Notice2022-24648
Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Delete Legacy Disciplinary Rules 475, 476, 476A, and 477; Adopt New Rule 2050; and Make Conforming Changes to Rules 2A, 27, 36, 600A, 619, 637, 3170, 8001, 8130, 8320, 9001 and 9217
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Published
November 14, 2022
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 87 Issue 218 (Monday, November 14, 2022)</title>
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[Federal Register Volume 87, Number 218 (Monday, November 14, 2022)]
[Notices]
[Pages 68208-68210]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-24648]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-96247; File No. SR-NYSE-2022-48]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Delete Legacy Disciplinary Rules 475, 476, 476A, and 477; Adopt New
Rule 2050; and Make Conforming Changes to Rules 2A, 27, 36, 600A, 619,
637, 3170, 8001, 8130, 8320, 9001 and 9217
November 7, 2022.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on October 27, 2022, New York Stock Exchange LLC (``NYSE'' or the
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II below, which Items have been prepared by the Exchange. 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.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to (1) delete legacy disciplinary Rules 475,
476, 476A, and 477 as obsolete and make conforming changes to Rules 2A,
36, 600A(c), 637, 8001, 8130(d), 8320(d) and 9001, and (2) adopt a new
Rule 2050 incorporating the substantive violations currently in Rule
476(a) without change and make conforming changes to Rules 27, 619(h),
3170(C)(3) and 9217. The proposed rule change is available on the
Exchange's website at <a href="http://www.nyse.com">www.nyse.com</a>, 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
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to (1) delete legacy disciplinary Rules 475,
476, 476A, and 477 as obsolete and make conforming changes to Rules 2A,
36, 600A(c), 637, 8001, 8130(d), 8320(d) and 9001, and (2) adopt a new
Rule 2050 incorporating the substantive violations currently in Rule
476(a) without change and make conforming changes to Rules 27, 619(h),
3170(C)(3) and 9217.
Background and Proposed Rule Change
In 2013, the Commission approved the Exchange's adoption of rules
relating to investigation, discipline, and sanctions, and other
procedural rules, based on the rules of the Financial Industry
Regulatory Authority (``FINRA'').\3\ The Exchange represented in that
filing that when the transition to the new disciplinary rules was
complete and there are no longer any member organizations or persons
subject to Rules 475, 476, 476A, and 477, the Exchange would submit a
proposed rule change that would delete such rules (except for the
listed offenses under NYSE Rule 476(a)).\4\ The Exchange represents
that the transition to the new disciplinary rules is complete and there
are no longer any member organizations or persons \5\ subject to Rules
475, 476,
[[Page 68209]]
476A, and 477, and that those rules can therefore be deleted as
obsolete.
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\3\ See Securities Exchange Act Release No. 69045 (March 5,
2013), 78 FR 15394 (March 11, 2013) (SR-NYSE-2013-02) (Order
Approving Proposed Rule Change Adopting Investigation, Disciplinary,
Sanction, and Other Procedural Rules That Are Modeled on the Rules
of the Financial Industry Regulatory Authority and To Make Certain
Conforming and Technical Changes). Beginning in 2016, the Exchange's
affiliates have each in turn adopted the FINRA disciplinary rules.
In 2016, NYSE American LLC (``NYSE American'') adopted its Rule 8000
and Rule 9000 Series based on the NYSE and FINRA Rule 8000 and Rule
9000 Series. See Securities Exchange Act Release Nos. 77241
(February 26, 2016), 81 FR 11311 (March 3, 2016) (SR-NYSEMKT-2016-
30). In 2018, the Commission approved NYSE National, Inc.'s (``NYSE
National'') adoption of the NYSE National Rule 10.8000 and Rule
10.9000 Series based on the NYSE American and FINRA Rule 8000 and
Rule 9000 Series. See Securities Exchange Act Release No. 83289 (May
17, 2018), 83 FR 23968 (May 23, 2018) (SR-NYSENat-2018-02). In 2019,
NYSE Arca, Inc. (``NYSE Arca'') adopted the NYSE Arca Rule 10.8000
and 10.9000 Series based on the NYSE American Rule 8000 and Rule
9000 Series. See Securities Exchange Act Release No. 85639 (April
12, 2019), 84 FR 16346 (April 18, 2019) (SR-NYSEArca-2019-15). Most
recently, NYSE Chicago also adopted investigation, disciplinary,
sanction, and other procedural rules modeled on the rules of its
affiliates. See Securities Exchange Act Release No. 95020 (June 1,
2022), 87 FR 35034 (June 8, 2022) (SR-NYSECHX-2022-10).
\4\ See Securities Exchange Act Release No. 68678 (January 16,
2013), 78 FR 5213, 5219 (January 24, 2013) (SR-NYSE-2013-02) (Notice
of Filing of Proposed Rule Change Adopting Investigation,
Disciplinary, Sanction, and Other Procedural Rules That Are Modeled
on the Rules of the Financial Industry Regulatory Authority and To
Make Certain Conforming and Technical Changes) (``Release No.
68678'').
\5\ The Exchange no longer has allied members. The references to
``allied member'' in Rules 476 and 476A should be to ``principal
executive.'' In 2008, the Exchange replaced the term ``allied
member'' with the newly defined category of ``principal executive''
but did not make corresponding technical changes to Rules 476 and
476A. See Securities Exchange Act Release No. 58549 (September 15,
2008), 73 FR 54444, 54445 (September 19, 2008) (SR-NYSE-2008-80)
(Notice of Filing and Immediate Effectiveness of Proposed Rule
Change and Amendment No. 1 Thereto Conforming Certain NYSE Rules to
Changes to NYSE Incorporated Rules Recently Filed by the Financial
Industry Regulatory Authority, Inc.); Rule 311.18 (defining
``principal executive''). See generally Securities and Exchange Act
Release No. 58103 (July 3, 2008), 73 FR 40403, 40403-04 (July 14,
2008) (SR-FINRA-2008-036) (Notice of Filing of a Proposed Rule
Change Relating to the Incorporated NYSE Rules) (proposing in part
to substitute ``principal executive'' for ``allied member'' in the
Incorporated NYSE Rules); Securities and Exchange Act Release No.
58533 (September 12, 2008), 73 FR 54652 (September 22, 2008) (SR-
FINRA-2008-036) (Order Approving Proposed Rule Change Relating to
Incorporated NYSE Rules). The Exchange will be submitting a separate
rule filing to replace the remaining references to ``allied member''
in its rules with ``principal executive.''
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The Exchange proposes conforming changes to Rules 2A
(Jurisdiction), 36 (Communications Between Exchange and Members'
Offices), 600A(c), and 637 (Failure to Honor Award) that contain
references to one or more of the rules proposed to be deleted. The
following rules reflecting the transition from the legacy disciplinary
rules to the current rule set would be deleted in their entirety: Rule
8130(d) (Retention of Jurisdiction); Rule 8320(d) (Payment of Fines,
Other Monetary Sanctions, or Costs; Summary Action for Failure to Pay);
Rule 8001 (Effective Date of Rule 8000 Series); and Rule 9001
(Effective Date of Rule 9000 Series).
In connection with the deletion of Rule 476, the Exchange also
proposes a new Rule 2050 titled ``Other Offenses'' that would,
consistent with its filing adopting the FINRA disciplinary rules,
retain the listed offenses in Rule 476(a)(1)-(11) without substantive
change. Proposed Rule 2050 would provide that a member organization or
covered person \6\ violates the provisions of the Rule if it commits
any of the enumerated offenses, which would be transposed from Rule
476(a) in the same order and without changes except for Rule 476(a)(8),
which is marked ``Reserved.'' The Exchange further proposes conforming
changes to the following rules to replace references to Rule 476(a)
with Rule 2050: Rule 27 (Regulatory Cooperation); Rule 619(h) (General
Provision Governing Subpoenas, Production of Documents, etc.); Rule
3170(C)(3) (Tape Recording of Registered Persons by Certain Firms); and
Rule 9217 (Violations Appropriate for Disposition Under Rule 9216(b)).
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\6\ NYSE Rule 9120(g) defines ``covered person'' to mean a
``member, principal executive, approved person, registered or non-
registered employee of a member organization, or other person
(excluding a member organization) subject to the jurisdiction of the
Exchange.'' The term was drafted to appropriately capture all
persons subject to the legacy disciplinary rules and preserve the
Exchange's scope of jurisdiction at the time the Rule 8000 and Rule
9000 Series were adopted. See Release No. 68678, 78 FR 5213 at 5219.
Under NYSE Rule 2(a), the term ``member'' means a natural person
associated with a member organization who has been approved by the
Exchange and designated by such member organization to effect
transactions on the floor of the Exchange or any facility thereof.
See id.
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2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b)(5) of the Exchange Act,\7\ in that 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.
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\7\ 15 U.S.C. 78f(b)(5).
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Specifically, the Exchange believes that deletion of the obsolete
legacy disciplinary rules now that there are no longer any member
organizations or persons subject to those rules, and making conforming
changes to the rules referencing those legacy disciplinary rules, would
increase the clarity and transparency of the Exchange's rules and
remove impediments to and perfect the mechanism of a free and open
market by ensuring that persons subject to the Exchange's jurisdiction,
regulators, and the investing public could more easily navigate and
understand the Exchange Bylaws and rules. The Exchange further believes
that the proposed amendments would not be inconsistent with the public
interest and the protection of investors because investors will not be
harmed and in fact would benefit from increased transparency and
clarity, thereby reducing potential confusion.
The Exchange further believes that retaining the substantive
offenses in Rule 476(a) without change is designed to prevent
fraudulent and manipulative acts and practices by permitting the
Exchange to continue to carry out its oversight and enforcement
responsibilities with respect to the substantive provisions currently
enumerated in Rule 476(a). For the same reasons, retention of those
provisions would not be inconsistent with the public interest and the
protection of investors.
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 Exchange Act. The proposed rule
change is not intended to address competitive issues but rather is
concerned solely with deleting obsolete rules and making related and
conforming changes.
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
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 for 30
days from the date on which it was filed, or such shorter time as the
Commission may designate, it has become effective pursuant to Section
19(b)(3)(A) of the Act \8\ and subparagraph (f)(6) of Rule 19b-4
thereunder.\9\
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\8\ 15 U.S.C. 78s(b)(3)(A).
\9\ 17 CFR 240.19b-4(f)(6). In addition, Rule19b-4(f)(6)(iii)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change, along
with a brief description and text of the proposed rule change, at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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At any time within 60 days of the filing of the 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 will institute proceedings to
determine whether the proposed rule change should be approved or
disapproved.
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
<bullet> Use the Commission's internet comment form (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#daa8afb6bff7b9b5b7b7bfb4aea99aa9bfb9f4bdb5ac"><span class="__cf_email__" data-cfemail="4230372e276f212d2f2f272c3631023127216c252d34">[email protected]</span></a>. Please include
File Number SR-NYSE-2022-48.
Paper Comments
<bullet> 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-NYSE-2022-48. 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
[[Page 68210]]
post all comments on the Commission's internet website (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>). 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-
NYSE-2022-48, and should be submitted on or before December 5, 2022.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\10\
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\10\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-24648 Filed 11-10-22; 8:45 am]
BILLING CODE 8011-01-P
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