Self-Regulatory Organizations; Notice of Filing of Proposed Amendments to the Amex Constitution by the American Stock Exchange LLC Eliminating the Requirement That the Chairman Also Be the CEO

[Federal Register Volume 65, Number 5 (Friday, January 7, 2000)]
[Notices]
[Pages 1206-1208]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-387]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-42307; File No. SR-Amex-99-25]


Self-Regulatory Organizations; Notice of Filing of Proposed 
Amendments to the Amex Constitution by the American Stock Exchange LLC 
Eliminating the Requirement That the Chairman Also Be the CEO

January 3, 2000.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934

[[Page 1207]]

(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on July 16, 1999, the American Stock Exchange LLC (``Amex'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by the Exchange. On 
November 9, 1999, the Amex filed Amendment No. 1 to the proposed rule 
change.\3\ On November 23, 1999, the Amex filed Amendment No. 2 to the 
proposed rule change.\4\ The Commission is publishing this notice to 
solicit comments on the proposed rule change, as amended, from 
interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ In Amendment No. 1, the Amex clarified certain aspects of 
the proposal and amended the proposed rule language to provide for 
the election of the Chairman by a majority of the members of the 
Board of Governors. See letter from J. Bruce Ferguson, Associate 
General Counsel, Legal & Regulatory Policy, Amex, to Joseph 
Corcoran, Attorney, Division of Market Regulation (``Division''), 
Commission, dated November 8, 1999 (``Amendment No. 1'').
    \4\ In Amendment No. 2, the Amex amended the proposed rule 
language to provide for the election of the Chief Executive Officer 
(``CEO'') by a majority of the members of the Board of Governors. 
See letter from J. Bruce Ferguson, Associate General Counsel, Legal 
& Regulatory Policy, Amex, to Joseph Corcoran, Attorney, Division, 
Commission, dated November 22, 1999 (``Amendment No. 2'').
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The Amex proposes to amend Article II, Section 4(a) of the Amex 
Constitution to eliminate the requirement that the Chairman of the 
Board also act as the Chief Executive Officer of the Exchange. 
Conforming changes to other provisions of the Constitution and rules 
are also being made.

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 Amex 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 IV below. The Amex 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
    Article II, Section 4(a) of the Amex Constitution currently 
requires that the Chairman of the Board also act as the CEO of the 
Exchange. The Chairman thus performs the standard functions of a Board 
Chairman, as well as being responsible to the Board for the management 
and administration of the affairs of the Exchange as CEO.
    The Exchange is proposing to amend Article II, Section 4(a) of the 
Constitution to eliminate the requirement that the Chairman also act as 
the CEO of the Exchange. The NASD's two other subsidiaries (the Nasdaq 
Stock Market and NASD Regulation), both have non-executive Chairmen. 
Eliminating this requirement from the Amex Constitution would give the 
Amex the flexibility to have a non-executive Chairman if desired. 
Having a non-executive Chairman attend to the functions of a Chairman 
would allow the CEO to focus on the operations of the Exchange. The 
Exchange would, of course, always have the ability to continue the dual 
role of Chairman and Chief Executive Officer if that was thought to be 
more advantageous.\5\
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    \5\ The Commission notes that as a result of dividing the 
Chairman/CEO position into two separate positions, the proposed 
language now permits the Chairman to be affiliated with a member of 
the Exchange.
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    As a result of the amendment to Article II, Section 4(a) of the 
Constitution decoupling the Chairman and CEO roles, it is necessary to 
make a number of conforming changes to other provisions of the 
Constitution and rules. Because the Chairman and CEO roles may now be 
held by separate persons, the Amex has attempted to clarify the 
separate functions of the Chairman and the CEO. Article II, Section 3 
(Chairman) and Article II, Section 4(a) (Chief Executive Officer), 
discussing the selection and authority of the Chairman and CEO 
respectively, have been appropriately rearranged. In each instance in 
other provisions of the Constitution and rules where the Chairman 
functions in his role as CEO, the term Chairman has been changed to 
CEO. In certain cases, the function may properly be performed by either 
the Chairman or the CEO, if delegated by the Chairman. Other than de-
coupling the Chairman and CEO roles and making the above mentioned 
conforming changes, the Amex represents that there are no substantive 
changes being made.
    The following examples of conforming changes being made are set 
forth for purposes of illustration.
a. Article II, Section 4(a) of the Constitution (Officers of the 
Exchange)
    •  Describes the authority of the Chairman to appoint 
officers, determine the salaries of Exchange employees, and make 
periodic reports to the Board.
    •  As this is normally a function of a CEO, the term Chairman 
is being changed to CEO.
b. Article II, Sections 4(c) and (d) of the Constitution (Officers of 
the Exchange)
    •  States that the Treasurer and Corporate Secretary report 
to the Chairman.
    •  As these two corporate positions normally report to the 
CEO of a company, the term Chairman is being changed to CEO.
c. Article V, Sections 1(b)(2) and (3) of the Constitution (Discipline 
of Members)
    •  Section 1(b)(2) authorizes the Chairman, subject to Board 
approval, to designate Exchange Officials and other persons to serve on 
the Hearing Board, a pool of persons who can be asked to serve as 
members of disciplinary panels in Exchange disciplinary proceedings.
    •  Section 1(b)(3) authorizes the Chairman, subject to Board 
approval, to designate one or more hearing officers, who have no 
Exchange duties or functions relating to the investigation or 
preparation of disciplinary matters, to act as Chairmen of Amex 
disciplinary panels.
    •  As these functions are more appropriately exercised by the 
CEO as the senior officer of the Exchange, the term Chairman is being 
changed to CEO.
d. Article V, Sections 3(a) and (b) of the Constitution (Discipline of 
Members)
    •  Section 3(a) states that a member or member firm failing 
to meet its commitments or in financial or operating difficulty putting 
investors and others at risk shall inform the Chairman of the Exchange 
and upon such notice be automatically suspended from the Exchange.
    •  Section 3(b) states that whenever it shall appear to the 
Chairman of the Exchange that a member or member firm is failing to 
meet its commitments or in financial or operating difficulty putting 
investors and others at risk, the Chairman shall announce to the 
Exchange the suspension of such member or member firm.
    •  Again, as these functions are more appropriately exercised 
by the CEO as

[[Page 1208]]

the senior officer of the Exchange, the term Chairman is being changed 
to CEO.
2. Statutory Basis
    The Exchange believes that the rule change is consistent with 
Section 6(b) of the Act in general and furthers the objectives of 
Section 6(b)(3) \6\ in particular in that it is intended to assure fair 
representation in the selection of its directors and administration of 
its affairs.
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    \6\ 15 U.S.C. 78f(b)(3).
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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.

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 
rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing 
for Commission Action

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) by order approve such proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
is consistent with the Act. Persons making written submissions should 
file six copies thereof with the Secretary, Securities and Exchange 
Commission, 450 Fifth Street, NW., Washington, DC 20549-0609. 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 will also be available for 
inspection and copying at the principal office of the Amex. All 
submissions should refer to File No. SR-Amex-99-25 and should be 
submitted by January 28, 2000.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(as)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-387 Filed 1-6-00; 8:45 am]
BILLING CODE 8010-01-M