[Federal Register Volume 72, Number 30 (Wednesday, February 14, 2007)]
[Notices]
[Pages 7104-7106]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-2549]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-55254; File No. SR-Phlx-2006-88]
Self-Regulatory Organizations; Philadelphia Stock Exchange,
Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule
Change Relating to Rule 712, Independent Audit
February 8, 2007.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
[[Page 7105]]
(``Act'') \1\, and Rule 19b-4 thereunder,\2\ notice is hereby given
that on December 21, 2006, the Philadelphia Stock Exchange, Inc.
(``Phlx'' or ``Exchange'') filed with the Securities and Exchange
Commission (``SEC'' or ``Commission'') the proposed rule change as
described in Items I, II, and III, below, which Items have been
prepared by the Phlx. The Exchange has designated this proposal as one
establishing or changing a due, fee, or other charge imposed by Phlx
under Section 19(b)(3)(A)(ii) \3\ of the Act and Rule 19b-4(f)(2) \4\
thereunder, which renders the proposal effective upon filing with the
Commission. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A)(ii).
\4\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Phlx, pursuant to Section 19(b)(1) of the Act \5\ and Rule 19b-
4 thereunder,\6\ proposes to amend Phlx Rule 712, Independent Audit, to
clarify that in certain circumstances a member organization may request
an extension of time to file its annual audit from the Exchange in
writing prior to the due date of the annual audit, and to provide for
the imposition of a fee to be assessed for the late filing of an annual
audited financial statement (``annual audit'').
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\5\ 15 U.S.C. 78s(b)(1).
\6\ 17 CFR 240.19b-4.
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The proposed new language is set forth below, with new text
italicized:
Rules of the Board of Governors
* * * * *
Independent Audit
Rule 712. Each member organization doing any business with the
public shall at least once each calendar year cause to be made an audit
of its affairs, conducted in accordance with applicable audit
requirements of the Securities and Exchange Commission and such other
requirements as deemed appropriate by the Exchange, by independent
public accountants and shall have such accountants prepare an answer to
the financial questionnaire of the Exchange based upon such audit.
Pursuant to Rule 17a-5(d), promulgated under the Exchange Act, all
broker-dealers are required to file annually audited financial
statements (``Annual Audits'') with their Designated Examining
Authority and the SEC, no more than 60 days after the date of the year
end financial statements. A member organization unable to meet the
filing deadline for its Annual Audit as a result of exceptional
circumstances may request an extension of time, in writing, prior to
the filing due date. Annual Audits not received by the Exchange by the
due date, or revised due date if an extension has been granted, will be
subject to a late fee as set forth below for each week or any part
thereof that the Annual Audit has not been filed, as calculated based
on the due date or revised due date for filing the Annual Audit.
(Implemented on a running three-year basis.)
(i) $100 per week for the first late filing in a three-year period.
(ii) $300 per week for the second late filing in a three-year
period.
(iii) $1,000 per week for the third late filing in a three-year
period.
* * * * *
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 Phlx 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 Phlx has substantially 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
Currently, Rule 712 sets forth the provisions governing the
requirements for an annual audit to be conducted in accordance with
audit requirements as set forth by the Securities and Exchange
Commission and other requirements as deemed appropriate by the
Exchange. The proposed amendment is designed to clarify that, if a
member organization is unable to meet the filing deadline for its
annual audit as a result of exceptional circumstances, the member
organization may request an extension of time to file its annual audit
in writing prior to the due date of the annual audit.\7\ In addition,
the proposed amendment is intended to encourage the prompt filing of
annual audits by those member organizations designated to the Exchange
for examining purposes through the assessment of a late filing fee.
Pursuant to the amended Rule, the Exchange may issue progressively
higher fees for all subsequent violations within the running three-year
time period.\8\
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\7\ Requests for extensions of time to file an annual audit
should be submitted to the Exchange.
\8\ The Exchange may present repeated or aggravated failures to
file such annual audits on a timely basis to the Exchange's Business
Conduct Committee for disciplinary action under Exchange Rules.
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2. Statutory Basis
The Exchange believes that its proposal to amend its schedule of
fees is consistent with Section 6(b) of the Act \9\ in general, and
furthers the objectives of Section 6(b)(4) of the Act \10\ in
particular, in that it is an equitable allocation of reasonable fees
and other charges among Exchange members.
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\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(4).
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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 not necessary or appropriate in
furtherance of the purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to section
19(b)(3)(A)(ii) of the Act \11\ and paragraph (f)(2) of Rule 19b-4 \12\
thereunder. At any time within 60 days of the filing of the proposed
rule change, the Commission may summarily abrogate 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.
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\11\ 15 U.S.C. 78s(b)(3)(A)(ii).
\12\ 17 CFR 240.19b-4(f)(2).
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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:
[[Page 7106]]
Electronic Comments
Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
Send an e-mail to [email protected]. Please include
File Number SR-Phlx-2006-88 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-2006-88. 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-2006-88 and should be submitted on or before March 7, 2007.
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\13\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\13\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-2549 Filed 2-13-07; 8:45 am]
BILLING CODE 8010-01-P