Philadelphia Stock Exchange, Inc. Announces Settlement Of Administrative Proceeding With The SEC

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.