[Federal Register Volume 88, Number 15 (Tuesday, January 24, 2023)]
[Notices]
[Pages 4236-4239]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-01266]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-96689; File No. SR-NYSEAMER-2023-04]


Self-Regulatory Organizations; NYSE American LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Change To Amend Rules 
9132, 9133, 9135, 9146, 9522, 9524, 9559 and 9630

January 18, 2023.
    Pursuant to section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given 
that, on January 4, 2023, NYSE American LLC (``NYSE American'' or the 
``Exchange'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I and II 
below, which Items have been prepared by the self-regulatory 
organization. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 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 amend Rules 9132, 9133, 9135, 9146, 9522, 
9524, 9559 and 9630 to permit, and in some instances require, 
electronic service and filing of documents in disciplinary and other 
proceedings and appeals, in conformity with recent changes by the 
Financial Industry Regulatory Authority, Inc. (``FINRA''). The proposed 
rule change is available on the Exchange's website at www.nyse.com, at 
the principal office of the Exchange, 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 self-regulatory organization 
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 those statements may be examined at 
the places specified in Item IV below. The Exchange has prepared 
summaries, set forth in sections A, B, and C below, of the most 
significant parts 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 proposes to amend Rules 9132, 9133, 9135, 9146, 9522, 
9524, 9559 and 9630 to permit, and in some instances require, 
electronic service and filing of documents in disciplinary and other 
proceedings, in conformity with recent changes by FINRA.
    In 2020, following the outbreak of the Coronavirus Disease 
(``COVID-19''), FINRA temporarily amended certain of its rules, 
including related to the method of service and filing in disciplinary 
proceedings before the Office of Hearing Officers (OHO) and appeals 
before the National Adjudicatory Council (NAC), among other types of 
administrative proceedings (the ``temporary amendments'').\4\ The 
temporary

[[Page 4237]]

amendments allowed, and in some instances required, FINRA (in its 
capacity as an Adjudicator per Rule 9120) to serve certain documents on 
parties by electronic mail (``email'') and required parties to file or 
serve documents by email, unless the parties agreed to an alternative 
method of service.\5\ Earlier this year, FINRA made permanent the 
temporary amendments to its rules regarding electronic service and 
filing permanent, with some modifications.\6\
---------------------------------------------------------------------------

    \4\ See, e.g., Securities Exchange Act Release No. 88917 (May 
20, 2020), 85 FR 31832 (May 27, 2020) (SR-FINRA-2020-015) (Notice 
and immediate effectiveness of filing to temporarily amend certain 
timing, method of service and other procedural requirements in FINRA 
Rules during the outbreak of COVID-19). FINRA extended the temporary 
amendments several times before filing to make certain of the 
aforementioned amendments permanent. The temporary amendments 
included rule changes to permit the conduct of virtual hearings 
(i.e., Rules 9261 and 9830), which rule changes are not being 
included in this proposal. Rather, the Exchange is solely copying a 
subset of rules covered by the temporary amendments as discussed 
herein.
    \5\ See id.
    \6\ See Securities Exchange Act Release Nos. 95147 (June 23, 
2022), 87 FR 38803 (June 29, 2022) (order approving change to 
certain FINRA rules to permit, and in some instances require, 
electronic service and filing of documents in disciplinary and other 
proceedings and appeals) (``Approval Order of FINRA Rules''); 94654 
(April 8, 2022), 87 FR 22264 (April 14, 2022) (SR-FINRA-2022-009) 
(``FINRA Notice''). The Approval Order of FINRA Rules related to 
FINRA Rules 1012, 1015, 6490, 9132, 9133, 9135, 9146, 9321, 9341, 
9349, 9351, 9522, 9524, 9559 and 9630 (collectively, ``the approved 
FINRA Rules'').
---------------------------------------------------------------------------

    In support of its filing, FINRA noted that advances in technology 
and its availability made filing and service permitted by the temporary 
amendments more efficient than under FINRA's ``original'' (non-amended) 
rules.\7\ Moreover, FINRA determined that electronic service and filing 
is beneficial for parties, panelists and FINRA staff.\8\ FINRA also 
noted that the Commission likewise amended its rules in November 2020 
to require electronic filing and service of documents in its 
administrative proceedings.\9\ For these reasons, FINRA determined that 
making permanent the temporary amendments would similarly improve and 
modernize FINRA's operations.\10\
---------------------------------------------------------------------------

    \7\ See FINRA Notice, 87 FR at 22267.
    \8\ See FINRA Notice, 87 FR at 22267.
    \9\ See Amendments to the Commission's Rules of Practice, 
Securities Exchange Act Release No. 90442 (November 17, 2020), 85 FR 
86464 (File No. S7-18-15) (December 30, 2020) (codified at 17 CFR 
201 (2020)).
    \10\ See FINRA Notice, 87 FR at 22266-67.
---------------------------------------------------------------------------

    To likewise improve and modernize Exchange rules, the Exchange 
proposes to modify certain of its disciplinary rules to allow for 
electronic service and filing of documents in disciplinary and other 
proceedings in conformity with the approved FINRA Rules.\11\
---------------------------------------------------------------------------

    \11\ Consistent with the Approval Order of FINRA Rules, the 
Exchange is not proposing to permit electronic service of an initial 
complaint on a respondent due to heightened fair process concerns. 
As is the case today, the only permissible methods of serving the 
initial complaint are by hand, mail or courier. See Rule 9131(b) 
(requiring that service be pursuant to Rule 9134(a)).
---------------------------------------------------------------------------

Background
    In 2016, NYSE American (then known as NYSE MKT LLC) adopted 
disciplinary rules that are, with certain exceptions, substantially the 
same as the Rule 8000 Series and Rule 9000 Series of FINRA and its 
affiliate the New York Stock Exchange LLC (``NYSE''), and which set 
forth rules for conducting investigations and enforcement actions.\12\ 
The NYSE American disciplinary rules were implemented on April 15, 
2016.\13\ The Exchange notes that FINRA and OHO administers 
disciplinary hearings on the Exchange's behalf.
---------------------------------------------------------------------------

    \12\ See Securities Exchange Act Release Nos. 77241 (February 
26, 2016), 81 FR 11311 (March 3, 2016) (SR-NYSEMKT-2016-30).
    \13\ See NYSE MKT Information Memorandum 16-02 (March 14, 2016).
---------------------------------------------------------------------------

    In adopting disciplinary rules modeled on FINRA's rules, the 
Exchange adopted the filing, service and other procedural requirements 
as contained the FINRA Rule 9100, 9500, and 9600 Series. As adopted, 
the text of Exchange Rules 9132, 9133, 9135, 9146, 9522, 9524, 9559 and 
9630 are based on, and are substantially the same as, their counterpart 
FINRA rules.\14\
---------------------------------------------------------------------------

    \14\ The Exchange notes that this proposal adopts a subset of 
the approved FINRA Rules, which subset are applicable to the 
Exchange rules. As noted herein, this proposal does not extend to 
the temporary amendments related to the conduct of virtual hearings 
(i.e., Rules 9261 and 9830).
---------------------------------------------------------------------------

    Consistent with FINRA's recent proposal, the Exchange proposes to 
amend certain of its disciplinary rules related to filing, service and 
other procedural requirements and appeals. The proposed rule change 
includes provisions to allow, and in some instances require, FINRA (in 
its capacity as an Adjudicator per Rule 9120) to serve certain 
documents on parties by email and require parties to file or serve 
documents by email, unless another method of service is ordered by the 
Adjudicator.\15\ In addition, to support the transition to email 
service and filing, the Exchange proposes to require parties in OHO 
proceedings to file and serve all parties with their current email 
address and contact information at the time of their first appearance, 
and to file and serve any change in email address or contact 
information during the course of the proceeding.
---------------------------------------------------------------------------

    \15\ To the extent that a party lacks the ability to use or 
access technology needed to file, serve or accept service by email, 
FINRA, as adjudicator, may order an alternative method of service 
upon a showing of good cause. See FINRA Notice, 87 FR at 22265.
---------------------------------------------------------------------------

    The proposed rule change would permit service of documents other 
than the initial complaint by email among various other methods of 
service, such as personal service, mail and courier, and to provide 
that service by email is deemed complete upon sending. The Exchange 
intends to elect email service whenever possible. If the Exchange has 
knowledge that the address used for service is not current or not 
functional (i.e., the Exchange receives a bounce back or other message 
indicating that there was a failure to deliver the email), the Exchange 
will use other permissible methods of service until it can verify the 
party's email address.\16\ The Exchange notes that, in most cases, the 
Exchange and the relevant party, or their counsel, will have already 
engaged in communications prior to the service of documents or other 
information. Accordingly, in most cases, the Exchange will already have 
information regarding the relevant party, or their counsel's, preferred 
method of service.
---------------------------------------------------------------------------

    \16\ As indicated in the proposed rule text, the Exchange will 
consider service by email complete upon sending of the relevant 
document or other information. This is consistent with service by 
mail under the current rules.
---------------------------------------------------------------------------

    The Rule 9000 Series, among other things, sets forth the procedure 
for disciplinary proceedings concerning a member, associated person or 
formerly associated person. The Rule 9100 Series is of general 
applicability to all proceedings set forth in the Rule 9000 Series, 
unless a rule specifically provides otherwise. Rules 9132(b),\17\ 
9133(b),\18\ and 9146(l) \19\ provide that the documents and other 
information governed by those rules be served pursuant to Rule 9134, 
which permits service on the parties using the following methods: (1) 
personal service, (2) mail, or (3) courier. Rule 9134 does not permit 
service by email. The proposed rule change would amend Rule 9132(b) to 
allow service of the relevant documents or information by email, and 
Rules 9133(b) and 9146(l) to require parties to serve documents by 
email, unless an alternative method of service is ordered by the 
Adjudicator.
---------------------------------------------------------------------------

    \17\ Rule 9132(b) (Service of Orders, Notices, and Decisions by 
Adjudicator; How Served).
    \18\ Rule 9133(b) (Service of Papers Other Than Complaints, 
Orders, Notices or Decisions; How Served).
    \19\ Rule 9146(l) (Motions; General).
---------------------------------------------------------------------------

    In addition, to support the transition to email service and filing, 
the Exchange proposes to amend Rule 9135 to add paragraph (d), which 
would require parties in OHO proceedings to file and serve the parties 
with their current

[[Page 4238]]

email address and contact information at the time of their first 
appearance, and to file and serve any change in email address or 
contact information during the course of the proceeding.\20\ The 
Exchange believes this proposed rule change will help ensure that 
documents are successfully sent from and received at a valid email 
address. It will also ensure that all participants, including the 
Exchange, applicants, respondents and any other parties, have accurate 
contact information for all parties.
---------------------------------------------------------------------------

    \20\ See proposed Rule 9135(d) (Filing of Papers with 
Adjudicator: Procedure; Party Contact Information).
---------------------------------------------------------------------------

    The Rule 9520 Series sets forth the procedures for eligibility 
proceedings and review of those proceedings by the Exchange Board. 
Because the applicable rules in this series do not allow for email as a 
method of service, the Exchange proposes to modify Rule 9522(a)(4) \21\ 
and to add new paragraph (d) to Rule 9524 \22\ to permit effective 
service by email.
---------------------------------------------------------------------------

    \21\ See proposed Rule 9522(a)(4) (Initiation of Eligibility 
Proceeding; Member Regulation Consideration; Service).
    \22\ See proposed Rule 9524(d) (Exchange Board of Directors 
Consideration; Service by Electronic Mail; When Service is 
Complete).
---------------------------------------------------------------------------

    The Rule 9550 Series sets forth the procedures for expedited 
proceedings and the ability of the Exchange Board to call for review a 
proposed decision prepared under the Rule 9550 Series. Rule 9559(h) 
\23\ sets forth the timing and method of service requirements for the 
parties' exchange of proposed exhibit and witness lists in advance of 
an expedited proceeding, but do not allow for email as a method of 
service. The Exchange proposes to amend Rule 9559(h)(2) to require 
service of exhibit and witness lists by email, unless an alternative 
method of service is ordered by the Adjudicator and to remove text from 
Rule 9559(h)(1) that requires that documents served by email must also 
be served by overnight courier or personal service.\24\ Finally, the 
Exchange proposes to add new paragraph (s) to Rule 9559 to provide 
that, for purposes of proposed Rule 9559(h), service by email is 
complete upon sending the documents or decision.\25\
---------------------------------------------------------------------------

    \23\ Rule 9559(h) (Hearing Procedures for Expedited Proceedings 
Under the Rule 9550 Series). Rule 9559(h) currently permits email as 
a method of service.
    \24\ See proposed Rule 9559(h)(1), (2) (Hearing Procedures for 
Expedited Proceedings Under the Rule 9550 Series; Transmission of 
Documents).
    \25\ See proposed Rule 9559(s) (Hearing Procedures for Expedited 
Proceedings Under the Rule 9550 Series; Service by Email; When 
Service is Complete). Rule 9559(h) currently permits email as a 
method of service.
---------------------------------------------------------------------------

    The Rule 9600 Series sets forth the procedures for members to seek 
exemptive relief from a variety of Exchange rules. Rule 9630(e) \26\ 
requires the Exchange (via the Chief Regulatory Officer) to serve its 
decision pursuant to Rules 9132 and 9134, which do not allow for email 
as a method of service. The proposed rule change would amend Rule 9630 
to add new paragraph (d) to allow for email as a method of service.\27\
---------------------------------------------------------------------------

    \26\ See Rule 9630 (Procedures for Exemptions; Appeal).
    \27\ See proposed Rule 9630(f) (Appeal; Service by Electronic 
Mail; When Service is Complete).
---------------------------------------------------------------------------

    The Exchange believes that this proposal, like the approved FINRA 
Rules, will modernize the rules and make service and filing more 
efficient and effective. Email technology is widely available, and use 
of electronic methods of service and filing is common practice in the 
courts and other regulatory agencies, including the Commission.\28\
---------------------------------------------------------------------------

    \28\ See supra note 9 (regarding Amendments to the Commission's 
Rules of Practice).
---------------------------------------------------------------------------

    As noted below, the Exchange has filed the proposed rule change for 
immediate effectiveness and has requested that the Commission waive the 
requirement that the proposed rule change not become operative for 30 
days after the date of the filing, so the Exchange can implement the 
proposed rule change immediately.
2. Statutory Basis
    The proposed rule change is consistent with section 6(b) of the 
Act,\29\ in general, and furthers the objectives of section 
6(b)(5),\30\ 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, 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. Additionally, the Exchange believes 
the proposed rule change is designed to provide a fair procedure for 
the disciplining of members and persons associated with members, 
consistent with sections 6(b)(7) and 6(d) of the Act.\31\
---------------------------------------------------------------------------

    \29\ 15 U.S.C. 78f(b).
    \30\ 15 U.S.C. 78f(b)(5).
    \31\ 15 U.S.C. 78f(b)(7) & 78f(d).
---------------------------------------------------------------------------

    The Exchange believes that the proposed rule change protects 
investors and the public interest by requiring use of broadly available 
technology to make service and filing processes more efficient and 
effective. The Exchange's disciplinary and eligibility proceedings and 
other review processes serve a critical role in providing investor 
protection and maintaining fair and orderly markets by, for example, 
sanctioning misconduct and preventing further customer harm by members 
and associated persons.
    The proposed rule change promotes efficiency in these processes by 
permitting electronic service and filing in most instances. To ensure 
that documents are effectively sent and received, the Exchange is 
proposing to require parties to provide and update their contact 
information, including their email address, during the course of a 
proceeding. These amendments reduce the reliance on paper documents in 
favor of more efficient electronic formats. The Exchange believes that 
the proposed rule change regarding electronic service and filing is 
especially important as hybrid and remote work become more common.
    The Exchange notes that, per the approved FINRA Rules, there are 
procedures in place for persons who lack the ability to use or access 
technology necessary to send or receive documents electronically to 
request relief from FINRA (as the Adjudicator) to file or serve 
documents by another method. Per FINRA, requests to use non-electronic 
methods of service were rare during the approximately two year period 
that it operated under the temporary amendments and, as such, FINRA 
anticipates that such requests under the approved FINRA Rules will be 
rare.
    In addition, the proposed rule change balances the interests of 
fairness and efficiency. As discussed, service of the initial complaint 
will continue to occur by hand, mail or courier, rather than by 
electronic means, thus ensuring there is satisfactory notice and fair 
process.
    Thus, the proposed rule change represents a significant step toward 
modernizing the service and filing processes in a manner that will 
protect investors and the public interest by promoting efficiency while 
preserving fair process.
    The Exchange believes that the proposed rule change supports the 
objectives of the Act by providing greater harmonization between 
Exchange rules and FINRA rules of similar purpose, resulting in less 
burdensome and more efficient regulatory compliance. As such, the 
proposed rule change will foster cooperation and coordination with 
persons engaged in facilitating transactions in securities and will 
remove impediments to and perfect the mechanism of a free and open 
market and a national market system.

[[Page 4239]]

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. The proposed rule change is 
not intended to address competitive issues but is designed to modernize 
the service and filing process in harmonization with the approved FINRA 
Rules.

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

    The Exchange has filed the proposed rule change pursuant to section 
19(b)(3)(A)(iii) of the Act \32\ and Rule 19b-4(f)(6) thereunder.\33\ 
Because the proposed rule change does not: (i) significantly affect the 
protection of investors or the public interest; (ii) impose any 
significant burden on competition; and (iii) become operative prior to 
30 days from the date on which it was filed, or such shorter time as 
the Commission may designate, if consistent with the protection of 
investors and the public interest, the proposed rule change has become 
effective pursuant to section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.
---------------------------------------------------------------------------

    \32\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \33\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

    A proposed rule change filed under Rule 19b-4(f)(6) \34\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b4(f)(6)(iii),\35\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has asked 
the Commission to waive the 30-day operative delay so that the proposal 
may become operative immediately upon filing. The Exchange states that 
this filing is non-controversial and eligible to become effective 
immediately because the proposal promotes uniformity in disciplinary 
rules across self-regulatory organizations and thereby enables the 
Exchange to modernize the service and filing process related to the 
conduct of disciplinary hearings.\36\ The Exchange further states that 
the proposed rule change would not significantly affect the protection 
of investors or the public interest or impose any significant burden on 
competition because the proposed rule change is based on the approved 
FINRA Rules. After reviewing the filing, the Commission believes that 
waiver of the 30-day operative delay for this proposal is consistent 
with the protection of investors and the public interest. Accordingly, 
the Commission hereby waives the 30-day operative delay and designates 
the proposal operative upon filing.\37\
---------------------------------------------------------------------------

    \34\ 17 CFR 240.19b-4(f)(6).
    \35\ 17 CFR 240.19b-4(f)(6)(iii).
    \36\ See supra Item II.
    \37\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule change's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of such proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings under 
section 19(b)(2)(B) \38\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
---------------------------------------------------------------------------

    \38\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

IV. 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 email to [email protected]. Please include 
File Number SR-NYSEAMER-2023-04 on the subject line.

Paper Comments

     Send paper comments in triplicate to: Secretary, 
Securities and Exchange Commission, 100 F Street NE, Washington, DC 
20549-1090.

All submissions should refer to File Number SR-NYSEAMER-2023-04. This 
file number should be included on the subject line if email 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 website (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 website viewing and printing in 
the Commission's Public Reference Room, 100 F Street NE, Washington, DC 
20549 on official business days between the hours of 10:00 a.m. and 
3:00 p.m. 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. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-NYSEAMER-2023-04 and should be submitted 
on or before February 14, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\39\
---------------------------------------------------------------------------

    \39\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-01266 Filed 1-23-23; 8:45 am]
BILLING CODE 8011-01-P


