curities Act of 1933 arising out of facts unrelated to Schneider's alleged violations of such laws in Cymaticolor. United States v. Schneider, 86 Crim. 385 (SWK) (SDNY). From at least 1980 to 1982, Schneider appeared and practiced before the Commission in that he, among other things, participated in the preparation of the registration statement of Cymaticolor's initial public offering and filed Reg ulation A notifications with the Commission. B. Schneider's Violative Conduct in Cymaticolor In Cymaticolor, the Commission charged Schneider with violations of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. The principal business of Cymaticolor, a New Jersey corporation located in Edison, New Jersey, has been the design and sale of business forms and computer supplies. Since 1980, Cymaticolor has sought to develop and market a four-color printing duplicator. During December 1980 and January 1981, Cymaticolor made an initial public offering of common stock pursuant to a Form S-18 regis tration statement under the Securities Act. Schneider's alleged involvement in the violative conduct consisted of his participation in preparing Cymaticolor's registration statement for Cymaticolor's public offering and failing to disclose that in or about June 1980, Cymaticolor's chairman of the board and president gave 60,000 shares of Cymaticolor's common stock to two individuals as compensation for their efforts in finding an underwriter for Cymaticolor's public offering. These shares equalled 20% of the shares issued in the public offering. Schneider knew of the existence and purpose of these material pay ments, but knowingly or recklessly failed to include them in the calculation of the costs of the offering and to disclose that such fees were paid. C. Schneider's Criminal Conduct in U.S. v. In February 1980, Schneider and others "ganized Empire Breeders, Inc. (“Empire”), a New York corporation. Schneider became the Secretary and a Director of Empire and, together with his fellow officers, planned an initial public offering ("IPO") of common stock of Empire pursuant to Regulation A. Prior to the planned public offering, Empire issued 3.1 million shares of its common stock to corporate insiders, of which Schneider received 200,000 shares. On October 20, 1980, Schneider, on behalf of Empire, filed with the Commission a "Form 1-A Notification Under Regulation A," providing information concerning the proposed IPO of Empire stock, together with a proposed offering circular. On December 22, 1980, Schneider, on behalf of Empire, filed an amendment to Empire's Form 1-A. Both the Form 1-A and the amendment were false and misleading in that they failed to disclose affiliates of Empire, including Robarl Breeders, Inc. (“Robarl”), in which Schneider and his wife owned a 25% interest. On December 23, 1980, Empire signed an underwriting agreement with Marsan Securities Corporation ("Marsan”), a registered broker-dealer. Marsan agreed to underwrite an IPO of 650,000 shares of Empire common stock at $2.00 per share on a best efforts basis contingent on the sale of a minimum of 450,000 shares. On April 7, 1981, the closing of the 450,000 share minimum portion of the IPO took place. In connection with the closing, Schneider agreed with his co-defendant to have Empire pay out to Robarl the sum of $145,000 for the purchase of four horses whereas the actual purchase price of these four horses was $100,000. Robarl, a partnership for the breeding of thoroughbreds, was owned by Schneider, his co-defendant, and three other investors. The above difference of $45,000 was used by Schneider and his co-defendant to repay a fellow investor in Robarl a portion of his earlier investment in Robarl represented by the purchase of thoroughbreds. A second area of Schneider's involvement related to a second Empire check, drawn following the closing on Empire common stock, in the amount of $30,000 which was used to purchase an official bank check in the same amount which was deposited in Robarl Breeders account. This $30,000 official bank check was purchased by Schneider's co-defendant using proceeds of the Empire public offering. Schneider understood at the time that this $30,000 sum represented the proceeds of the sale of a horse owned by Robarl Breeders. Approximately 25% of this $30,000 was immediately disbursed out of Robarl's bank account to Schneider as well as to other Robarl investors. Other proceeds of the Empire public offering were used to pay brokers an undisclosed commission to promote Empire stock as well as to repay to an individual monies borrowed by Schneider's co-defendant to purchase thoroughbreds for an unrelated business. On August 3, 1981, Schneider and his co-defendant, on behalf of Empire, filed with the Commission Form 2-A (Report of Sale under Regulation A) which stated falsely that as of June 1, 1981, out of $1,018,882 net proceeds of Empire's IPO, Empire had disbursed only $1,000 to officers, directors and affiliates and had disbursed $627,935 to others, of which $540,700 was purportedly for purchases of racehorses. As a result of the above, Empire's financial statements for the six-month period ended July 31, 1981 and for the year ended January 31, 1982, were materially false in that they overstated the values of Empire's assets. Thereafter, there was disseminated to Empire's public shareholders false and misleading information contained in Empire's financial state ments. On September 8, 1987, Schneider pleaded guilty before Judge Shirley Wohl Kram of the U.S. District Court for the Southern District of New York to one count of securities fraud under Section 17(a) of the Securities Act. In doing so, Schneider admitted to the Court that prices on certain horses were inflated in order to divert funds from the proceeds of Empire's public offering. III. FINDINGS AND CONCLUSIONS 1. Schneider is licensed to practice law by the State of New York. From at least 1980 to 1982, Schneider appeared and practiced before the Commission in that he, among other things, prepared statements, opinions and other papers filed with the Commission on behalf of Cymaticolor and Empire. 2. During December 1980 and January 1981, Schneider participated in the preparation and filing with the Commission of a registration statement on Form S-18 which was materially false and misleading by failing to disclose that 60,000 shares of Cymaticolor's common stock had been given to two individuals as finder's fees in connection with Cymaticolor's public offering. 3. In October and December 1980, Schneider, on behalf of Empire, filed with the Commission notifications under Regulation A on Form 1-A which were materially false and misleading by failing to disclose affiliates of Empire in which Schneider and his wife owned a 25% interest. 4. On August 23, 1985, Schneider was permanently enjoined, upon his consent, from further violations of Section 17(a) of the Securities Act and Section 10(b) of the Securities Exchange Act and Rule 10b-5 thereunder. 5. On September 8, 1987, Schneider pleaded guilty to knowingly and willfully violating Section 17(a) of the Securities Act in connection with his participation in a scheme that diverted funds from the proceeds of a public securities offering by Empire. Based on the foregoing, Schneider willfully violated Sections 17(a) of the Securities Act and 10(b) of the Exchange Act and Rule 10b-5 thereunder in connection with the public offerings by Empire and Cymaticolor, respectively, in that he prepared statements, opinions and other papers filed with the Commission in Cymaticolor's registration statement and in the application for exemption from registration pursuant to Regulation A by Empire which contained misstatements and omissions of material fact concerning, among other things, the payment of underwriting fees in connection with Cymaticolor's public offering and the use of proceeds in connection with Empire's public offering. IV. ORDER AND SANCTION IT IS HEREBY ORDERED that Schneider be and hereby is permanently denied the privilege of appearing or practicing before the Commission as an attorney from the date of this Order. IT IS FURTHER ORDERED that the Commission shall retain jurisdiction over this matter for the purpose of enforcing the provisions of the Order in accordance with the law. Jonathan G. Katz Secretary SECURITIES EXCHANGE ACT OF 1934 An order has been issued granting the application of the New York Stock Exchange, Inc. to strike from listing and registration the Common Stock, $1.00 Par Value; Warrants (Expiring July 15, 1990); 12% Subordinated Debentures due July 15, 2003; and 14% Subordinated Notes due October 1, 1994, of McLean Industries, Inc. SECURITIES EXCHANGE ACT OF 1934 Self-Regulatory Organizations; MBS Clearing On September 1, 1988, the MBS Clearing Corporation ("MBSCC") filed a proposed rule change (File No. SR-MBS-88-15) with the Commission pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934, ("Act"), 15 U.S.C. $78s(b)(1). The proposal would impose a schedule of penalties on MBSCC participants ("Participants") who fail to make timely payment of their debit balances. On October 26, 1988, MBSCC filed an amendment to the proposal to change the basis of the filing to Section 19(b)(2) of the Act, 15 U.S.C. §78s(b)(2). The Commission is publishing this notice to solicit comments on the proposal and is granting accelerated temporary approval of the proposal as described below. I. Description of the Proposal The proposed rule change would impose a schedule of penalties on Participants in the MBSCC Depository Division ("Depository Division") who fail to make timely payment of their debit balances. First, if payment of a Participant's debit balance is received after the Depository Division's 4:15 p.m. (EST) cutoff time, under the proposal Participants would be charged one of the following penalties: Second, if as a result of a late payment or nonpayment of a Participant's debit balance, the Depository Division is required to borrow or advance funds to cover the debit balance, the Depository Division would charge, in addition to interest, but in lieu of the penalty specified above, a penalty equal to the greater of $500 or one day's interest at 250 basis points (2.5%). II. MBSCC's Rationale for the Proposal MBSCC states that the proposed penalties are consistent with Section 17A of the Act in that they promote the prompt and accurate clearance and settlement of securities transactions among Participants and provide appropriate disciplinary action for violation of the provisions of the Depository Division rules. 1See Temporary Registration Order (Securities Exchange Act Release No. 24046 (February 2, 1987), 52 FR 4218. III. Discussion The proposed penalties are being adopted pursuant to Article II, Rule 5, Section 3(d) and Article VI, Rule 3 of the Depository Division rules, which generally provide that MBSCC may assess Participants a fine for failure to make timely payment of their debit balances. The proposed penalties are subject to appeal under Article VI, Rule 7, Section 1(c) of the Depository Division rules, and under Article VI, Rule 3, no penalty becomes effective until five days after notification of the imposition thereof. Penalties are automatically stayed during the pendency of any appeal. The Commission believes that temporary approval of the proposed penalties is justified. The proposed penalties are adopted from Depository Division rules considered and discussed in the Commission order granting MBSCC temporary registration as a clearing agency. The Depository Division rules provide Participants with an opportunity to appeal the assessment of the proposed penalty, allowing Participants to explain any mitigating circumstances. Finally, the Commission believes that the proposed penalty will encourage Participants to make timely payment of their debit balance and reduce risk of loss to MBSCC and its Participants. Therefore, the Commission believes it appropriate to temporarily approve the proposed rule change, effective September 1, 1988, until January 5, 1989. IV. Request for Comments Within 35 days of the date of publication of this notice in the Federal Register or within such longer period (1) as the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or (2) as to which the selfregulatory organization consents, the Commission will by order approve such proposed change or institute proceedings to determine whether the proposed rule change should be disapproved. Interested persons can submit written comments about the proposal by filing six copies of their comments with the Secretary, Securities and Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. Copies of the filing, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission and all written com munications 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 in the Commission's Public Reference Section, 450 Fifth Street, N.W., Washington, D.C. 20549. Copies of the filing also will be available for inspection and copying at MBSCC's principal office. All comments should refer to File No. SRMBS-88-15 and should be submitted by [insert date 21 days from date of publication]. V. Conclusion IT IS THEREFORE ORDERED, pursuant to Section 19(b)(2) of the Act, that the proposed rule change (File No. SR-MBS-88-15) be, and hereby is, temporarily approved effective nunc pro tunc September 1, 1988, until January 5, 1989. For the Commission, by the Division of Market Regulation pursuant to delegated authority. Jonathan G. Katz Secretary SECURITIES EXCHANGE ACT OF 1934 Self-Regulatory Organizations; Proposed Rule Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934, 15 U.S.C. 78s(b)(1), notice is hereby given that on September 20, 1988, the Chicago Board Options Exchange, Inc. ("CBOE" or "Exchange") filed with the Securities and Exchange 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 02 In order to limit underlying Treasury securities for specific coupon options to the most recently issued and actively traded issues, ordinarily the approval of such an underlying security will only extend for a period of no more than 15 months from the date of its initial approval, and series of options opened thereafter will relate to more recently issued Treasury securities; provided, however, that such approval may be extended in the event of the reopening of the underlying security by the Treasury, or in the event of issues where a reasonably active secondary market exists. Further, even prior to the end of such 15-month period, the Board (or the Committee designated by the Board) shall withdraw approval of an underlying Treasury security at any time if it determines on the basis of information made publicly available by the Treasury that the security has a public issuance of less than $750 million, excluding stripped securities. .03 No change. .04 The Exchange may list [a] Treasury bonds that either [has] have never been listed on the Exchange or [has] have been delisted when, based on information made publicly available by the Treasury, the bonds [has] have a public issuance of $1 billion, excluding stripped securities. Rule 21.7 and Interpretations and Policies 21.7.01, .02, .03, and .04 replace Rules 5.3 and 5.4. Terms of Treasury Security Options (b) Expiration Months. Unless the Board (or the Committee designated by the Board) otherwise provides and so indicates at the post at which the option is traded, Treasury security options may expire at three-month intervals or in [consecutive months] sequential monthly expirations. There may be up to five expiration months, none further out than [nine] fifteen months. (c) Exercise Price. The exercise price of each series of Treasury security options shall be fixed at a percentage of principal amount which is an integral multiple of [1%] 0.5% [for Treasury securities having a remaining term to maturity of six (italics indicates additions; brackets indicate de- years or less, or 2% for Treasury securities having letions) Rule 21.7 No change. ... Interpretations and Policies .01 No change. a remaining term to maturity of more than six years]. In the case of a specific coupon Treasury security option, the exercise price so determined shall be reasonably close to the percentage of principal amount at which the underlying se curity is traded in the primary market at the time the series of options is first opened for trading. The exercise price of such additional series will ordinarily be fixed at an integral multiple of [1% or 2%] 0.5%, but the Board (or the Committee designated by the Board), upon two business days' notice, may fix exercise prices at different intervals, provided that all such exercise prices are reasonably close to the market prices of the underlying securities. Notice of any additional series opened for trading shall be posted on the bulletin board on the Exchange floor. In the case of market basket Treasury bond options, the exercise price so determined shall be a percentage of principal amount of a hypothetical underlying Treasury bond bearing an 8% nominal rate of interest and a 15-year nominal term to maturity which results in a yield reasonably close to the highest market yield of Treasury bonds qualified for delivery upon exercise in accordance with Rule 21.24(b), as determined by the Exchange at the time the series of options is first opened for trading. Rule 21.8 supplements Rule 5.5 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 and is set forth in sections (A), (B), and (C) below. (A) Self-Regulatory Organization's Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change The modifications to the Interpretations and Policies of Exchange Rule 21.7 are proposed in order to conform the contracts to the standards and current practices of the industry. Interpretation .02 extends the initial trading period for a Treasury security beyond 15 months in certain circumstances where a reasonably active secondary market exists; while the modification of Interpretation .04 provides the Exchange the opportunity to list more than one Treasury security that has not been recently issued. The proposed modification to Rule 21.8(b) is intended to standardize the language so that it conforms to language contained elsewhere in the Rules regarding sequential monthly expirations. The change to 15 months is intended to conform the paragraph to the expirations provided for in Rule 21.9(a). The modifications to Paragraph (c) of Rule 21.8 allow for .5 point strike price intervals to be responsive to investor interest in at-the-money contracts. The proposed change will not result in a proliferation of strike prices. The Exchange intends to drop series in which no open interest exists thus limiting the number of series outstanding. The .5 point intervals will provide investors with exchange-listed contracts similar to those traded in the over-the-counter market, where customized at-the-market contracts are standard. The Exchanges' Product Development Committee has recently authorized .5 strike intervals in Treasury securities options pursuant to the power under the present rule. A copy of the announcement is attached as Exhibit A. (B) Self-Regulatory Organization's Statement on Burden on Competition This proposed rule change will not impose a burden on competition. (C) Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received from Members, Participants or Others Comments were neither solicited nor received. 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 reasons for so finding or (ii) as to which the Amex 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 submission 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, |