because all of the parties affected by the proposed fee—the other ITS participant exchanges—have already consented to and will adopt the same fee arrangement. 19 18 15 U.S.C. 78s(b)(2). 19 *See supra* note 17. For the reasons set forth above, the Commission finds good cause to accelerate approval of the proposed rule change pursuant to section 19(b)(2) of the Act. 20 20 *Id.* V. Conclusion *It is therefore ordered,* pursuant to Section 19(b)(2) of the Act, 21 that the proposed rule change (SR-CBOE-2005-86) is hereby approved on an accelerated basis. 21 *Id.* For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 22 22 17 CFR 200.30-3(a)(12). Jonathan G. Katz, Secretary. [FR Doc. E5-6029 Filed 10-31-05; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-52674; File No. SR-NYSE-2005-71] Self-Regulatory Organizations; New York Stock Exchange, Inc.; Notice of Filing and Order Granting Accelerated Approval to a Proposed Rule Change To Establish Certain Fees With Respect to Transactions Executed Through the Intermarket Trading System October 25, 2005. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”) 1 and Rule 19b-4 thereunder, 2 notice is hereby given that on October 17, 2005, the New York Stock Exchange, Inc. (“NYSE” or “Exchange”) filed with the Securities and Exchange Commission (“Commission” or “SEC”) the proposed rule change as described in Items I and II below, which Items have been prepared by the NYSE. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons, and is approving the proposal on an accelerated basis. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to enter into arrangements with other national securities exchanges to pass certain fees they have collected from members for transactions executed on another exchange through the Intermarket Trading System (“ITS”). This proposal does not require changes to NYSE rule text. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item III below. The Exchange has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose Section 31 of the Act 3 requires each national securities exchange to pay the Commission a fee based on the aggregate dollar amount of certain sales of securities (“covered sales”). Rules 31 and 31T, adopted by the Commission in June 2004, 4 established procedures for the calculation and collection of Section 31 fees on such covered sales. Rule 31 requires each national securities exchange that owes Section 31 fees to submit a completed Form R31 to the Commission each month, beginning with July 2004. Rule 31T required each exchange to submit a completed Form R31 for each of the months September 2003 to June 2004, inclusive. Each national securities exchange must report its covered sales volume based on the data from a designated clearing agency, when available. The designated clearing agency for covered sales of equity securities is the National Securities Clearing Corporation (“NSCC”). These covered sales are reported in Part I of Form R31, and each exchange is required to “provide in Part I only the data supplied to it by a designated clearing agency.” 5 The data supplied by NSCC for the period September 2003 through August 2004 did not accurately reflect the aggregate dollar value of the covered sales occurring on each exchange to permit reports to be made in accordance with new Rules 31 and 31T. In particular, the data NSCC reported to each national securities exchange included non-covered sales data for sales originating on one exchange and executed on another exchange through the ITS. 6 3 15 U.S.C. 78ee. 4 *See* Securities Exchange Act Release No. 49928 (June 28, 2004), 69 FR 41060 (July 7, 2004) (“Adopting Release”). 5 17 CFR 240.31(b)(5). 6 As a result of this and other inaccuracies in the data reported by NSCC, the national securities exchanges were unable to report accurate information on Form R31, unless they made adjustments to the NSCC data based on data other than that provided by NSCC. On October 6, 2004, the Commission's Division of Market Regulation (“Division”) issued a “no-action” letter advising exchanges for whom NSCC acts as a designated clearing agency under Rule 31, that the Division staff would not recommend that the Commission take enforcement action if a national securities exchange adjusts the data provided by NSCC to accurately reflect covered sales occurring on the national securities exchange. *See* letter from Robert L.D. Colby, Deputy Director, Division, Commission to Ellen J. Neely, Senior Vice President and General Counsel, Chicago Stock Exchange, Inc. (“CHX”), dated October 6, 2004. Section 31 requires that national securities exchanges pay a fee based on the aggregate dollar amount of sales of securities transacted on the exchange. Given the specific language of Section 31, the Commission in the Adopting Release for Rules 31 and 31T advised that the current methodology for treating sales of securities that occur through ITS 7 was no longer appropriate and that “it would be simpler and more transparent for each covered [self-regulatory organization (“SRO”)] to report all covered sales that occur on its market.” The Commission further stated: 7 In the Adopting Release, the Commission described the current methodology: “SRO A sends an ITS commitment to a member of SRO B to sell a security, and the commitment is executed on SRO B. Under existing arrangements, SRO A pays the Section 31 fee arising from this trade and passes the fee to its member that initiated the trade. * * * [T]he SROs devised this system because SRO B does not have the ability to require members of SRO A to reimburse it for the cost of its Section 31 fees.” Adopting Release, 69 FR at 41067. The Commission acknowledges that a covered SRO on which a covered sale occurs as a result of an incoming ITS order may not be able to collect funds to pay the Section 31 fee from one of its own members. However, Section 31 does not address the manner or extent to which covered SROs may seek to recover the amounts that they pay pursuant to Section 31 from their members. Covered SROs may wish to devise new arrangements for passing fees between themselves so that the funds are collected from the covered SRO that originated the ITS order. 8 8 *Id.* The Commission further noted that any such arrangements devised by the SROs would have to be established pursuant to Section 19(b) of the Act and Rule 19b-4 thereunder. A subcommittee of the ITS Operating Committee 9 (“Subcommittee”) has had discussions in order to devise new arrangements for passing fees between the ITS participants that
(1)were collected from their members for the months of September 2003 through August 2004; and
(2)are being collected from their members beginning in September 2004 and continuing. This proposed rule change is being submitted by the NYSE with the understanding that the other exchanges participating in the proposed arrangement devised by the subcommittee will be submitting substantially similar rule change proposals. 10 9 The ITS participants are American Stock Exchange LLC, Boston Stock Exchange (“BSE”), Chicago Board Options Exchange, CHX, National Association of Securities Dealers (“NASD”), National Stock Exchange, NYSE, Pacific Exchange, and Philadelphia Stock Exchange. 10 NASD has determined not to participate in the arrangement for passing fees between exchanges although they participated in many of the conference calls regarding the proposed arrangement. Pursuant to the new arrangement being proposed, each ITS participant exchange determines whether it has received and executed more in dollar value of covered sales than it has originated and sent to each other ITS participant exchange. For example, for the historical period, September 2003 through August 2004, SRO A sent ITS commitments for covered sales whose dollar value was $150 million to SRO B for execution. SRO A collected fees from its members to fund its Section 31 obligation for those covered sales executed on SRO B. SRO B, as the executing market center, is obligated to pay the Section 31 fee to the SEC. During the same period, SRO B sent ITS commitments for covered sales whose dollar value was $210 million to SRO A. SRO B collected fees from its members for those covered sales executed on SRO A. SRO A, as the executing market center, is obligated to pay the Section 31 fee to the SEC. Since SRO A executed a greater dollar value of covered sales from SRO B than it sent to SRO B, the proposed arrangement requires SRO A to determine the amount of the fees collected by SRO B from its members based on the aggregate dollar value of covered sales from SRO B and executed on SRO A through ITS commitments. When invoicing SRO B, SRO A will deduct the amount of the fee it owes to SRO B ( *i.e.* , the fee amount based on SRO A's $210 million in aggregate covered sales less the fee amount based on SRO B's $150 million in aggregate covered sales) and will invoice only for the difference of $60 million. Once the fees have been invoiced and paid for the historical period, the ITS participant exchanges plan to use the same arrangement for the period beginning September 2004 and continuing. It is anticipated that the invoicing process will occur twice yearly to coincide with the March 15 and September 30 payment schedule for Section 31 fees set forth in the Act. To implement this proposed arrangement, an ITS participant exchange will require access to the aggregate dollar value of buy and sell transactions occurring through ITS. Under the proposed arrangement for fees collected for the months of September 2003 through August 2004, an ITS participant exchange may choose to use data obtained from the Inter-market Surveillance Information System (“ISIS”) or data that provides comparable information that includes aggregate dollar value of ITS transactions. 11 The ISIS data is sorted by originating market center ( *i.e.,* the sender of an ITS commitment) and receiving market center ( *i.e.,* the market center that executes the ITS commitment). Using this data, each ITS participant exchange can determine on a monthly basis the dollar value of all executed commitments sent to and received from another ITS participant exchange. 11 The NYSE has made available to the ITS participants spreadsheets for each month in the period using the ISIS data. At its meeting on February 23, 2005, the Subcommittee asked the Securities Industry Automation Corporation (“SIAC”) to determine the time and expense involved for SIAC to use the ITS database that it maintains to provide reports of the aggregate dollar value of buy and sell transactions occurring through ITS to the ITS participants. On March 15, 2005, representatives of the Subcommittee authorized SIAC to develop new reports. SIAC is in the process of developing these reports. Once SIAC can provide this data, it will no longer be necessary for ISIS data to be used. The new reports provided by SIAC will be used by ITS participants in connection with determining which ITS participant exchange will pay the fee for transactions occurring through ITS and which ITS participant exchange has collected the fee from its members. The NYSE believes that the proposed arrangement is a fair and efficient means for passing fees collected at one ITS participant exchange based upon executions of covered sales occurring at another ITS participant exchange. The NYSE acknowledges that the legal duty to report and pay the Section 31 fee remains with the ITS participant on which the sale was in fact transacted. 2. Statutory Basis This proposal would establish a process for SROs to enter into arrangements to pass fees they have collected from members for transactions executed on another SRO through ITS. For these reasons, the Exchange believes that the proposed rule change is consistent with the Act and the rules and regulations thereunder that are applicable to a national securities exchange and, in particular, the requirements of Section 6(b) of the Act. 12 Specifically, the Exchange believes the proposed rule change is consistent with the requirements of Section 6(b)(5) of the Act, 13 in that it is designed to promote just and equitable principles of trade, to prevent fraudulent and manipulative acts and practices, and, in general, to protect investors and the public interest. In addition, the Exchange believes that the proposed rule change is consistent with the provisions of Section 6(b)(4) of the Act, 14 which requires that the rules of an exchange provide for the equitable allocation of reasonable dues, fees, and other charges among its members and issuers and other persons using its facilities. 12 15 U.S.C. 78f(b). 13 15 U.S.C. 78f(b)(5). 14 15 U.S.C. 78f(b)(4). B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others No written comments were solicited or received with respect to the proposed rule change. III. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov.* Please include File Number SR-NYSE-2005-71 on the subject line. Paper Comments • Send paper comments in triplicate to Jonathan G. Katz, Secretary, Securities and Exchange Commission, Station Place, 100 F Street, NE., Washington, DC 20549-9303. All submissions should refer to File Number SR-NYSE-2005-71. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room. Copies of such filing also will be available for inspection and copying at the principal office of the NYSE. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-NYSE-2005-71 and should be submitted on or before November 22, 2005. IV. Commission's Findings and Order Granting Accelerated Approval of a Proposed Rule Change After careful consideration, the Commission finds that the proposed rule change is consistent with the Act and the rules and regulations thereunder applicable to a national securities exchange. 15 In particular, the Commission believes that the proposal is consistent with Section 6(b)(4) of the Act, 16 which requires that the rules of an exchange provide for the equitable allocation of reasonable dues, fees, and other charges among its members and issuers and other persons using its facilities. National securities exchanges obtain funds to pay their Section 31 fees to the Commission by charging fees to broker-dealers who generate the covered sales on which Section 31 fees are based. An exchange can obtain most of these funds by imposing a fee on one of its members whenever the member is on the sell side of a transaction. However, when the exchange accepts an ITS commitment to buy, the ultimate seller is a party on another market. The exchange lacks the ability to pass a fee to that seller directly, because the seller may not be a member of the exchange. Under the proposed arrangement, which the Commission understands will be adopted by each of the ITS participant exchanges, 17 the exchange that routed the ITS commitment away will continue to collect a fee from the broker-dealer that placed the sell order. Then, with respect to each ITS participant exchange, the exchange will determine whether it is a net sender or net receiver of ITS trades and send fees to or accept fees from each other exchange accordingly. The Commission believes this is an equitable manner for the exchanges to obtain funds to pay their Section 31 fees on covered sales resulting from ITS trades. 15 In approving this proposal, the Commission has considered its impact on efficiency, competition, and capital formation. *See* 15 U.S.C. 78c(f). 16 15 U.S.C. 78f(b)(4). 17 *See* letter from George W. Mann, Jr., Executive Vice President and General Counsel, BSE, and Chairman, Subcommittee, to Michael Gaw, Assistant Director, Division, Commission, dated September 29, 2005. Under Section 19(b)(2) of the Act, 18 the Commission may not approve any proposed rule change prior to the thirtieth day after the date of publication of the notice of filing thereof, unless the Commission finds good cause for so doing. The Commission hereby finds good cause for approving the proposed rule change prior to the thirtieth day after publishing notice of filing thereof in the **Federal Register.** In this case, the Commission does not believe a comment period is necessary because all of the parties affected by the proposed fee—the other ITS participant exchanges—have already consented to and will adopt the same fee arrangement. 19 18 15 U.S.C. 78s(b)(2). 19 *See supra* note 17. For the reasons set forth above, the Commission finds good cause to accelerate approval of the proposed rule change pursuant to Section 19(b)(2) of the Act. 20 20 *Id.* V. Conclusion *It is therefore ordered,* pursuant to Section 19(b)(2) of the Act, 21 that the proposed rule change (SR-NYSE-2005-71) is hereby approved on an accelerated basis. 21 *Id.* For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 22 22 17 CFR 200.30-3(a)(12). Jonathan G. Katz, Secretary. [FR Doc. E5-6022 Filed 10-31-05; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-52675; File No. SR-PCX-2005-75] Self-Regulatory Organizations; Pacific Exchange, Inc.; Notice of Filing and Order Granting Accelerated Approval to a Proposed Rule Change and Amendment No. 1 Thereto Relating to Offers of Settlement October 25, 2005. Pursuant to section 19(b)(1) 1 of the Securities Exchange Act of 1934 (“Act”) and Rule 19b-4 2 thereunder, notice is hereby given that on June 13, 2005, the Pacific Exchange, Inc. (“PCX” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. On September 21, 2005, PCX submitted Amendment No. 1 to the proposed rule change. 3 The Commission is publishing this notice and order to solicit comments on the proposed rule change, as amended, from interested persons and simultaneously is approving the proposal, as amended, on an accelerated basis. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 *See* Amendment No. 1. I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change PCX is proposing to amend PCX Rule 10.6 pertaining to offers of settlement. The text of the proposed rule change, as amended, is available on PCX's Web site ( *http://www.pacificex.com* ), at the PCX's principal office, and at the Commission's Public Reference Room. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item III below. The Exchange has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange states that the purpose of the proposed rule change is to revise the procedures for offers of settlement submitted in Exchange enforcement actions against Options Trading Permit (“OTP”) Holders and OTP Firms in order to make the disciplinary process more efficient and effective while maintaining appropriate OTP Holder and OTP Firm involvement in the oversight of the settlement process. Currently, all offers of settlement, whether contested or uncontested by the Exchange's Department of Enforcement, are considered by the Ethics and Business Conduct Committee (“EBCC”) for acceptance or rejection. If an offer of settlement is accepted by the EBCC, the EBCC issues a decision, and the Respondent 4 cannot seek review of the decision. EBCC decisions are then submitted to the PCX Board of Directors (the “Board”) in order to provide the Board with an opportunity to accept or reject the offer of settlement. This process is subject to the delays occurring between the time when the EBCC accepts an offer of settlement and the time when the Board subsequently reviews the accepted offer of settlement. Consequently, the imposition of disciplinary measures intended to prevent misconduct and maintain the integrity of the marketplace are also delayed. 4 *See* PCX Rule 10.4 (defining “Respondent”). Under the proposed rule change, an offer of settlement would be “uncontested” when a Respondent makes an offer and the Department of Enforcement does not oppose it. 5 In cases of uncontested offers of settlement made before a complaint has been issued, the General Counsel of the Exchange would have the authority to accept or reject the offers and decisions. 6 Similarly, in cases of uncontested offers of settlement made after a complaint has been issued but before the hearing on the merits, the General Counsel of the Exchange would have the authority to accept or reject the offers and decisions. 7 Finally, in cases of uncontested offers of settlement made after a hearing on the merits has begun, the Conduct Panel for the hearing would have the authority to accept or reject offers and decisions. 8 5 *See* proposed PCX Rule 10(e)(1). The Commission notes that the Exchange's Department of Enforcement would transmit the Respondent's uncontested offer of settlement, along with a proposed decision, to either the Exchange's General Counsel or the Conduct Panel, as appropriate. 6 *See* proposed PCX Rule 10(e)(2). When a Respondent submits an offer of settlement, the Department of Enforcement drafts a decision accepting the offer and submits both documents to the appropriate body. *See* Letter from Alden Adkins, Chief Regulatory Officer, PCX, to Katherine A. England, Assistant Director, Division of Market Regulation, Commission, dated October 6, 2005. 7 *See* proposed PCX Rule 10(e)(3). 8 *See* proposed PCX Rule 10(e)(4). Any offer of settlement opposed by the Department of Enforcement would be “contested.” 9 Under the proposal, Respondents would not be permitted to submit contested offers of settlement for consideration by the EBCC or the Conduct Panel before a complaint has been issued. 10 In cases of contested offers of settlement made after a complaint has been issued but before a hearing on the merits has begun, the EBCC would have the authority to accept or reject the offers and decisions, 11 which is consistent with current PCX practices. In cases of contested offers of settlement made after a hearing on the merits has begun, the Conduct Panel would have the authority to accept or reject the offers and decisions. 12 Any offer of settlement submitted by a Respondent to the Conduct Panel after a hearing on the merits has begun would not stay the proceedings, unless the Conduct Panel decides to stay the proceedings. 13 9 *See* proposed PCX Rule 10(f)(1). The Commission notes that the Exchange's Department of Enforcement would transmit the Respondent's contested offer of settlement, along with a proposed decision, to either the EBCC or the Conduct Panel, as appropriate. 10 *See* proposed PCX Rule 10(f)(2). 11 *See* proposed PCX Rule 10(f)(3). 12 *See* proposed PCX Rule 10(f)(4). 13 *See* proposed PCX Rule 10(a)(2). All offers of settlement would become final upon acceptance by the General Counsel of the Exchange, the EBCC, or the Conduct Panel, as appropriate, and thus Board approval of offers of settlement would no longer be required. Under the proposal, the Board and the EBCC would review on a quarterly basis all offers of settlement after-the-fact to provide guidance and feedback to the Department of Enforcement and the General Counsel of the Exchange concerning appropriate settlement practices and amounts. 14 14 *See* proposed PCX Rule 10(k). Neither the Board's nor the EBCC's action will affect any issued decisions. In addition, the proposed rule change sets forth certain requirements with which offers of settlement must comply. 15 These requirements include that the offer be in writing and signed by the person making the offer, and that the offer set forth certain details stating the statutory provisions or rules alleged to have been violated, the acts or practices that the OTP Holder or OTP Firm is alleged to have engaged in or omitted, findings of fact, proposed sanctions, and the effective date of such proposed sanctions. 15 *See* proposed PCX Rule 10(c). Finally, the proposed rule change sets forth certain rights that a Respondent waives upon submission of an offer of settlement to the PCX. In particular, a Respondent waives his right to:
(1)Claim bias or prejudgment by certain individuals;
(2)appeal before PCX committees, the Commission, and federal, state, and local courts; and
(3)claim violations of the *ex parte* prohibitions of PCX Rule 10.3. 16 The Exchange believes that waiver of such rights is appropriate in light of the proposed rule's intent, which is to create a more efficient and effective disciplinary process. 17 16 *See* proposed PCX Rule 10(d). 17 Paragraph
(j)of the proposed rule change provides that a Respondent shall not be prejudiced by an offer of settlement that is rejected. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with section 6(b) of the Act 18 in general, and furthers the objectives of section 6(b)(5) of the Act 19 in particular, because it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in facilitating transactions in securities, and to remove impediments to and perfect the mechanism of a free and open market and a national market system. 18 15 U.S.C. 78f(b)(5). 19 15 U.S.C. 78f(b). B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received from Members, Participants or Others Written comments on the proposed rule change were neither solicited nor received. III. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change, as amended, is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov.* Please include File Number SR-PCX-2005-75 on the subject line. Paper Comments • Send paper comments in triplicate to Jonathan G. Katz, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-9303. All submissions should refer to File Number SR-PCX-2005-75. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room. Copies of the filing also will be available for inspection and copying at the principal office of the PCX. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-PCX-2005-75 and should be submitted on or before November 22, 2005. IV. Commission's Findings and Order Granting Accelerated Approval of Proposed Rule Change The Commission finds that the proposed rule change, as amended, is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange. 20 Specifically, the Commission believes that the proposal is consistent with section 6(b)(7) of the Act, 21 which requires that the rules of an exchange provide a fair procedure for the discipline of its members and persons associated with its members. The Commission also believes that the proposal is reasonably designed to provide a more efficient disciplinary process to address violations of the Exchange's rules and the federal securities laws by the Exchange's members. 20 In approving this proposed rule change, as amended, the Commission has considered its impact on efficiency, competition, and capital formation. *See* 15 U.S.C. 78c(f). 21 15 U.S.C. 78f(b)(7). Under the Exchange's proposal, a Respondent may propose an uncontested offer of settlement to the Exchange's Department of Enforcement in response to the initiation of a disciplinary inquiry by the Department of Enforcement. 22 If the Respondent submits an uncontested offer of settlement before a hearing on the merits has begun, then the Department of Enforcement would transmit the uncontested offer, along with a proposed decision, to the Exchange's General Counsel for consideration. Specifically, if a Respondent submits an uncontested offer of settlement before the issuance of a complaint, and the General Counsel accepts it, then the Department of Enforcement would issue the decision and notify the parties. If a Respondent submits an uncontested offer of settlement after the Department of Enforcement has issued a complaint, and the General Counsel accepts it, then the General Counsel would issue the decision and notify the parties. Finally, if the Respondent submits an uncontested offer of settlement after a hearing on the merits has begun, then the Department of Enforcement would transmit the uncontested offer, along with a proposed decision, to the Conduct Panel for consideration. If the Conduct Panel accepts the decision, then the General Counsel would issue the decision and notify the parties. 22 The Exchange represents that it contacts a Respondent before any complaint is issued, such that the Respondent would be in a position to ascertain whether the terms of any contemplated offer of settlement would be “uncontested” or “contested” by the Exchange's Department of Enforcement. The Commission believes that the involvement of the Exchange's General Counsel in considering uncontested offers of settlement submitted before a hearing on the merits has begun should be an appropriate safeguard and provides for an appropriate separation of functions at the Exchange. Further, the Commission believes that the proposal is reasonably designed to advance the interests of the Exchange's Department of Enforcement in efficiently and expeditiously resolving disciplinary cases when an uncontested offer of settlement is made before the commencement of a hearing on the merits without the involvement of the EBCC, while providing for review and consideration of possible violations. In particular, the Commission believes that the involvement of the Department of Enforcement and General Counsel in considering and rendering decisions on uncontested offers of settlement before the commencement of a hearing on the merits is appropriate, given the Respondent's choice to propose settlement terms that the Exchange's Department of Enforcement considers acceptable. Additionally, the proposal allows a Respondent, after a complaint has been issued, to submit an offer of settlement for consideration that is otherwise opposed on its terms, *i.e.* , contested, by the Exchange's Department of Enforcement. If submitted before a hearing on the merits, a contested offer of settlement would be considered by the EBCC. If a Respondent submits a contested offer of settlement after a hearing on the merits has begun, the offer would be considered by the Conduct Panel. The Commission believes that this process is reasonably designed to allow Respondents to have their contested offers of settlement considered by the EBCC or the Conduct Panel when the offer would otherwise be opposed by the Exchange's Department of Enforcement. In addition, the Commission believes that this process balances the Exchange's interests in achieving efficient resolutions of disciplinary matters with its members' interests in having a process through which they can submit contested offers of settlement for consideration by the EBCC or the Conduct Panel. The Commission notes that under current PCX Rule 10, all offers of settlement are considered by the EBCC. In particular, the Commission notes that contested offers of settlement submitted after the issuance of a complaint but before the commencement of a hearing on the merits would be considered by the EBCC, and contested offers of settlement submitted after the issuance of a complaint and after the commencement of a hearing on the merits would be considered by the Conduct Panel. The Commission believes that this procedure provides a fair process by which the Exchange's members may take their contested offers of settlement before the EBCC or Conduct Panel, both of which are comprised primarily of the OTP Holders or allied persons of OTP Firms. Moreover, the proposed rule change sets forth in detail provisions relating to the content and signature requirements for offers of settlement, as well as waivers of certain rights upon submission of an offer of settlement. Additionally, the proposal provides for quarterly review by the EBCC and the Board Appeals Committee of final disciplinary actions in order to provide the Department of Enforcement and General Counsel with guidance on future settlement practices and settlement amounts. The Commission believes that this provision is reasonably designed to provide for EBCC and Board input, albeit on a prospective basis only, on the Exchange's disciplinary program, thereby providing a mechanism for the Board to comply with the self-regulatory organization's responsibility to maintain an adequate and effective disciplinary system. The Commission finds good cause for approving this proposal before the thirtieth day after the publication of notice thereof in the **Federal Register** . Accelerating approval of the proposal will allow the Exchange to implement, without undue delay, a more efficient process for reviewing and deciding upon offers of settlement, while maintaining OTP Holder and OTP Firm involvement in the settlement process. In addition, the Commission notes that the NASD has a substantially similar rule with respect to offers of settlement. V. Conclusion *It is therefore ordered,* pursuant to section 19(b)(2) of the Act, 23 that the proposed rule change, as amended (SR-PCX-2005-75), is hereby approved on an accelerated basis. 23 15 U.S.C. 78s(b)(2). For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 24 24 17 CFR 200.30-3(a)(12). Jonathan G. Katz, Secretary. [FR Doc. 05-21716 Filed 10-31-05; 8:45 am]
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  • 15 USC 78
  • 17 CFR 240.12
  • 7 CFR 200.30-3(a)(1)
  • 17 CFR 240.19
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