

[Federal Register: April 28, 2006 (Volume 71, Number 82)]
[Notices]               
[Page 25257-25260]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr28ap06-118]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53700; File No. SR-BSE-2005-46]

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

April 21, 2006.

I. Introduction

    On October 24, 2005, the Boston Stock Exchange, Inc. (``BSE'' 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 March 16, 2006, BSE 
filed Amendment No. 1 to the proposed rule change.\3\ On March 21, 
2006, BSE filed Amendment No. 2 to the proposed rule change.\4\ The 
proposed rule change, as amended, was published for comment in the 
Federal Register on March 28, 2006.\5\ On April 17, 2006, BSE 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 by Amendment Nos. 1 and 2, on an accelerated basis, 
publishes notice of Amendment No. 3 to the proposed rule change, and 
grants accelerated approval to Amendment No. 3.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ In Amendment No. 1, BSE 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 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. In addition, BSE revised its 
rule text to clarify which provisions in its appeal procedures were 
based on calendar or business days and to cross-reference its rules 
regarding the Exchange's basis for involuntary delisting of a class 
of securities by the Exchange.
    \4\ Amendment No. 2 replaced and superseded the Exchange's 
original proposed rule change and Amendment No. 1.
    \5\ See Securities Exchange Act Release No. 53544 (March 23, 
2006), 71 FR 15499.
    \6\ Amendment No. 3 replaced and superseded the proposed rule 
change and Amendment Nos. 1 and 2. While Amendment No. 3 replaced 
and superseded the proposed rule change in its entirety, only 
certain changes were made to the proposal as published. The changes 
made in Amendment No. 3 are as follows: (1) Charging issuers a 
$3,000 fee (instead of the previously proposed $5,000 fee) when 
issuers appeal the Exchange's delisting determinations; (2) 
modifying the appeal procedures so that the issuer is entitled to a 
hearing before the Stock List Committee and deleting proposed 
language that issuers must first request a hearing and the hearing 
is at the option of the Exchange; (3) providing that the decision of 
the Stock List Committee shall be issued within 15 business days of 
the hearing or final request for documentation or information; (4) 
referencing amended SEC Rule 12d2-2 in the commentary; and (5) 
specifying the time period the Exchange must publicize its final 
determination to remove a security from listing by issuing a press 
release and posting on Web site as no fewer than ten days before the 
delisting becomes effective.
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II. Description of the Proposed Rule Change, As Amended

    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

[[Page 25258]]

effective pursuant to amended SEC Rule 12d2-2(d)(1), and must remain 
posted on its Web site until the delisting is effective.
    The Exchange proposes to adopt new Section 2 of BSE Rule Chapter 
XXVII to set forth its rules and procedures with respect to issuer-
initiated and Exchange-initiated delistings. The proposal incorporates 
the Exchange's current delisting practices and the requirements of 
amended SEC Rule 12d2-2.
    Proposed Section 2(b) provides the procedures for Exchange-
initiated action to strike a security from listing on the Exchange. 
Proposed Section 2(b)(1) codifies the Exchange's current practice to 
provide notice to the issuer of the Exchange's decision to strike a 
security from listing on the Exchange when the issuer has fallen below 
the Exchange's continued listing policies and standards. BSE rules do 
not currently set forth appeal procedures for issuers to appeal the 
Exchange's delisting decision. Accordingly, BSE proposed new Section 
2(b)(2) to provide issuers with an opportunity to appeal the Exchange's 
delisting decision to the Exchange's Stock List Committee. Proposed new 
Sections 2(b)(2)(A)-(C) outline the procedures for such appeals.
    Specifically, proposed Section 2(b)(2)(A) provides that an issuer 
shall file a request to appeal the Exchange's delisting decision no 
later than five business days following the issuer's receipt of the 
Exchange's delisting decision. Further, the issuer's request to appeal 
must include a $3,000 appeal fee. During the appeal process, the 
Exchange may suspend dealings in the security. If the issuer does not 
request an appeal within the relevant time period, BSE would file a 
Form 25 to strike the security from listing on the Exchange in 
accordance with the requirements of amended SEC Rule 12d2-2(b).
    Proposed Section 2(b)(2)(B) provides that once the Exchange 
received an appeal, the issuer would be entitled to present an appeal 
before the Exchange's Stock List Committee. The issuer must submit any 
written materials, if any, within 15 calendar days of the filing of the 
notice to appeal. The Exchange would not hold a hearing without 
providing five business days notice to the issuer of the time and place 
of the hearing. Proposed Section 2(b)(2)(C) provides that the decision 
of the Exchange's Stock List Committee is final and would be issued 
within 15 business days of the hearing or the final request for 
information. The Exchange would issue a written decision to the issuer.
    BSE also proposed new Section 2(b)(3) to incorporate the new 
requirements set forth in amended SEC Rule 12d2-2(b)(1)(iii). The 
Exchange would provide public notice of its final determination to 
strike a security from listing by issuing a press release and posting a 
notice on the Exchange's Web site, no fewer than ten days before the 
delisting becomes effective. The public notice would remain on the 
Exchange's Web site until the delisting becomes effective. Finally, in 
accordance with amended SEC Rule 12d2-2(b)(2), the Exchange would 
provide a copy of the filed Form 25 to the issuer.
    With respect to issuer-initiated delisting procedures, the Exchange 
proposes to codify its current practices and adopt new procedures to 
comply with the requirements of amended SEC Rule 12d2-2. Proposed 
Section 2(a) would require an issuer to provide the Exchange a 
certified copy of resolutions adopted by the issuer's Board of 
Directors authorizing the withdrawal from listing. After notice to the 
Exchange, the proposed rules state that the issuer must comply with 
amended SEC Rule 12d2-2(c). Proposed Section 2(a) provides that the 
issuer must:
    (i) Comply with all applicable laws in effect in the state in which 
the issuer is incorporated;
    (ii) Provide written notice, which describes the security involved 
and all material facts relating to the reasons for withdrawal, to the 
Exchange no fewer than 10 days before the issuer files an application 
on Form 25 with the Commission; and
    (iii) Publish notice, contemporaneous with providing written notice 
to the Exchange, through a press release, and if it has a publicly 
accessible Web site, post such notice on that Web site, which shall 
remain available until the delisting become effective.
    Proposed Section 2(a) further provides that the Exchange, after 
notice from the issuer with respect to voluntary withdrawal from 
listing, shall post the notice of the issuer's intent on the Exchange's 
Web site the next business day, and such notice shall remain until the 
delisting is effective. In addition, the issuer must provide a copy of 
the Form 25 to the Exchange contemporaneously with the filing of the 
Form 25.
    The Exchange has also proposed, as commentary to Section 2, that an 
issuer seeking to voluntarily apply to withdraw a class of security 
from listing when the issuer has received notice from the Exchange 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 the issuer has not 
received a notice from the Exchange, must disclose that it is no longer 
eligible for continued listing (including the specific continued 
listing policies and standards that the issue is below) in: (i) The 
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 as required by amended SEC Rule 
12d2-2(c)(2)(ii); and (ii) the public press release and Web site notice 
as required by amended SEC Rule 12d2-2(c)(2)(iii).

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 
\11\ and, in particular, the requirements of Section 6 of the Act.\12\ 
Specifically, as discussed below, the Commission finds that the 
proposal, as amended, is consistent with Sections 6(b)(4),\13\ 
6(b)(5),\14\ and 6(b)(7) of the Act.\15\ Section 6(b)(4) of the Act 
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. Section 
6(b)(5) of the Act 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. Section 
6(b)(7) of the Act requires, among other things, that the rules of an 
exchange provide a fair procedure for the prohibition or limitation by 
the exchange of any person with respect to access to services offered 
by the exchange or a member thereof. Further, as noted in more detail 
below, the changes being adopted by BSE meet the

[[Page 25259]]

requirements of amended SEC Rule 12d2-2.
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    \11\ 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).
    \12\ 15 U.S.C. 78f.
    \13\ 15 U.S.C. 78f(b)(4).
    \14\ 15 U.S.C. 78f(b)(5).
    \15\ 15 U.S.C. 78f(b)(7).
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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 BSE's proposal complies with the dictates of amended SEC 
Rule 12d2-2(b).
    The proposed rule change requires the Exchange to provide notice to 
issuers of the Exchange's decision to remove a security from listing 
and/or registration. In addition, the proposal provide issuers an 
opportunity to appeal the Exchange's delisting decision to a committee 
designated by the Board. As discussed above, the proposal sets forth 
the specific procedures for issuers appealing the Exchange's delisting 
decision to the Stock List Committee, which is a committee designated 
by the Board. Finally, the proposed rule change would provide for 
public notice of BSE's final determination to remove the security from 
listing and/or registration.
    The Commission believes that the proposed rule requiring notice to 
the issuer of the Exchange's decision to remove a security from listing 
and/or registration and establishing appeal procedures provides issuers 
with adequate notice and opportunity to appeal the delisting as 
required by amended SEC Rule 12d2-2(b). The Commission notes that the 
appeal procedures being adopted by the Exchange set forth an adequate 
structure to meet the requirements of Section 6(b)(7) of the Act \16\ 
and for BSE to review mandatory delistings upon appeal. In addition, 
public notice of the Exchange's final determination 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.\17\
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    \16\ 15 U.S.C. 78f(b)(7).
    \17\ 15 U.S.C. 78f(b)(5).
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    Finally, the Exchange proposes to charge issuers a $3,000 appeal 
fee in connection with a request to appeal the Exchange's delisting 
decision. The Commission believes that the proposed fee is consistent 
with Section 6(b)(4) of the Act.\18\ The Commission also believes that 
the fee likely is not overly burdensome or excessive to the extent that 
an issuer would be deterred from employing its due process right to 
present an appeal before the Stock List Committee, and therefore, is 
consistent with Section 6(b)(7) of the Act.\19\ Further, the Commission 
notes that the appeal fee is comparable to fees of other exchanges.\20\
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    \18\ 15 U.S.C. 78f(b)(4).
    \19\ 15 U.S.C. 78f(b)(7).
    \20\ See, e.g., NASD Rule 4805 and Amex Company Guide Section 
1203(a) (charging issuers a $4,000 fee where the consideration is on 
the basis of written submission and $5,000 fee where the 
consideration is on the basis of an oral hearing).
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B. Issuer Voluntary Delisting

    The Exchange proposes to adopt rules concerning the general 
requirements of amended SEC Rule 12d2-2(c) regarding issuer voluntary 
delisting. Proposed BSE Chapter XXVII Section 2(a) states that an 
issuer proposing to withdraw its security from listing shall first 
provide to the Exchange a certified copy of its Board of Directors 
resolutions authorizing such action. The Commission believes that this 
requirement may help ensure that the decision to delist a security 
voluntarily has been well-considered by the issuer's board of 
directors. Thereafter, the issuer must comply with the requirements of 
amended SEC Rule 12d2-2(c), which are specifically set out in BSE's 
rules. The Commission believes that the proposed changes will inform 
issuers of the requirements for voluntary delisting of their securities 
under BSE 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 was filed with the 
Commission, contemporaneous 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, BSE proposes to adopt a new commentary to require that 
not less than ten days before the issuer submits a Form 25, the issuer 
seeking to voluntarily apply to withdraw a security from listing on the 
Exchange when the issuer has received notice from the Exchange 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 disclose in:
    (i) 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
    (ii) its public press release and Web site notice required by 
amended SEC Rule 12d2-2(c)(2)(iii).
    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 Nos. 1, 
2, and 3

    Pursuant to Section 19(b)(2) of the Act,\21\ 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 by Amendment Nos. 1 and 
2, prior to the 30th day after publishing the notice 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.\22\ In 
addition, no comments were received on the proposal, as originally 
published.\23\ 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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    \21\ 15 U.S.C. 78s(b)(2).
    \22\ See SEC Rule 12d2-2 Approval Order, supra note 10.
    \23\ See note 5, supra.
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    The Commission further finds good cause for approving Amendment No. 
3 to the proposal, prior to the 30th day after publishing notice of 
Amendment No. 3 in the Federal Register. As previously discussed, the 
revisions made to the proposal in Amendment No. 3 as compared to the 
proposal as published \24\ would provide issuers with specific appeal 
procedures, and allow shareholders to be informed and aware that the 
issuer has failed to meet Exchange listing standards and is

[[Page 25260]]

voluntarily delisting with the consent of the Exchange. The Commission 
believes that granting accelerated approval of Amendment No. 3 will 
permit the Exchange to implement this new provision as expeditiously as 
possible, to the benefit of investors. The Commission also believes 
that accelerating approval of Amendment No. 3 is appropriate because 
these revisions do not raise new regulatory issues.
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    \24\ See note 6, supra.
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    Accordingly, pursuant to Section 19(b)(2) of the Act,\25\ the 
Commission finds good cause to approve the proposed rule change, as 
amended by Amendment Nos. 1, 2, and 3, prior to the 30th day after 
notice of the proposed rule change and Amendment Nos. 1, 2, and 3 are 
published in the Federal Register.
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    \25\ 15 U.S.C. 78s(b)(2).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning Amendment No. 3, including whether Amendment No. 3 
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-BSE-2005-46 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-BSE-2005-46. 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 Exchange. 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-BSE-2005-46 and should be submitted on or before May 19, 
2006.

V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\26\ that the proposed rule change (File No. SR-BSE-2005-46), as 
amended, is approved on an accelerated basis.
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    \26\ 15 U.S.C. 78s(b)(2).
    \27\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\27\
Nancy M. Morris,
Secretary.
 [FR Doc. E6-6373 Filed 4-27-06; 8:45 am]

BILLING CODE 8010-01-P
