SEC Division of Trading and Markets no-action letter: New York Stock Exchange, Inc.

February 11, 2005

Mr. Don Van Weezel Vice President, Regulatory Affairs New York Stock Exchange, Inc. 20 Broad St. New York, NY 10005

Dear Mr. Van Weezel:

In your letter dated February 11, 2005, on behalf of the New York Stock Exchange, Inc. ("NYSE"), you seek assurances that the staff of the Division of Market Regulation ("Staff") would not recommend enforcement action to the Securities and Exchange Commission ("Commission") if the NYSE does not file a notice with the Commission of proposed admission or continuance pursuant to Rule 19h-1(a) under the Securities Exchange Act of 1934 ("Exchange Act") for certain persons subject to a statutory disqualification (as defined in Section 3(a)(39) of the Exchange Act) solely because of a finding by a foreign financial regulatory authority specified in Sections 15(b)(4)(G)(ii) and (iii) of the Exchange Act. In particular, as discussed more fully in your letter, your request pertains to Related Entities (as defined in your letter) and natural persons associated, or seeking to become associated, with an NYSE member firm, and is limited to findings in which sanctions are no longer in effect. 1

Based on the facts and representations set forth in your letter, the Staff will not recommend enforcement action to the Commission under Exchange Act Section 6(c)(2) or Rule 19h-1(a) if the NYSE does not file a notice pursuant to Rule 19h-1(a) for the persons described above. We note in particular that none of the natural persons will conduct, or intends to conduct, any securities business within, or directed toward, persons in the United States or identifiable groups of U.S. citizens resident abroad.

This staff position is limited to enforcement action under Section 6(c)(2) of the Exchange Act and Rule 19h-1(a) thereunder and does not purport to express any legal conclusions with respect to the applicability of the statutory or regulatory provisions of the federal securities laws. Moreover, this response is based upon the representations you have made in your letter, and any different facts or conditions may require a different response. The Staff's position is subject to modification or revocation if at any time the Commission or the Staff determines that such action is necessary or appropriate in furtherance of the purposes of the Exchange Act.

Sincerely,

Brian A. Bussey Assistant Chief Counsel

Endnotes

1 As discussed, the request for relief extends to four Related Entities cases in process as of the date of this letter.

Incoming Letter:

The Incoming Letter is in Acrobat format.

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Vice Raidm i
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Ncw York Smck Exchmjic. hc. zo Broad Scrca
New York, NY 10005
NYSE
February 1 1,2005
Catherine McGuire, Esq.
Chief Counsel
Division of Market Regulation
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
Re: Foreign Statutory Disqualification lssues
Dear Ms. McGuire:
The New York Stock Exchange, Inc. ("NYSE'';) is seeking assurances fiom the st* of the Division of Market Regulation ("Staff7) of I he Securities and Exchange Commission ("Commission") that the St& will not recomml .nd enforcement action to the Commission if the NYSE does nut file a notice ,;vith the Commission of proposed admission or continuance pursuam to Rule 19h- 1 (a) ("Rule 19h-1 notice7') under the Securities Exchange Act of 1934 ("Act"), notw iihstanding a statutory disqualification (as defined in Section 3(a)(39) of the Act) consistilx; of a finding by a foreign financial regulatory authority specified in Sections 15(b)1 4)(G)(ii) or (iii) of the Act. From time to time, as a result of actions taken b ,; foreign financial regulatory authorities, associated person entities (i.e.. not natural persc' (IS) of NY SE member-organizations become subject to a statutory disqualification LII ider Section 3(a)(39)'s incorporation of Sections 15(b)(4)(G)(ii) and (iii). The respecti!. r;: associated person entities do not control, nor are they controlled by, the NY SE ITI r.-mber-organization, but instead are associated with the member-organizations throi~ gh a commonly controlling parent organization (such associated person entities, "1 :.elated Entities"). As you know, a RuIe 19h-1 notice is not requirl: ri under Rule T9h-T (a)(3)(iii)(B) if the statutory disqualification consists of a finding b + the Commission or a self-regulatory organization of a wilifuI violation "and the sanc [ion for such violation is no longer in effect." We believe that similar relief fiom the ;Lute 19h-1 (a) notice requirement is appropriate where a Related Entity's statutory d rsqualification consists of a finding by a

Catherine McGuire, Esq.
February 1 1, 2005 foreign financial regulatory authority specified ~n Sections 15(b)(4)(G)(ii) or (iii)' and the sanction related to such hdiq is no longer in I :ffect b,, the sanction has been paid or served). Accordingly, we are seeking no-actio.1 relief from the Rule 19h-l(a) notice requirement in such cir~umstances.~ Similarly, we are seeking assurances that the SI :ie will not recommend enforcement action to the Commission if the NYSE does no file a Rule 19h-1 notice where a statutory disqualification of a natural person associated, Ir seeking to become associated, with an NYSE member-organization consists of a findi ~g by a foreign financial regulatory authority specified in Sections 15(b)(4)(G)(ii) L. tld (iii) and the sanction related to such finding is no longer in effect, provided that the 1:1atural person does not conduct, nor intends to conducr, any securities business with in, or directed toward, persons in the United States or identifiable groups of U.S. citi !ens resident abroad￾1 A person is subject to a statutory disqua lification under Section 3(a)(39)(F)'s incorporation of clauses (ii) and (iii) of Section 15@)(4)(G) if such person "is subject to" a finding by a foreign financial regulatory autb rity of:
(1) a violation of "any foreign statute 01 regulation regarding transactions in securities, or contracts of sale of a corm :lodity for fhre delivery, traded on or subject to the rules of a contract market: or any board of trade;" (2) "aidling], abett[ing], counsel[ing], c :~mmand[ing], induc [kg], or procur[ing] the violation by any person ofany provlsion of any statutory provisions enacted by a foreign government, or rules or re$trdations thereunder, empowering a foreign financial regulatory authority n 5:arding transactions in securities, or contracts of sale of a commodity for fh 1.m delivery, traded on or subject to ~e rules of a conuact market or any board : ?f trade;" or (3) "fail[ing] reasonably to supervise, ul ith a view to preventing violations of such statutory provisions, rules, and regulati~ as, another person who commits such a violation, if such other person is subjec to his supervision." 2 As discussed, this request extends to fo Ir Related Entities cases in process as of the date of rhis letter.

Fsb-11-05 03:59pm From￾Catherine McGuire, Esq.
February 1 1,2005
The staff of the NYSE would be happy to fiuthl it discuss this issue with you. Any questions should be addressed to myself at the ;I bove telephone number or Peggy Getmino at (2 12) 656-8450. cc: Sue Light, NYSE M. Rufino, NYSE M. Menchel, NASD