[Federal Register Volume 79, Number 11 (Thursday, January 16, 2014)]
[Notices]
[Pages 2919-2920]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-00686]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-71276; File No. 4-669]
Self-Regulatory Organizations; Topaz Exchange, LLC (d/b/a ISE
Gemini); Order Declaring Effective a Minor Rule Violation Plan for
Topaz Exchange, LLC
January 9, 2014.
On November 14, 2013, Topaz Exchange, LLC (d/b/a ISE Gemini) (the
``Exchange'') filed with the Securities and Exchange Commission
[[Page 2920]]
(``Commission'') a proposed minor rule violation plan (``MRVP'')
pursuant to Section 19(d)(1) of the Securities Exchange Act of 1934
(the ``Act'') \1\ and Rule 19d-1(c)(2) thereunder.\2\ The proposed MRVP
was published for public comment on November 29, 2013.\3\ The
Commission received no comments on the proposal. This order declares
the Exchange's proposed MRVP effective.
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\1\ 15 U.S.C. 78s(d)(1).
\2\ 17 CFR 240.19d-1(c)(2).
\3\ See Securities Exchange Act Release No. 70927 (November 22,
2013), 78 FR 71689 (``Notice'').
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The Exchange's MRVP specifies those uncontested minor rule
violations with sanctions not exceeding $2,500 that would not be
subject to the provisions of Rule 19d-1(c)(1) of the Act,\4\ which
requires a self-regulatory organization (``SRO'') to promptly file
notice with the Commission of any final disciplinary action taken with
respect to any person or organization.\5\ In accordance with Rule 19d-
1(c)(2) under the Act,\6\ the Exchange proposed to designate certain
specified rule violations as minor rule violations, and requested that
it be relieved of the prompt reporting requirements regarding such
violations, provided it gives notice of such violations to the
Commission on a quarterly basis. The Exchange proposed to include in
its MRVP the procedures and violations currently included in Exchange
Rule 1614 (``Imposition of Fines for Minor Rule Violations''), which
had been incorporated by reference from the International Securities
Exchange's rule book.\7\
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\4\ 17 CFR 240.19d-1(c)(1).
\5\ The Commission adopted amendments to paragraph (c) of Rule
19d-1 to allow SROs to submit for Commission approval plans for the
abbreviated reporting of minor disciplinary infractions. See
Securities Exchange Act Release No. 21013 (June 1, 1984), 49 FR
23828 (June 8, 1984). Any disciplinary action taken by an SRO
against any person for violation of a rule of the SRO which has been
designated as a minor rule violation pursuant to such a plan filed
with and declared effective by the Commission shall not be
considered ``final'' for purposes of Section 19(d)(1) of the Act if
the sanction imposed consists of a fine not exceeding $2,500 and the
sanctioned person has not sought an adjudication, including a
hearing, or otherwise exhausted his administrative remedies.
\6\ 17 CFR 240.19d-1(c)(2).
\7\ On July 26, 2013, the Exchange received its grant of
registration, which included approval of the rules that govern the
Exchange. See Securities Exchange Act Release No. 70050, 78 FR 46622
(August 1, 2013) (File No. 10-209).
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According to the Exchange's proposed MRVP, under Exchange Rule
1614, the Exchange may impose a fine (not to exceed $2,500) on any
Member, or person associated with or employed by any Member, with
respect to any rule listed in Exchange Rule 1614(d).\8\ The Exchange
shall serve the person against whom a fine is imposed with a written
statement setting forth the rule or rules violated, the act or omission
constituting each such violation, the fine imposed, and the date by
which such determination becomes final or by which such determination
must be contested. If the person against whom the fine is imposed pays
the fine, such payment shall be deemed to be a waiver of such person's
right to a disciplinary proceeding and any review of the matter under
the Exchange rules. Any person against whom a fine is imposed may
contest the Exchange's determination by filing with the Exchange a
written answer, at which point the matter shall become a disciplinary
proceeding.
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\8\ See Notice, supra note 3.
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Upon the Commission's declaration of effectiveness of the
Exchange's MRVP, the Exchange will provide the Commission a quarterly
report for any actions taken on minor rule violations under the MRVP.
The quarterly report will include: The Exchange's internal file number
for the case, the name of the individual and/or organization, the
nature of the violation, the specific rule provision violated, the
sanction imposed, the number of times the rule violation occurred, and
the date of disposition.\9\
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\9\ The Exchange attached a sample form of the quarterly report
with its submission to the Commission.
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The Commission finds that the proposed MRVP is consistent with the
requirements of the Act and the rules and regulations thereunder
applicable to a national securities exchange. In particular, the
Commission believes that the proposal is consistent with Section
6(b)(5) of the Act,\10\ which requires that the rules of an exchange be
designed to promote just and equitable principles of trade, 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. The Commission also believes that the proposal is
consistent with Sections 6(b)(1) and 6(b)(6) of the Act,\11\ which
require that the exchange enforce compliance with, and provide
appropriate discipline for violations of, Commission and Exchange
rules. In addition, because the MRVP offers procedural rights to a
person sanctioned under Exchange Rule 1614, the Commission believes
that Exchange Rule 1614 provides a fair procedure for the disciplining
of members and persons associated with members, consistent with
Sections 6(b)(7) and 6(d)(1) of the Act.\12\
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\10\ 15 U.S.C. 78f(b)(5).
\11\ 15 U.S.C. 78f(b)(1) and 78f(b)(6).
\12\ 15 U.S.C. 78f(b)(7) and 78f(d)(1).
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Finally, the Commission finds that the proposal is consistent with
the public interest, the protection of investors, or otherwise in
furtherance of the purposes of the Act, as required by Rule 19d-1(c)(2)
under the Act,\13\ because the MRVP strengthens the Exchange's ability
to carry out its oversight and enforcement responsibilities as an SRO
in cases where full disciplinary proceedings are unsuitable in view of
the minor nature of the particular violation.
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\13\ 17 CFR 240.19d-1(c)(2).
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In declaring the Exchange's MRVP effective, the Commission in no
way minimizes the importance of compliance with Exchange rules and all
other rules subject to the imposition of sanctions under Exchange Rule
1614. The Commission believes that the violation of an SRO's rules, as
well as Commission rules, is a serious matter. However, Exchange Rule
1614 provides a reasonable means of addressing violations that do not
rise to the level of requiring formal disciplinary proceedings, while
providing greater flexibility in handling certain violations. The
Commission expects that the Exchange will continue to conduct
surveillance with due diligence and make determinations based on its
findings, on a case-by-case basis, regarding whether a sanction under
the MRVP is appropriate, or whether a violation requires formal
disciplinary action.
It is therefore ordered, pursuant to Rule 19d-1(c)(2) under the
Act,\14\ that the proposed MRVP for Topaz Exchange, LLC (d/b/a ISE
Gemini), File No. 4-669, be, and hereby is, declared effective.
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\14\ Id.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
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\15\ 17 CFR 200.30-3(a)(44).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-00686 Filed 1-15-14; 8:45 am]
BILLING CODE 8011-01-P