Self-Regulatory Organizations; Notice of Filing of Proposed Rule Change by the Philadelphia Stock Exchange, Inc., Relating to Limiting Time for Submission of Settlement Offers

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-37838; File No. SR-PHLX-96-42]

Self-Regulatory Organizations; Notice of Filing of Proposed Rule

Change by the Philadelphia Stock Exchange, Inc., Relating to Limiting

Time for Submission of Settlement Offers

October 17, 1996.

Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934

(``Act''), 15 U.S.C. 78s(b)(1), notice is hereby given that on

September 27, 1996, 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 self-

regulatory organization. The Commission is publishing this notice to

solicit comments on the proposed rule change from interested persons.

I. Self-Regulatory Organization's Statement of the Terms of Substance

of the Proposed Rule Change

Currently, PHLX Rule 960.7, ``Offers of Settlement,'' allows a

respondent in any proceeding under the PHLX's disciplinary rules to

submit a written settlement offer to the Exchange's Business Conduct

Committee (``BCC'') at any time during the course of the proceeding.

The PHLX proposes to amend PHLX Rule 960.7 to limit the time when a

respondent may submit a written settlement offer to the BCC to within

120 calendar days immediately following the date of service of the

statement of charges upon the respondent. Under the proposal, the

Exchange may schedule a hearing during the 120-day period immediately

following the date of service of the statement of charges or as soon as

practicable thereafter. The BCC may consider a settlement offer

submitted after the 120-day period as long as consideration of the

offer does not delay the hearing in the matter.

The text of the proposed rule change is available at the Office of

the Secretary, PHLX, and at the Commission.

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 these statements may be examined at

the places specified in Item IV below.

[[Page 55063]]

The self-regulatory organization has 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

The purpose of this proposal is to adopt a time limit during which

respondents involved in a disciplinary matter before the PHLX's BCC may

submit offers of settlement. Presently, under PHLX Rule 960.7, a

respondent may submit an offer of settlement at any time during the

course of the proceedings. Because the language allows for offers of

settlement to be submitted at any time, the BCC was concerned that

respondents could intentionally submit inadequate offers of settlement

for the sole purpose of delaying a scheduled hearing until the offer is

reviewed by the full BCC.

Thus, the Exchange proposes to amend PHLX Rule 960.7 in order to

allow offers of settlement to be submitted only during the 120-day

period immediately following the date of service of the statement of

charges upon a respondent. The BCC could then schedule hearings after

the 120 days knowing that there will not be last minute requests for

continuances based upon late offers of settlement. Under proposed

Interpretation and Policy .01, the BCC may also schedule a hearing

during the 120-day period immediately following the date of service of

the statement of charges on the respondent.\1\ The BCC will continue to

have the ability to entertain offers of settlement after the 120 days

if its review does not delay the scheduled hearing in the matter.

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\1\ Under PHLX Rule 960.5, ``Hearing,'' a respondent must be

given at least 15 business days notice of the time of a hearing.

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The PHLX believes that the proposed rule change is consistent with

Section 6 of the Act in general, and in particular, with Section

6(b)(5), in that it is designed to promote just and equitable

principles of trade, to prevent fraudulent and manipulative acts and

practices, 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, as well as to protect investors and the public interest

by allowing for more expeditious completion of disciplinary matters.

(B) Self-Regulatory Organization's Statement on Burden on Competition

The PHLX does not believe that the proposed rule change will impose

any inappropriate burden on competition.

(C) Self-Regulatory Organization's Statement on Comments on the

Proposed Rule Change Received From Members, Participants or Others

No written comments were either received or requested.

III. Date of Effectiveness of the Proposed Rule Change and Timing for

Commission Action

Within 35 days of the date of publication of this notice in the

Federal Register or within such longer period (i) as the Commission may

designate up to 90 days of such date if it finds such longer period to

be appropriate and publishes its reason for so finding or (ii) as to

which the self-regulatory organization consents, the Commission will:

(a) By order approve such proposed rule change, or

(b) Institute proceedings to determine whether the proposed rule

change should be disapproved.

IV. Solicitation of Comments

Interested persons are invited to submit written data, views and

arguments concerning the foregoing. Persons making written submissions

should file six copies thereof with the Secretary, Securities and

Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 20549.

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 at the

Commission's Public Reference Room. Copies of the filing will also be

available for inspection and copying at the principal office of the

above mentioned self-regulatory organization. All submissions should

refer to file number SR-PHLX-96-42 and should be submitted by November

13, 1996.

For the Commission, by the Division of Market Regulation,

pursuant to delegated authority.\2\

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\2\ 17 CFR 200.30-3(a)(12) (1995).

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Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 96-27144 Filed 10-22-96; 8:45 am]

BILLING CODE 8010-01-M