PHILADELPHIA — June 1, 2006 — Philadelphia Stock Exchange,
Inc. (Phlx) announced today that it has reached a settlement with
the Securities and Exchange Commission (“SEC” or “Commission”)
regarding the Commission’s allegations that, during the period
from approximately April 1999 through January 2002, Phlx failed
to adequately surveil for certain trading and order handling rule
violations and, thus, failed to adequately enforce such rules. Without
admitting or denying the findings, Phlx consented to an Order Instituting
Administrative Cease-and-Desist Proceedings making findings that
it violated Section 19(g) of the Securities Exchange Act of 1934
and imposing certain undertakings regarding the training of regulatory
personnel and its members and the engagement of a Third Party Auditor
to audit its policies and procedures to ensure compliance with and
detect and deter violations of its rules and the federal securities
laws and other commitments. No fine or censure was imposed.
In its Order, the Commission noted that, in determining to accept
the settlement, it considered remedial acts promptly undertaken
by Phlx, cooperation afforded the Commission staff, and Phlx’s
commitment to improve the oversight of its regulatory function as
well as the voluntary undertaking of remedial efforts including,
but not limited to, engaging outside counsel and consultants to
conduct a complete review of its regulatory programs, augmenting
the ranks of regulatory staff and management, and significantly
increasing its regulatory budget in an effort to enhance its regulatory
programs.
“We believe this settlement reflects the recognition of our
serious commitment to the maintenance of a robust and effective
regulatory program and our immediate and significant response to
regulatory issues discovered by both Phlx and the SEC,” said
Meyer “Sandy” Frucher, PHLX’s Chairman and CEO.
This matter is finally behind us and we will continue efforts to
operate as a sophisticated, robust, regulatory compliant and transparent
market center.”
The Philadelphia Stock Exchange was founded in 1790. The PHLX trades
1.946 stocks, 2,177 equity options, 19 sectors index options, and
currency options and futures. For more information about the PHLX
and its products, visit www.phlx.com.
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