[Federal Register Volume 86, Number 3 (Wednesday, January 6, 2021)]
[Notices]
[Pages 650-653]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-29214]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-90823; File No. SR-NYSEAMER-2020-88]
Self-Regulatory Organizations; NYSE American LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change Extending
the Expiration Date of the Temporary Amendments to Rules 9261 and 9830
as Set Forth in SR-NYSEAMER-2020-69 From December 31, 2020, to April
30, 2021
December 30, 2020.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act'' or ``Exchange Act'') \2\ and Rule 19b-4 thereunder,\3\
notice is hereby given that on December 22, 2020, NYSE American LLC
(``NYSE American'' 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\ 15 U.S.C. 78a.
\3\ 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 extending the expiration date of the
temporary amendments to Rules 9261 and 9830 as set forth in SR-
NYSEAMER-2020-69 from December 31, 2020, to April 30, 2021, in
conformity with recent changes by the Financial Industry Regulatory
Authority, Inc. (``FINRA''). The proposed rule change would not make
any changes to the text of NYSE American Rules 9261 and 9830. 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
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes extending the expiration date of the
temporary amendments as set forth in SR-NYSEAMER-2020-69 \4\ to Rules
9261 (Evidence and Procedure in Hearing) and 9830 (Hearing) from
December 31, 2020, to April 30, 2021 to harmonize with recent changes
by FINRA to extend the expiration date of the temporary amendments to
its Rules 9261 and 9830. SR-NYSEAMER-2020-69 temporarily granted to the
Chief or Deputy Chief Hearing Officer the authority to order that
hearings be conducted by video conference if warranted by public health
risks posed by in-person hearings during the ongoing COVID-19 pandemic.
The proposed rule change would not make any changes to the text of
Exchange Rules 9261 and 9830.\5\
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\4\ See Securities Exchange Act Release No. 90085 (October 2,
2020), 85 FR 63603 (October 8, 2020) (SR-NYSEAMER-2020-69) (``SR-
NYSEAMER-2020-69'').
\5\ The Exchange may submit a separate rule filing to extend the
expiration date of the proposed extension beyond April 30, 2021 if
the Exchange requires additional temporary relief from the rule
requirements identified in SR-NYSEAMER-2020-69. The amended NYSE
American rules will revert back to their original state at the
conclusion of the temporary relief period and any extension thereof.
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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.\6\
The NYSE American disciplinary rules were implemented on April 15,
2016.\7\
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\6\ See Securities Exchange Act Release Nos. 77241 (February 26,
2016), 81 FR 11311 (March 3, 2016) (SR-NYSEMKT-2016-30) (``2016
Notice'').
\7\ See NYSE MKT Information Memorandum 16-02 (March 14, 2016).
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In adopting disciplinary rules modeled on FINRA's rules, NYSE
American adopted the hearing and evidentiary processes set forth in
Rule 9261 and in Rule 9830 for hearings in matters involving temporary
and permanent cease and desist orders under the Rule 9800 Series. As
adopted, the text of Rule 9261 and Rule 9830 are substantially the same
as the FINRA rules with certain modifications.\8\
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\8\ See 2016 Notice, 81 FR at 11327 & 11332.
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[[Page 651]]
In response to the spread of COVID-19, on August 31, 2020, FINRA
filed with the Commission a proposed rule change for immediate
effectiveness, SR-FINRA-2020-027, to temporarily grant FINRA's Office
of Hearing Officers (``OHO'') and the National Adjudicatory Council
(``NAC'') the authority to conduct certain hearings by video
conference, if warranted by the current COVID-19-related public health
risks posed by in-person hearings. Among the rules FINRA amended were
Rules 9261 and 9830.\9\
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\9\ See Securities Exchange Act Release No. 83289 (September 2,
2020), 85 FR 55712 (September 9, 2020) (SR-FINRA-2020-027) (the
``August 31 FINRA Filing'').
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Given that FINRA and OHO administers disciplinary hearings on the
Exchange's behalf, and that the public health concerns addressed by
FINRA's amendments apply equally to Exchange disciplinary hearings, on
September 15, 2020, the Exchange filed to temporarily amend Rule 9261
and Rule 9830 to permit FINRA to conduct virtual hearings on its
behalf.\10\ The temporary amendments to Rule 9261 and Rule 9830, as
originally proposed, will expire on December 31, 2020, absent another
proposed rule change filing by the Exchange.
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\10\ See supra note 4.
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The COVID-19 conditions necessitating these temporary amendments
persist, with cases rapidly escalating nationwide. Based on its
assessment of current COVID-19 conditions and the lack of certainty as
to when COVID-19-related health concerns will subside, on December 1,
2020, FINRA filed to extend the expiration date of the temporary rule
amendments to, among other rules, FINRA Rule 9261 and 9830 from
December 31, 2020, to April 30, 2021.\11\
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\11\ See Securities Exchange Act Release No. 90619 (December 9,
2020), 85 FR 81250 (December 15, 2020) (SR-FINRA-2020-042) (``SR-
FINRA-2020-042'').
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Proposed Rule Change
Consistent with FINRA's recent proposal, the Exchange proposes to
extend the expiration date of the temporary rule amendments to NYSE
American Rules 9261 and 9830 as set forth in SR-NYSEAMER-2020-69 from
December 31, 2020, to April 30, 2021.
As set forth in SR-FINRA-2020-042, based on its assessment of
current COVID-19 conditions, including the recent escalation in COVID-
19 cases nationwide, FINRA does not believe that the COVID-19-related
health concerns necessitating this relief will subside by December 31,
2020, and has determined that there will be a continued need for this
temporary relief for several months beyond December 31, 2020.\12\ FINRA
accordingly proposed to extend the expiration date of the temporary
rule amendments in the August 31 FINRA Filing from December 31, 2020,
to April 30, 2021.
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\12\ See id.
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The Exchange proposes to similarly extend the expiration date of
the temporary rule amendments to NYSE American Rules 9261 and 9830 as
set forth in SR-NYSEAMER-2020-69 from December 31, 2020, to April 30,
2021. With COVID-19 cases surging nationwide, the Exchange agrees with
FINRA that the COVID-19-related public health risks necessitating this
temporary relief have not yet abated and are unlikely to abate by
December 31, 2020. The proposed change will permit OHO to continue to
assess, based on critical COVID-19 data and criteria and the guidance
of health and security consultants, whether an in-person hearing would
compromise the health and safety of the hearing participants such that
the hearing should proceed by video conference. FINRA has adopted a
detailed and thorough protocol to ensure that hearings conducted by
video conference will maintain fair process for the parties.\13\ The
Exchange believes that this is a reasonable procedure to continue to
follow for hearings under Rules 9261 and 9830 chaired by a FINRA
employee.
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\13\ See SR-FINRA-2020-042, 85 FR at 81251-52; August 31 FINRA
Filing, 85 FR at 55713.
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As noted below, the Exchange has filed the proposed rule change for
immediate effectiveness and has requested that the SEC 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,\14\ in general, and furthers the objectives of Section
6(b)(5),\15\ 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.\16\
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\14\ 15 U.S.C. 78f(b).
\15\ 15 U.S.C. 78f(b)(5).
\16\ 15 U.S.C. 78f(b)(7) and 78f(d).
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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.
The proposed rule change, which extends the expiration date of the
temporary amendments to Exchange rules consistent with FINRA's
extension to its Rules 9261 and 9830 for four months as set forth in
SR-FINRA-2020-042, will permit the Exchange to continue to effectively
conduct hearings during the COVID-19 pandemic in situations where in-
person hearings present likely public health risks. The ability to
conduct hearings by video conference will permit the adjudicatory
functions of the Exchange's disciplinary rules to continue unabated,
thereby avoiding protracted delays. The Exchange believes that this is
especially important in matters where temporary and permanent cease and
desist orders are sought because the proposed rule change would enable
those hearings to continue to proceed without delay, thereby enabling
the Exchange to continue to take immediate action to stop significant,
ongoing customer harm, to the benefit of the investing public.
As set forth in detail in SR-NYSEAMER-2020-69, the temporary relief
to permit hearings to be conducted via video conference maintains fair
process and will continue to provide fair process consistent with
Sections 6(b)(7) and 6(d) of the Act \17\ while striking an appropriate
balance between providing fair process and enabling the Exchange to
fulfill its statutory obligations to protect investors and maintain
fair and orderly markets while accounting for the significant health
and safety risks of in-person hearings stemming from the outbreak of
COVID-19. The Exchange notes that this proposal, like SR-NYSEAMER-2020-
69, provides only temporary relief. As
[[Page 652]]
proposed, the changes would be in place through April 30, 2021. As
noted in SR-NYSEAMER-2020-69 and above, the amended rules will revert
back to their original state at the conclusion of the temporary relief
period and, if applicable, any extension thereof. Accordingly, the
proposed rule change extending this temporary relief is in the public
interest and consistent with the Act's purpose.
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\17\ 15 U.S.C. 78f(b)(7) and 78f(d).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed temporary 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 rather
intended solely to provide continued temporary relief given the impacts
of the COVID-19 pandemic and the related health and safety risks of
conducting in-person activities. The Exchange believes that the
proposed rule change will prevent unnecessary disruptions that would
otherwise result if the temporary amendments were to expire on December
31, 2020.
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 foregoing 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) \18\ of the Act and Rule 19b-
4(f)(6) thereunder.\19\
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\18\ 15 U.S.C. 78s(b)(3)(A).
\19\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-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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A proposed rule change filed under Rule 19b-4(f)(6) normally does
not become operative for 30 days after the date of filing. However,
pursuant to Rule 19b-4(f)(6)(iii), the Commission may designate a
shorter time if such action is consistent with the protection of
investors and the public interest. The Exchange has requested that the
Commission waive the 30-day operative delay so that the proposed rule
change may become operative immediately upon filing. As noted above,
the Exchange states that the COVID-related health and safety risks of
conducting in-person activities, which necessitated these temporary
amendments, persist and that cases are escalating nationwide. Based on
FINRA's assessment of the current COVID-19 conditions and FINRA's
determination that there is a continued need for this temporary relief
for several months beyond December 31, 2020, the Exchange states that
it agrees with FINRA that the COVID-19-related public health risks
necessitating this temporary relief have not yet abated and are
unlikely to abate by December 31, 2020.\20\ Moreover, the Exchange
states that FINRA has adopted a detailed and thorough protocol to
ensure that hearings conducted by video conference will provide a fair
process for all parties and enable the Exchange to fulfill its
statutory obligations to protect investors and maintain fair and
orderly markets.\21\ The Exchange believes that this is a reasonable
procedure to continue to follow for hearings under Rules 9261 and 9830
chaired by a FINRA employee. Accordingly, the Exchange states that
waiver of the operative delay would prevent unnecessary disruptions
that would otherwise result if the temporary amendments were to expire
on December 31, 2020.
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\20\ See SR-FINRA-2020-042.
\21\ See id.
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The Exchange also indicates that this filing is eligible to become
operative immediately because the proposal would continue to provide
greater harmonization between the Exchange rules and FINRA rules that
serve a similar purpose, resulting in less burdensome and more
efficient regulatory compliance. This proposal would serve to extend
the expiration date of the temporary amendments to the Exchange rules
set forth in SR-NYSEAMER-2020-69, which is consistent with FINRA's
extension to its comparable rules, where FINRA requested and the
Commission granted a waiver of the 30-day operative delay.\22\ The
Exchange also indicates that this temporary relief is necessary in
order for the continued performance of its adjudicatory functions
necessary to meet its statutory obligations in light of COVID-19
related health and safety risks associated with in-person hearings and
will only be temporary relief, with the rules reverting back to their
original state at the conclusion of the relief period and any extension
thereof.\23\
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\22\ See supra note 11 (referencing FINRA's proposal to extend
the expiration date of temporary rule amendments allowing hearings
to be conducted on a temporary basis by video conference if
warranted by COVID-19 related health risks).
\23\ See supra note 5 and accompanying text.
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The Commission observes that this proposal, like SR-NYSEAMER-2020-
69 and FINRA's comparable filing,\24\ provides only temporary relief
during the period in which the Exchange's operations are impacted by
COVID-19. As proposed, the changes would be in place through April 30,
2021. For these reasons, the Commission believes that waiver of the 30-
day operative delay 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.\25\
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\24\ See supra notes 9 and 11 and accompanying text.
\25\ 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).
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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 shall institute proceedings to
determine whether the proposed rule 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
Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-NYSEAMER-2020-88 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.
[[Page 653]]
All submissions should refer to File Number SR-NYSEAMER-2020-88. 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, on business days between the
hours of 10:00 a.m. and 3:00 p.m., located at 100 F Street NE,
Washington, DC 20549. Copies of such 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-2020-88 and should
be submitted on or before February 22, 2021.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\26\
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\26\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-29214 Filed 1-5-21; 8:45 am]
BILLING CODE 8011-01-P