[Federal Register Volume 76, Number 30 (Monday, February 14, 2011)]
[Notices]
[Pages 8386-8388]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-3177]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-63855; File No. SR-NYSE-2011-02]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
Amending the Forms of Broker Letters Set Forth in Exchange Rule 451 and
Sections 905.02 and 905.03 of the Exchange's Listed Company Manual
February 7, 2011.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 \2\ thereunder, notice is hereby given
that on January 26, 2011, New York Stock Exchange LLC (``NYSE'' or
``Exchange'') filed with the Securities and Exchange Commission (the
``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 amend Exchange Rule 451 and Sections
905.02 and 905.03 of the Exchange's Listed Company Manual (the
``Manual'') to amend the forms of letters contained in those rules to
reflect the recent amendments to the Exchange's broker voting rules in
relation to executive compensation proposals. The text of the proposed
rule change is available at the Exchange, the Commission's Public
Reference Room, and http://www.nyse.com.
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 recently amended Exchange Rule 452 and Section 402.08
of the Manual to provide that brokers which are record holders of
shares held in client accounts will no longer be permitted to vote
those shares on matters relating to executive compensation.\3\ This
amendment was made in accordance with the requirements of Section 957
of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the
``Dodd-Frank Act'').
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\3\ See Securities Exchange Act Release No. 62874 (September 9,
2011) 75 FR 56152 (September 15, 2011) (SR-NYSE-2011-59).
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Supplementary Material .20 to Exchange Rule 451 and Sections
905.01, 905.02 and 905.03 contain specimens of letters containing the
information and instructions required pursuant to the proxy rules to be
given by NYSE member organizations to clients where the member
organization is the record holder of shares beneficially owned by those
clients in the circumstances where a broker (i) may vote on all
proposals without voting instructions (Section 905.01), (ii) may not
vote on any proposals without instructions (Section 905.02), and (iii)
may vote on certain but not all proposals without instructions (Section
905.03). These letters are shown as examples and not as prescribed
forms. Member organizations are permitted to adapt the
[[Page 8387]]
form of these letters for their own purposes provided all of the
required information and instructions are clearly enumerated in letters
to clients.
The Exchange is concerned that many shareholders receiving proxy
materials from their brokers for meetings scheduled after effectiveness
of the amendments to the NYSE broker voting rules in relation to
executive compensation proposals will not be aware of those amendments
and may therefore assume that the broker as record holder will vote
their shares on such proposals if they do not return voting
instructions to their broker. The NYSE believes it is important for as
many shares as possible to be voted on such proposals and, therefore,
believes it is important to educate retail investors with respect to
the implications of their failure to return voting instructions under
the amended rules. Consequently, the Exchange proposes to amend the
forms of letters provided for use in connection with meetings where the
broker may vote on none of the proposals before the meeting and
meetings where the broker may vote on some but not all of the proposals
before the meeting. The proposed amendments will insert language in
those forms to alert beneficial holders that brokers will no longer be
able to vote uninstructed shares on executive compensation matters. To
limit the length of the letters, the Exchange proposes to modify
language previously added with respect to the fact that brokers could
no longer vote uninstructed shares on the election of directors for
meetings scheduled after January 1, 2010.\4\ References to the new
treatment of executive compensation proposals and director elections
will be combined.
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\4\ See Securities Exchange Act Release No. 61046 (November 20,
2009), 74 FR 62849 (December 1, 2009) (SR-NYSE-2009-114).
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2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) \5\ of the Act, in general, and furthers the
objectives of Section 6(b)(5) of the Act,\6\ in particular in that it
is designed to promote just and equitable principles of trade, to
foster cooperation and coordination with persons engaged in regulating,
clearing, settling, processing information with respect to, and
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,
and is not designed to permit unfair discrimination between customers,
issuers, brokers, or dealers. The Exchange believes that the proposed
amendments are consistent with the investor protection objectives of
the Act in that their sole purpose is to explain to shareholders the
implications of failing to provide voting instructions to their
brokers, thereby enabling them to make a more informed decision with
respect to the exercise of their voting rights.
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\5\ 15 U.S.C. 78f(b).
\6\ 15 U.S.C. 78f(b)(5).
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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 that is 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 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: (i) Does not significantly affect
the protection of investors or the public interest; (ii) does not
impose any significant burden on competition; and (iii) does not become
operative for 30 days after the date of the filing, or such shorter
time as the Commission may designate if consistent with the protection
of investors and the public interest, provided that the self-regulatory
organization has given the Commission written notice of its intent to
file 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,\7\ the proposed rule change has become
effective pursuant to Section 19(b)(3)(A) of the Exchange Act \8\ and
Rule 19b-4(f)(6) thereunder.\9\
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\7\ The Commission notes that the Exchange has satisfied the
five-day pre-filing requirement.
\8\ 15 U.S.C. 78s(b)(3)(A).
\9\ 17 CFR 240.19b-4(f)(6).
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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 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
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-NYSE-2011-02 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSE-2011-02. 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 Web site 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
a.m. and 3 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; 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-NYSE-2011-02 and should be
submitted on or before March 7, 2011.
[[Page 8388]]
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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Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-3177 Filed 2-11-11; 8:45 am]
BILLING CODE 8011-01-P