

[Federal Register: April 27, 2006 (Volume 71, Number 81)]
[Notices]               
[Page 24886-24889]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr27ap06-88]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53692; File No. SR-Phlx-2005-62]

 
Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; 
Order Granting Accelerated Approval of Proposed Rule Change and 
Amendment No. 1 Thereto and Notice of Filing and Order Granting 
Accelerated Approval to Amendment Nos. 2 and 3 to the Proposed Rule 
Change Relating to Amending Exchange Delisting Rules To Conform to 
Recent Amendments to Commission Rules Regarding Removal From Listing 
and Withdrawal From Registrations

April 20, 2006.

I. Introduction

    On October 25, 2005, the Philadelphia Stock Exchange, Inc. 
(``Phlx'' or ``Exchange'') filed with the Securities and Exchange 
Commission (``SEC'' or ``Commission''), pursuant to Section 19(b)(1) of 
the Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 
thereunder,\2\ a proposed rule change to amend Exchange delisting rules 
to conform to recent amendments to Commission rules regarding removal 
from listing and withdrawal from registration. On January 4, 2006, Phlx 
filed Amendment No. 1 to the proposed rule change.\3\ The proposed rule 
change, as amended, was published for comment in the Federal Register 
on

[[Page 24887]]

March 23, 2006.\4\ On March 31, 2006, Phlx filed Amendment No. 2 to the 
proposed rule change.\5\ On April 12, 2006, Phlx filed Amendment No. 3 
to the proposed rule change.\6\ No comments were received regarding the 
proposal. This order approves the proposed rule change, as amended, on 
an accelerated basis, publishes notice of Amendment Nos. 2 and 3 to the 
proposed rule change, and grants accelerated approval to Amendment Nos. 
2 and 3.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ In Amendment No. 1, Phlx amended its rule text and the 
purpose section of the Exchange's Form 19b-4 to clarify the 
effective date of the proposed rule change and revised Phlx Rule 809 
to state that an issuer proposing to withdraw a security from 
listing on the Exchange must provide a copy of Form 25 to the 
Exchange upon filing with the Commission.
    \4\ See Securities Exchange Act Release No. 53496 (March 16, 
2006), 71 FR 14769.
    \5\ In Amendment No. 2, Phlx amended its rule text to a clarify 
that an issuer that is below the continued listing policies and 
standards of the Exchange and seeks to voluntarily apply to withdraw 
a class of securities from listing must disclose that it is no 
longer eligible for continued listing in its statement of material 
facts relating to the reason for withdrawal from listing, its public 
press release, and its Web site notice.
    \6\ In Amendment No. 3, the Exchange revised Phlx Rule 811 to 
clarify that an issuer that is below the continued listing policies 
and stadards of the Exchange and considering delisting may file a 
delistign application pursuant to the procedures outlined in amended 
Phlx Rule 809(b)-(c).
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 II. Description of the Proposed Rule Change

    Section 12 of the Act \7\ and Rule 12d2-2 thereunder \8\ (``SEC 
Rule 12d2-2'') govern the process for the delisting and deregistration 
of securities listed on national securities exchanges. Recent 
amendments to SEC Rule 12d2-2 (``amended SEC Rule 12d2-2'') and other 
Commission rules require the electronic filing of revised Form 25 \9\ 
on the Commission's Electronic Data Gathering, Analysis, and Retrieval 
(``EDGAR'') system by exchanges and issuers for all delistings, other 
than delistings of standardized options and securities futures, which 
are exempted.\10\
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    \7\ 15 U.S.C. 78l.
    \8\ 17 CFR 240.12d2-2.
    \9\ 17 CFR 249.25.
    \10\ See Securities Exchange Act Release No. 52029 (July 14, 
2005), 70 FR 42456 (July 22, 2005) (``SEC Rule 12d2-2 Approval 
Order'').
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    In the case of exchange-initiated delistings, amended SEC Rule 
12d2-2(b) states that a national securities exchange may file an 
application on Form 25 to strike a class of securities from listing 
and/or withdraw the registration of such securities, in accordance with 
its rules, if the rules of such exchange, at a minimum, provide for:
    (i) Notice to the issuer of the exchange's decision to delist its 
securities;
    (ii) An opportunity for appeal to the exchange's board of 
directors, or to a committee designated by the board; and
    (iii) Public notice of the national securities exchange's final 
determination to remove the security from listing and/or registration, 
by issuing a press release and posting notice on its Web site. Public 
notice must be disseminated no fewer than 10 days before the delisting 
becomes effective pursuant to amended SEC Rule 12d2-2(d)(1), and must 
remain posted on its Web site until the delisting is effective.
    Phlx Rule 811 (Delisting Policies and Procedures) establishes the 
procedures for the Exchange to delist a company that is below the 
Exchange's continued listing criteria. The Exchange proposes to revise 
Phlx Rule 811 to incorporate the new requirements set forth in amended 
SEC Rule 12d2-2(b). The provisions set forth in current Phlx Rule 811, 
which provide for notification to the issuer in the event that the 
Exchange determines to delist the issuer's securities and the right to 
appeal the Exchange's determination, satisfy the minimum provisions set 
forth in amended SEC Rule 12d2-2(b)(1)(i)-(ii). Phlx rules do not 
currently provide for the mandated public notice, and accordingly, 
amended Phlx Rule 811(g) would require the Exchange to provide public 
notice of its final determination to remove a security from listing 
and/or registration, pursuant to SEC Rule 12d2-2(b)(1)(iii). In 
addition, proposed Commentary to Phlx Rule 810 would require the 
Exchange to deliver a copy of the Form 25 promptly to the issuer, 
pursuant to amended SEC Rule 12d2-2(b)(2).
    With respect to issuer voluntary delisting procedures, the Exchange 
proposes to amend Phlx Rule 811 to require an issuer seeking to 
voluntarily delist from the Exchange to submit Form 25 to the 
Commission in compliance with the requirements of amended SEC Rule 
12d2-2(c). In addition, the issuer would be required to provide a copy 
of the Form 25 to the Exchange simultaneously with the filing of the 
Form with the Commission.
    In addition, Phlx proposes to amend Phlx Rule 809(c) to clarify 
that not less than ten days before the issuer submits Form 25 an issuer 
seeking to voluntarily apply to withdraw a security from listing on the 
Exchange where the issuer has received notice from the Exchange, 
pursuant to Phlx Rule 811 or otherwise, that the issuer is below the 
Exchange's continued listing policies and standards, or that the issuer 
is aware that it is below such continued listing policies and standards 
notwithstanding that it has not received such notice from the Exchange, 
must:
    (i) Provide written notice to the Exchange of its decision to 
withdraw from listing indicating all material facts relating to the 
reasons for withdraw in compliance with amended SEC Rule 312d2-2(c); 
and
    (ii) Contemporaneously with providing such notice to the Exchange 
disclose that it is no longer eligible for continued listing (including 
the specific continued listing policies and standards that the issue is 
below) in (A) its statement of all material facts relating to the 
reasons for withdrawal from listing provided to the Exchange along with 
written notice of its determination to withdraw from listing required 
by amended SEC Rule 12d2-2(c)(2)(ii), and (B) its release and Web site 
notice required by amended SEC Rule 12d2-2(c)(2)(iii).\11\
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    \11\ See Amendment No. 2, supra note 5.
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    Finally, the Exchange has proposed changes in its rules to clarify 
that the Form 25 serves as the application to remove a security from 
listing and/or registration and to specify that the proposed changes 
will be effective as of April 24, 2006 as required by amended SEC Rule 
12d2-2.

III. Commission's Findings and Order Granting Accelerated Approval of 
Proposed Rule Change and Amendment Nos. 1, 2, and 3

    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 
\12\ and, in particular, the requirements of Section 6 of the Act.\13\ 
Specifically, as discussed below, the Commission finds that the 
proposal, as amended, is consistent with Section 6(b)(5) of the 
Act,\14\ which requires, in part, that the rules of an exchange be 
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 regulating, clearing, 
settling, and processing information with respect to, and facilitating 
transactions in securities, to remove impediments to and perfect the 
mechanism of a free and open market and a national market system, and, 
in general, to protect investors and the public interest. Further, as 
noted in more detail below, the changes being adopted by Phlx meet the 
requirements of amended SEC Rule 12d2-2.
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    \12\ In approving this proposal, the Commission has considered 
the proposed rule's impact on efficiency, competition, and capital 
formation. See 15 U.S.C. 78c(f).
    \13\ 15 U.S.C. 78f.
    \14\ 15 U.S.C. 78f(b)(5).

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[[Page 24888]]

 A. Exchange Delisting

    Amended SEC Rule 12d2-2(b) states that a national securities 
exchange may file an application on Form 25 to strike a class of 
securities from listing and/or withdraw the registration of such 
securities, in accordance with its rules, if the rules of such 
exchange, at a minimum, provide for notice to the issuer of the 
exchange's decision to delist, opportunity for appeal, and public 
notice of the exchange's final determination to delist. The Commission 
believes that Phlx's current rules and proposal comply with the 
dictates of amended SEC Rule 12d2-2(b).
    Phlx rules currently provide the requisite issuer notice as well as 
an opportunity for appeal to a committee designated by the Exchange's 
Board of Governors. Specifically, issuers may appeal delisting 
determinations by the Allocation, Evaluation and Securities Committee 
to an ad hoc Exchange committee appointed by the Board of Governors and 
the committee will consist of three persons, at least one of which must 
be a member of the Board of Governors.\15\ Finally, the proposed rule 
change will provide for public notice of the exchange's final 
determination to remove the security from listing and/or registration. 
This should ensure that investors have adequate notice of an exchange 
delisting and is consistent with the protection of investors under 
Section 6(b)(5) of the Act.\16\
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    \15\ The other two members of the Committee may be governors, 
members, Exchange officials, and/or other persons (not having an 
interest in the matter) as the Chairman of the Board of Governors 
shall determine. See Phlx Rule 811(d).
    \16\ 15 U.S.C. 78f(b)(5).
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 B. Issuer Voluntary Delisting

    The Exchange proposes to set forth in its Exchange rules the 
general requirements of amended SEC Rule 12d2-2(c) regarding issuer 
voluntary delisting. Accordingly, amended Phlx Rule 809 would state 
that an issuer shall delist its security by filing Form 25 
electronically via Edgar in compliance with all of the requirements of 
amended SEC Rule 12d2-2(c). The Commission believes that the proposal 
will better inform issuers of the requirements for voluntary delisting 
of their securities under Phlx rules and federal securities laws.
    The proposal also sets forth a new requirement not in amended SEC 
Rule 12d2-2 that would require an issuer seeking to voluntarily delist 
its security to provide a copy of the Form 25 that it has filed with 
the Commission simultaneously with such filing. The Commission believes 
that this requirement will allow the Exchange to be fully informed of 
the filing of a Form 25 and be prepared to take timely action to delist 
the security in accordance with the filing of the Form.
    In addition, Phlx proposes to amend Phlx Rule 809 to clarify that 
not less than ten days before the issuer submits Form 25, an issuer 
seeking to voluntarily apply to withdraw a security from listing on the 
Exchange where the issuer has received notice from the Exchange, 
pursuant to Phlx Rule 811 or otherwise, that the issuer is below the 
Exchange's continued listing policies and standards, or that the issuer 
is aware that it is below such continued listing policies and standards 
notwithstanding that it has not received such notice from the Exchange, 
must:
    (i) Provide written notice to the Exchange of its decision to 
withdraw from listing indicating all material facts relating to the 
reasons for withdraw in compliance with amended SEC Rule12d2-2(c); and
    (ii) Contemporaneously with providing such notice to the Exchange 
disclose that it is no longer eligible for continued listing (including 
the specific continued listing policies and standards that the issue is 
below) in (A) its statement of all material facts relating to the 
reasons for withdrawal from listing provided to the Exchange along with 
written notice of its determination to withdraw from listing required 
by amended SEC Rule12d2-2(c)(2)(ii), and (B) its release and Web site 
notice required by amended SEC Rule 12d2-2(c)(2)(iii).\17\
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    \17\ See Amendment No. 2, supra note 5.
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    The Commission believes that this requirement will allow 
shareholders to be informed and aware that the issuer has failed to 
meet Exchange listing standards and is voluntarily delisting with the 
consent of the Exchange. Issuers will therefore not be permitted to 
delist voluntarily without public disclosure of their noncompliance 
with Exchange listing standards.

 C. Accelerated Approval of Proposed Rule Change and Amendment No. 1, 
and Amendment Nos. 2 and 3

    Pursuant to Section 19(b)(2) of the Act,\18\ the Commission may not 
approve any proposed rule change, or amendment thereto, prior to the 
30th day after the date of publication of notice of the filing thereof, 
unless the Commission finds good cause for so doing and publishes its 
reasons for so finding. The Commission hereby finds good cause for 
approving the proposed rule change, as amended, prior to the 30th day 
after publishing notice of the proposed rule change and Amendment Nos. 
1, 2, and 3 in the Federal Register. In the SEC Rule 12d2-2 Approval 
Order, the Commission stated that the compliance date of the amendments 
is April 24, 2006.\19\ In addition, no comments were received on the 
proposal, as originally published.\20\ Accelerated approval of the 
proposal, as amended, would enable the Exchange's amended rules to 
become operative by the compliance date set forth by the Commission.
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    \18\ 15 U.S.C. 78s(b)(2).
    \19\  See SEC Rule 12d2-2 Approval Order, supra note 10.
    \20\ See note 4, supra.
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    The Commission further finds good cause for approving Amendment 
Nos. 2 and 3 to the proposal, prior to the 30th day after publishing 
notice of Amendment Nos. 2 and 3 in the Federal Register. In Amendment 
No. 2, Phlx amended its rule text to clarify that an issuer that is 
below the continued listing policies and standards of the Exchange and 
seeks to voluntarily apply to withdraw a class of securities from 
listing must disclose its status. In Amendment No. 3, the Exchange 
revised Phlx Rule 811 to clarify that an issuer that is below the 
continued listing policies and standards of the Exchange and 
considering delisting may file a delisting application pursuant to the 
procedures outlined in amended Phlx Rule 809(b)-(c).
    As previously discussed, the revisions made to the proposal in 
Amendment No. 2 will allow shareholders to be informed and aware that 
the issuer has failed to meet Exchange listing standards and is 
voluntarily delisting with the consent of the Exchange. The Commission 
believes that granting accelerated approval of Amendment No. 2 will 
permit the Exchange to implement this new provision as expeditiously as 
possible, to the benefit of investors. In addition, the revisions made 
to the proposal in Amendment No. 3 are clarifying changes. The 
Commission also believes that accelerating approval of Amendment Nos. 2 
and 3 is appropriate because these revisions do not raise new 
regulatory issues.
    Accordingly, pursuant to Section 19(b)(2) of the Act,\21\ the 
Commission finds good cause to approve the proposed rule change, as 
amended, prior to the 30th day after notice of the proposed rule change 
and Amendment

[[Page 24889]]

Nos. 1, 2, and 3 are published in the Federal Register.
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    \21\ Id.
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning Amendment Nos. 2 and 3, including whether 
Amendment Nos. 2 and 3 are 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-Phlx-2005-62 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.
    All submissions should refer to File Number SR-Phlx-2005-62. 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 Phlx. 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-Phlx-2005-62 and should be submitted on or before May 
18, 2006.

V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\22\ that the proposed rule change (File No. SR-Phlx-2005-62), as 
amended by Amendment Nos. 1, 2, and 3, is approved on an accelerated 
basis.
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    \22\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\23\
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    \23\ 17 CFR 200.30-3(a)(12).
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J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E6-6345 Filed 4-26-06; 8:45 am]

BILLING CODE 8010-01-P
