Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing of Proposed Rule Change To Modify the Procedures Followed When a Listed Company Falls Below Certain Listing Requirements, 46267-46270 [E9-21644]
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Federal Register / Vol. 74, No. 172 / Tuesday, September 8, 2009 / Notices
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants or Others
Written comments were neither
solicited nor received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section
19(b)(3)(A)(iii) of the Act 13 and
subparagraph (f)(3) of Rule 19b–4
thereunder.14 At any time within 60
days of the filing of the proposed rule
change, the Commission may summarily
abrogate 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.
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:
jlentini on DSKJ8SOYB1PROD with NOTICES
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml ); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–BX–2009–049 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–BX–2009–049. 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 (https://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 inspection and copying 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 such 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 publicly available. All
submissions should refer to File
Number SR–BX–2009–049 and should
be submitted on or before September 29,
2009.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.15
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–21667 Filed 9–4–09; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–60611; File No. SR–
NASDAQ–2009–077]
Self-Regulatory Organizations; The
NASDAQ Stock Market LLC; Notice of
Filing of Proposed Rule Change To
Modify the Procedures Followed When
a Listed Company Falls Below Certain
Listing Requirements
September 2, 2009.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 1919b–4
thereunder,2 notice is hereby given that
on August 17, 2009, The NASDAQ
Stock Market LLC (‘‘Nasdaq’’) filed with
the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I, II, and III below, which Items
have been prepared by Nasdaq. 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
Nasdaq proposes to modify the
procedures followed when a listed
company falls below certain listing
15 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.1919b–4.
13 15
U.S.C. 78s(b)(3)(a)(iii).
14 17 CFR 240.19b–4(f)(3).
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46267
requirements. Nasdaq will implement
the proposed rule upon approval.
The text of the proposed rule change
is below. Proposed new language is in
italics; proposed deletions are in
brackets.3
5810. Notification of Deficiency by the
Listing Qualifications Department
When the Listing Qualifications
Department determines that a Company
does not meet a listing standard set forth
in the Rule 5000 Series, it will
immediately notify the Company of the
deficiency. As explained in more detail
below, deficiency notifications are of
four types:
(1)–(4) No change.
Notifications of deficiencies that
allow for submission of a compliance
plan or an automatic cure or compliance
period may result, after review of the
compliance plan or expiration of the
cure or compliance period, in issuance
of a Staff Delisting Determination or a
Public Reprimand Letter.
(a)–(b) No change.
IM–5810–1. No change.
(c) Types of Deficiencies and
Notifications.
The type of deficiency at issue
determines whether the Company will
be immediately suspended and delisted,
or whether it may submit a compliance
plan for review or is entitled to an
automatic cure or compliance period
before a Staff Delisting Determination is
issued. In the case of a deficiency not
specified below, Staff will issue the
Company a Staff Delisting
Determination or a Public Reprimand
Letter.
(1) No change.
(2) Deficiencies for which a Company
may Submit a Plan of Compliance for
Staff Review.
(A) Unless the Company is currently
under review by an Adjudicatory Body
for a Staff Delisting Determination, the
Listing Qualifications Department may
accept and review a plan to regain
compliance when a Company is
deficient with respect to one of the
standards listed in subsections (i)
through (iv) below. In accordance with
Rule 5810(c)(2)(C), plans provided
pursuant to subsections (i) through (iii)
below must be provided generally
within [15] 45 calendar days, and in
accordance with Rule 5810(c)(2)(F),
plans provided pursuant to subsection
(iv) must be provided generally within
60 calendar days.
(i)–(iv) No change.
IM–5810–2. No change.
3 Changes are marked to the rule text that appears
in the electronic manual of Nasdaq found at https://
nasdaqomx.cchwallstreet.com.
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Federal Register / Vol. 74, No. 172 / Tuesday, September 8, 2009 / Notices
(B) Staff Alternatives Upon Review of
Plan Staff may request such additional
information from the Company as is
necessary to make a determination, as
described below. In cases other than
filing delinquencies, which are
governed by Rule 5810(c)(2)(F) below,
upon review of a plan of compliance,
Staff may either:
(i) Grant an extension of time to
regain compliance not greater than [105]
180 calendar days from the date of
Staff’s initial notification, unless the
Company is currently under review by
an Adjudicatory Body for a Staff
Delisting Determination. If Staff grants
an extension, it will inform the
Company in writing of the basis for
granting the extension and the terms of
the extension;
(ii)–(iii) No change.
(C) Timeline for Submission of
Compliance Plans
Except for deficiencies from the
standards of Rule 5250(c)(1) or (2),
Staff’s notification of deficiencies that
allow for compliance plan review will
inform the Company that it has [15] 45
calendar days to submit a plan to regain
compliance with Nasdaq’s listing
standard(s). [Within the restrictions of
paragraph (B),] Staff may extend this
deadline for up to an additional 5
calendar days upon good cause shown
and may request such additional
information from the Company as is
necessary to make a determination
regarding whether to grant such an
extension.[, and upon receipt of the
Company’s plan, may request additional
information from the Company to help
it determine the Company’s ability to
regain compliance.]
(D)–(F) No change.
(3) Deficiencies for which the Rules
Provide a Specified Cure or Compliance
Period
With respect to deficiencies related to
the standards listed in (A)–(E) below,
Staff’s notification will inform the
Company of the applicable cure or
compliance period provided by these
Rules and discussed below. If the
Company does not regain compliance
within the specified cure or compliance
period, the Listing Qualifications
Department will immediately issue a
Staff Delisting Determination letter.
(A)–(B) No change.
(C) Market Value of Listed Securities
[(MVLS)]
A failure to meet the continued listing
requirements for [MVLS] Market Value
of Listed Securities shall be determined
to exist only if the deficiency continues
for a period of [10] 30 consecutive
business days. Upon such failure, the
Company shall be notified promptly and
shall have a period of [90] 180 calendar
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days from such notification to achieve
compliance [with the applicable
continued listing standard]. Compliance
can be achieved by meeting the
applicable standard for a minimum of
10 consecutive business days during the
[90] 180 day compliance period.
(D) Market Value of Publicly Held
Shares [(MVPHS)]
A failure to meet the continued listing
requirement for Market Value of
Publicly Held Shares shall be
determined to exist only if the
deficiency continues for a period of 30
consecutive business days. Upon such
failure, the Company shall be notified
promptly and shall have a period of [90]
180 calendar days from such
notification to achieve compliance. [
]Compliance can be achieved by
meeting the applicable standard for a
minimum of 10 consecutive business
days during the [90] 180 day
compliance period.
(E)–(F) No change.
(4) No change.
(d) No change.
*
*
*
*
*
5840. Adjudicatory Process: General
Information
(a)–(d) No change.
(e) Computation and Adjustment of
Time
(1) No change.
(2) When Staff determines whether a
deficiency has occurred with respect to
[bid price, market value of listed
securities] the Bid Price, Market Value
of Listed Securities or [market value of
publicly held shares] Market Value of
Publicly Held Shares requirements, the
first trading day that the [bid price or
market value] Bid Price or Market Value
is below required standards is included
in computing the total number of
consecutive trading days of default.
Similarly, when Staff determines
whether a Company has regained
compliance with the [bid price, MVLS
or MVPHS] Bid Price, Market Value of
Listed Securities, or Market Value of
Publicly Held Shares requirements, the
first trading day that the [bid price or
market value] Bid Price or Market Value
is at or above required standards is
included in computing the total number
of consecutive trading days.
(3)–(4) No change.
(f)–(k) No change.
*
*
*
*
*
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission,
Nasdaq included statements concerning
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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. Nasdaq 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
1. Purpose
Nasdaq is proposing to modify certain
of the listing rules that provide the
compliance periods associated with
Nasdaq’s continued listing rules to make
them more consistent and, in some
cases, to provide additional time to
companies to regain compliance. In
addition, Nasdaq is proposing to modify
the time available to a company to
provide a plan to regain compliance
with certain listing requirements and
the length of the extension that Nasdaq
staff can allow a company to regain
compliance.4
Price Related Criteria
Under Nasdaq rules, if a company’s
security has a closing bid price below $1
for 30 consecutive trading days, it no
longer meets the bid price requirement
and is automatically provided 180
calendar days to regain compliance.5
However, under other requirements that
are derived, in part, from the company’s
price, the company may be found noncompliant based on fewer days below
the applicable threshold or have less
time to regain compliance. Specifically,
under the current rules related to market
value of listed securities, a company is
non-compliant after being below the
standard for 10 consecutive trading days
and, thereafter, is provided only 90
calendar days to regain compliance.6
Similarly, while the rules for market
value of publicly held shares provide
that a company is not deficient until it
is below the standard for 30 consecutive
trading days, the company is only
provided with 90 calendar days to
regain compliance.7 Because
4 Nasdaq is also proposing to eliminate certain
abbreviations that are used inconsistently and
utilize defined terms, as appropriate, in Rules 5810
and 5840, and to remove authority in Rule
5810(c)(2)(C) that is duplicated in Rule
5810(c)(2)(B).
5 Rule 5810(b)(3)(A).
6 Rule 5810(b)(3)(C). NASDAQ recently changed
the period to regain compliance with the market
value of listed securities requirement from 30 to 90
days. Securities Exchange Act Release No. 59291
(January 23, 2009), 74 FR 5197 (January 29, 2009)
(SR–NASDAQ–2009–002).
7 Rule 5810(b)(3)(D).
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compliance with each of these rules is
directly related to the price of an
issuer’s security, Nasdaq believes that
the length of time to trigger noncompliance, and the amount of time
afforded as a compliance period, should
be consistent with each other and with
the periods applicable under the bid
price rules. Therefore Nasdaq proposes
to extend the period that a company
would need to be below the minimum
market value of listed securities
requirement before being considered
non-compliant from 10 to 30
consecutive trading days. In addition to
providing consistency among the pricerelated tests, Nasdaq believes that this
longer period will prevent a short-term
market-wide decline from causing a
company to become non-compliant.
Nasdaq also proposes to extend from 90
to 180 days the compliance period in
which companies that are noncompliant with the market value of
listed securities and market value of
publicly held shares requirements can
regain compliance.8 Nasdaq believes
that the existing 90-day time frames do
not provide sufficient time for a
company to regain compliance. For
example, if a company chooses to issue
additional shares to evidence
compliance, 90 calendar days is often an
insufficient time to allow a company to
obtain any necessary shareholder
approval, register the shares, and
demonstrate compliance for 10 business
days.
As revised, the maximum amount of
time that could be afforded to a
company that failed to meet the market
value of listed securities or market value
of publicly held shares requirements
would be 18 months. A company could
only receive an extension up to this 18month maximum length if: (i) It failed
to comply during the automatic 180-day
compliance period; 9 (ii) the company
appealed to a Hearings Panel; 10 and (iii)
the Nasdaq Listing and Hearing Review
Council determined to call the matter
for review, stay the company’s
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8 Nasdaq
could apply its authority described in
Rule 5100 to delist a security during a compliance
period if the market value of listed securities or
market value of publicly held shares was so low
that delisting is necessary to maintain the quality
of and public confidence in the market, to prevent
fraudulent and manipulative acts and practices, and
to protect investors and the public interest.
9 Proposed Rules 5810(c)(3)(C) and 5810(c)(3)(D).
10 An appeal to the Hearings Panel stays the
securities delisting. Rule 5815(a)(1). The company
can submit a plan to regain compliance and request
that the Hearings Panel grant an exception to the
listing standards for a limited time period. Rule
5815(a)(5). Based on its review of that plan, the
Hearings Panel can grant the company a maximum
of 180 days from the date of the staff’s delisting
determination to regain compliance. Rule
5815(c)(1)(A).
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delisting,11 and, after reviewing the
company’s compliance plan,12 provide
the company with the maximum 360day period from the date of the Staff
Delisting Determination to regain
compliance.13
Requirements with Respect to
Compliance Plans
Nasdaq also proposes to modify the
periods applicable in cases where a
company can provide staff with a plan
to regain compliance, such as when a
company fails to meet the minimum
requirements for stockholders’ equity,
the number of publicly held shares, or
the number of shareholders.14
Currently, companies are provided 15
calendar days to submit a plan to regain
compliance and, following a review of
the plan, staff can grant the company a
period of up to 105 calendar days from
the initial notification of noncompliance for the company to regain
compliance. Nasdaq’s experience has
been that 15 days is often insufficient
for a company to formulate a
meaningful plan, especially given
current market and economic
conditions, and accordingly proposes to
increase from 15 to 45 the number of
calendar days a company has to present
its plan. Staff would be permitted to
grant up to a 5-day extension of this
period upon good cause shown.15
Further, Nasdaq proposes to increase
from 105 to 180 the number of calendar
days for which staff can grant an
extension of time from its initial
notification of non-compliance.16
Nasdaq believes that this additional
11 Rule 5820(a) provides that an appeal to the
Nasdaq Listing and Hearings Review Council does
not operate to stay a Hearings Panel’s decision to
delist a company. In order for a Panel decision to
be stayed, the Listing Council must call the matter
for review pursuant to Rule 5820(b) and
affirmatively determine to stay the Panel’s decision.
12 When the Listing Council calls a matter for
review it provides the company with a deadline to
submit a written submission. Rule 5820(b). The
Listing Council’s review is based on the written
record, including that submission. Rule 5820(e)(1).
13 Rule 5820(d)(1).
14 Rule 5810(c)(2) and IM–5810–2 provide the
procedures governing deficiencies for which a
company may submit a plan of compliance to
Nasdaq staff. Nasdaq has posted frequently asked
questions at https://www.nasdaq.com/about/faqslisting-information-questions.stm#continued, which
discuss the information a company should consider
in preparing its plan of compliance.
15 It is anticipated that this authority would be
used to address cases where the company could not
timely submit its plan due to events outside the
control of the company, such as when severe
weather interferes with the company’s ability to
provide the necessary information before the
deadline.
16 Nasdaq staff will determine whether to allow
the company additional time, and if so how much
time to allow, based on a review of the company’s
plan of compliance.
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46269
time will better allow companies to
implement a plan to regain compliance.
As revised, the maximum amount of
time that could be afforded to a
company that failed to meet a listing
requirement that allows the submission
of a plan to regain compliance would be
18 months. A company could only
receive an extension up to this 18month maximum length if: (i) After
reviewing the company’s compliance
plan, Nasdaq staff granted the company
the maximum 180-day period to regain
compliance; 17 (ii) the company failed to
comply within the time allowed by staff
and appealed to a Hearings Panel;18 and
(iii) the Nasdaq Listing and Hearing
Review Council determined to call the
matter for review, stay the company’s
delisting, and, after reviewing the
company’s compliance plan, provide
the company with the maximum 360day period from the date of the Staff
Delisting Determination to regain
compliance.19
Implementation
Any company that had not yet been
notified that is was non-compliant with
the market value of listed securities
requirement upon Commission approval
of the proposed rule change would not
be notified until they were below the
requirement for 30 consecutive trading
days.20 Any company that had already
been notified that it was non-compliant
with either the market value of listed
securities requirement or the market
value of publicly held shares
requirement and that was still in the 90
calendar day compliance period for
such failure would have their
compliance period extended until 180
calendar days from the date they were
originally notified of the deficiency.21
No additional time would be provided
to a company that has received a Staff
Delisting Determination for failure to
17 Proposed
Rule 5810(c)(2)(B)(i).
footnote 10, supra.
19 See footnotes 11–13, supra.
20 For example, if a security is below the market
value of listed securities requirement for 7
consecutive trading days when the proposed rule is
approved, the company would not be notified that
it is deficient unless and until the security remains
below the requirement for another 23 consecutive
trading days, such that it remained below for a total
of 30 consecutive trading days.
21 For example, if a company had been notified
that its security was below either the market value
of listed securities or market value of publicly held
shares requirement 30 days before the proposed
rule is approved, such that it had 60 days remaining
in its compliance period, that compliance period
would be extended by 90 days so that the company
would have 150 days remaining in the compliance
period.
18 See
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meet either of those requirements before
the proposed rule change is approved.22
With respect to the proposed changes
to the compliance plan process, if a
company has not yet submitted its plan
of compliance when the proposed rule
change is approved, the deadline to
submit that plan would be extended
until 45 days from the date of staff’s
notification of the deficiency. If the
company had submitted its plan of
compliance when the proposed rule
change is approved, but staff has not yet
made a determination with respect to
whether to grant additional time, staff
would be permitted to grant the
company up to 180 days from staff’s
notification of the deficiency to regain
compliance. If the company has already
received an extension of time to regain
compliance from staff when the
proposed rule change is approved,23 at
the end of that exception staff could,
based on a review of the company at the
time, grant additional time for the
company to regain compliance, up to
180 days from staff’s original
notification of the deficiency.24 No
additional time would be provided to a
company that had already received a
Staff Delisting Determination at the time
the proposed rule change is approved.25
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2. Statutory Basis
Nasdaq believes that the proposed
rule change is consistent with the
provisions of Section 6 of the Act,26 in
general and with Sections 6(b)(5) of the
Act,27 in particular, which requires,
among other things, that a national
securities exchange’s rules must be
designed to prevent fraudulent and
manipulative acts and practices, to
promote just and equitable principles of
trade, and, in general, to protect
investors and the public interest.
Nasdaq believes that the proposed rule
change is consistent with these
22 For example, if a company had been notified
that its security was below either the market value
of listed securities or market value of publicly held
shares requirement 95 days before the proposed
rule is approved, the company would not receive
any additional time as a result of the proposed rule
change. Such companies would continue through
the Hearings and Appeals process, however, and
could receive additional time as provided for in
Rules 5815(c)(1)(A) and 5820(d)(1).
23 Rule 5810(c)(2)(B)(i).
24 The proposal to allow a company additional
time at the end of its extension based on staff’s
further review of the company is consistent with
Nasdaq’s current practice of potentially allowing a
company additional time if it was not initially
granted the full 105 days allowed by current Rule
5810(c)(2)(B)(i).
25 Such companies would continue through the
Hearings and Appeals process, however, and could
receive additional time as provided for in Rules
5815(c)(1)(A) and 5820(d)(1).
26 15 U.S.C. 78f.
27 15 U.S.C. 78f(b)(5).
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requirements in that it would enhance
consistency within Nasdaq’s rules and
between Nasdaq and other markets,
thereby reducing investor confusion and
facilitating capital formation, while
permitting reasonable periods of time
for companies to address instances of
non-compliance with Nasdaq rules.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
Nasdaq does not believe that the
proposed rule change will result in any
burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act, as amended.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants or Others
Written 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 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,
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 (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–NASDAQ–2009–077 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–NASDAQ–2009–077. This
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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 (https://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 inspection and copying 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 such 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 publicly available. All
submissions should refer to File
Number SR–NASDAQ–2009–077 and
should be submitted on or before
September 29, 2009.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.28
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–21644 Filed 9–4–09; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–60609; File No. SR–BX–
2009–056]
Self-Regulatory Organizations;
NASDAQ OMX BX, Inc.; Notice of Filing
and Immediate Effectiveness of
Proposed Rule Change To Amend the
Fee Schedule of the Boston Options
Exchange Facility
September 1, 2009.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (‘‘Act’’
or ‘‘Exchange Act’’) 1 and Rule 19b–4
thereunder,2 notice is hereby given that
on August 31, 2009, NASDAQ OMX BX,
Inc. (the ‘‘Exchange’’) filed with the
28 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
E:\FR\FM\08SEN1.SGM
08SEN1
]]>Agencies
[Federal Register Volume 74, Number 172 (Tuesday, September 8, 2009)]
[Notices]
[Pages 46267-46270]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-21644]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-60611; File No. SR-NASDAQ-2009-077]
Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing of Proposed Rule Change To Modify the Procedures
Followed When a Listed Company Falls Below Certain Listing Requirements
September 2, 2009.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 1919b-4 thereunder,\2\ notice is hereby given
that on August 17, 2009, The NASDAQ Stock Market LLC (``Nasdaq'') filed
with the Securities and Exchange Commission (``Commission'') the
proposed rule change as described in Items I, II, and III below, which
Items have been prepared by Nasdaq. 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 240.1919b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Nasdaq proposes to modify the procedures followed when a listed
company falls below certain listing requirements. Nasdaq will implement
the proposed rule upon approval.
The text of the proposed rule change is below. Proposed new
language is in italics; proposed deletions are in brackets.\3\
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\3\ Changes are marked to the rule text that appears in the
electronic manual of Nasdaq found at https://nasdaqomx.cchwallstreet.com.
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5810. Notification of Deficiency by the Listing Qualifications
Department
When the Listing Qualifications Department determines that a
Company does not meet a listing standard set forth in the Rule 5000
Series, it will immediately notify the Company of the deficiency. As
explained in more detail below, deficiency notifications are of four
types:
(1)-(4) No change.
Notifications of deficiencies that allow for submission of a
compliance plan or an automatic cure or compliance period may result,
after review of the compliance plan or expiration of the cure or
compliance period, in issuance of a Staff Delisting Determination or a
Public Reprimand Letter.
(a)-(b) No change.
IM-5810-1. No change.
(c) Types of Deficiencies and Notifications.
The type of deficiency at issue determines whether the Company will
be immediately suspended and delisted, or whether it may submit a
compliance plan for review or is entitled to an automatic cure or
compliance period before a Staff Delisting Determination is issued. In
the case of a deficiency not specified below, Staff will issue the
Company a Staff Delisting Determination or a Public Reprimand Letter.
(1) No change.
(2) Deficiencies for which a Company may Submit a Plan of
Compliance for Staff Review.
(A) Unless the Company is currently under review by an Adjudicatory
Body for a Staff Delisting Determination, the Listing Qualifications
Department may accept and review a plan to regain compliance when a
Company is deficient with respect to one of the standards listed in
subsections (i) through (iv) below. In accordance with Rule
5810(c)(2)(C), plans provided pursuant to subsections (i) through (iii)
below must be provided generally within [15] 45 calendar days, and in
accordance with Rule 5810(c)(2)(F), plans provided pursuant to
subsection (iv) must be provided generally within 60 calendar days.
(i)-(iv) No change.
IM-5810-2. No change.
[[Page 46268]]
(B) Staff Alternatives Upon Review of Plan Staff may request such
additional information from the Company as is necessary to make a
determination, as described below. In cases other than filing
delinquencies, which are governed by Rule 5810(c)(2)(F) below, upon
review of a plan of compliance, Staff may either:
(i) Grant an extension of time to regain compliance not greater
than [105] 180 calendar days from the date of Staff's initial
notification, unless the Company is currently under review by an
Adjudicatory Body for a Staff Delisting Determination. If Staff grants
an extension, it will inform the Company in writing of the basis for
granting the extension and the terms of the extension;
(ii)-(iii) No change.
(C) Timeline for Submission of Compliance Plans
Except for deficiencies from the standards of Rule 5250(c)(1) or
(2), Staff's notification of deficiencies that allow for compliance
plan review will inform the Company that it has [15] 45 calendar days
to submit a plan to regain compliance with Nasdaq's listing
standard(s). [Within the restrictions of paragraph (B),] Staff may
extend this deadline for up to an additional 5 calendar days upon good
cause shown and may request such additional information from the
Company as is necessary to make a determination regarding whether to
grant such an extension.[, and upon receipt of the Company's plan, may
request additional information from the Company to help it determine
the Company's ability to regain compliance.]
(D)-(F) No change.
(3) Deficiencies for which the Rules Provide a Specified Cure or
Compliance Period
With respect to deficiencies related to the standards listed in
(A)-(E) below, Staff's notification will inform the Company of the
applicable cure or compliance period provided by these Rules and
discussed below. If the Company does not regain compliance within the
specified cure or compliance period, the Listing Qualifications
Department will immediately issue a Staff Delisting Determination
letter.
(A)-(B) No change.
(C) Market Value of Listed Securities [(MVLS)]
A failure to meet the continued listing requirements for [MVLS]
Market Value of Listed Securities shall be determined to exist only if
the deficiency continues for a period of [10] 30 consecutive business
days. Upon such failure, the Company shall be notified promptly and
shall have a period of [90] 180 calendar days from such notification to
achieve compliance [with the applicable continued listing standard].
Compliance can be achieved by meeting the applicable standard for a
minimum of 10 consecutive business days during the [90] 180 day
compliance period.
(D) Market Value of Publicly Held Shares [(MVPHS)]
A failure to meet the continued listing requirement for Market
Value of Publicly Held Shares shall be determined to exist only if the
deficiency continues for a period of 30 consecutive business days. Upon
such failure, the Company shall be notified promptly and shall have a
period of [90] 180 calendar days from such notification to achieve
compliance. [
]Compliance can be achieved by meeting the applicable standard for
a minimum of 10 consecutive business days during the [90] 180 day
compliance period.
(E)-(F) No change.
(4) No change.
(d) No change.
* * * * *
5840. Adjudicatory Process: General Information
(a)-(d) No change.
(e) Computation and Adjustment of Time
(1) No change.
(2) When Staff determines whether a deficiency has occurred with
respect to [bid price, market value of listed securities] the Bid
Price, Market Value of Listed Securities or [market value of publicly
held shares] Market Value of Publicly Held Shares requirements, the
first trading day that the [bid price or market value] Bid Price or
Market Value is below required standards is included in computing the
total number of consecutive trading days of default. Similarly, when
Staff determines whether a Company has regained compliance with the
[bid price, MVLS or MVPHS] Bid Price, Market Value of Listed
Securities, or Market Value of Publicly Held Shares requirements, the
first trading day that the [bid price or market value] Bid Price or
Market Value is at or above required standards is included in computing
the total number of consecutive trading days.
(3)-(4) No change.
(f)-(k) No change.
* * * * *
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, Nasdaq 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. Nasdaq 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
1. Purpose
Nasdaq is proposing to modify certain of the listing rules that
provide the compliance periods associated with Nasdaq's continued
listing rules to make them more consistent and, in some cases, to
provide additional time to companies to regain compliance. In addition,
Nasdaq is proposing to modify the time available to a company to
provide a plan to regain compliance with certain listing requirements
and the length of the extension that Nasdaq staff can allow a company
to regain compliance.\4\
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\4\ Nasdaq is also proposing to eliminate certain abbreviations
that are used inconsistently and utilize defined terms, as
appropriate, in Rules 5810 and 5840, and to remove authority in Rule
5810(c)(2)(C) that is duplicated in Rule 5810(c)(2)(B).
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Price Related Criteria
Under Nasdaq rules, if a company's security has a closing bid price
below $1 for 30 consecutive trading days, it no longer meets the bid
price requirement and is automatically provided 180 calendar days to
regain compliance.\5\ However, under other requirements that are
derived, in part, from the company's price, the company may be found
non-compliant based on fewer days below the applicable threshold or
have less time to regain compliance. Specifically, under the current
rules related to market value of listed securities, a company is non-
compliant after being below the standard for 10 consecutive trading
days and, thereafter, is provided only 90 calendar days to regain
compliance.\6\ Similarly, while the rules for market value of publicly
held shares provide that a company is not deficient until it is below
the standard for 30 consecutive trading days, the company is only
provided with 90 calendar days to regain compliance.\7\ Because
[[Page 46269]]
compliance with each of these rules is directly related to the price of
an issuer's security, Nasdaq believes that the length of time to
trigger non-compliance, and the amount of time afforded as a compliance
period, should be consistent with each other and with the periods
applicable under the bid price rules. Therefore Nasdaq proposes to
extend the period that a company would need to be below the minimum
market value of listed securities requirement before being considered
non-compliant from 10 to 30 consecutive trading days. In addition to
providing consistency among the price-related tests, Nasdaq believes
that this longer period will prevent a short-term market-wide decline
from causing a company to become non-compliant. Nasdaq also proposes to
extend from 90 to 180 days the compliance period in which companies
that are non-compliant with the market value of listed securities and
market value of publicly held shares requirements can regain
compliance.\8\ Nasdaq believes that the existing 90-day time frames do
not provide sufficient time for a company to regain compliance. For
example, if a company chooses to issue additional shares to evidence
compliance, 90 calendar days is often an insufficient time to allow a
company to obtain any necessary shareholder approval, register the
shares, and demonstrate compliance for 10 business days.
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\5\ Rule 5810(b)(3)(A).
\6\ Rule 5810(b)(3)(C). NASDAQ recently changed the period to
regain compliance with the market value of listed securities
requirement from 30 to 90 days. Securities Exchange Act Release No.
59291 (January 23, 2009), 74 FR 5197 (January 29, 2009) (SR-NASDAQ-
2009-002).
\7\ Rule 5810(b)(3)(D).
\8\ Nasdaq could apply its authority described in Rule 5100 to
delist a security during a compliance period if the market value of
listed securities or market value of publicly held shares was so low
that delisting is necessary to maintain the quality of and public
confidence in the market, to prevent fraudulent and manipulative
acts and practices, and to protect investors and the public
interest.
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As revised, the maximum amount of time that could be afforded to a
company that failed to meet the market value of listed securities or
market value of publicly held shares requirements would be 18 months. A
company could only receive an extension up to this 18-month maximum
length if: (i) It failed to comply during the automatic 180-day
compliance period; \9\ (ii) the company appealed to a Hearings Panel;
\10\ and (iii) the Nasdaq Listing and Hearing Review Council determined
to call the matter for review, stay the company's delisting,\11\ and,
after reviewing the company's compliance plan,\12\ provide the company
with the maximum 360-day period from the date of the Staff Delisting
Determination to regain compliance.\13\
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\9\ Proposed Rules 5810(c)(3)(C) and 5810(c)(3)(D).
\10\ An appeal to the Hearings Panel stays the securities
delisting. Rule 5815(a)(1). The company can submit a plan to regain
compliance and request that the Hearings Panel grant an exception to
the listing standards for a limited time period. Rule 5815(a)(5).
Based on its review of that plan, the Hearings Panel can grant the
company a maximum of 180 days from the date of the staff's delisting
determination to regain compliance. Rule 5815(c)(1)(A).
\11\ Rule 5820(a) provides that an appeal to the Nasdaq Listing
and Hearings Review Council does not operate to stay a Hearings
Panel's decision to delist a company. In order for a Panel decision
to be stayed, the Listing Council must call the matter for review
pursuant to Rule 5820(b) and affirmatively determine to stay the
Panel's decision.
\12\ When the Listing Council calls a matter for review it
provides the company with a deadline to submit a written submission.
Rule 5820(b). The Listing Council's review is based on the written
record, including that submission. Rule 5820(e)(1).
\13\ Rule 5820(d)(1).
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Requirements with Respect to Compliance Plans
Nasdaq also proposes to modify the periods applicable in cases
where a company can provide staff with a plan to regain compliance,
such as when a company fails to meet the minimum requirements for
stockholders' equity, the number of publicly held shares, or the number
of shareholders.\14\ Currently, companies are provided 15 calendar days
to submit a plan to regain compliance and, following a review of the
plan, staff can grant the company a period of up to 105 calendar days
from the initial notification of non-compliance for the company to
regain compliance. Nasdaq's experience has been that 15 days is often
insufficient for a company to formulate a meaningful plan, especially
given current market and economic conditions, and accordingly proposes
to increase from 15 to 45 the number of calendar days a company has to
present its plan. Staff would be permitted to grant up to a 5-day
extension of this period upon good cause shown.\15\ Further, Nasdaq
proposes to increase from 105 to 180 the number of calendar days for
which staff can grant an extension of time from its initial
notification of non-compliance.\16\ Nasdaq believes that this
additional time will better allow companies to implement a plan to
regain compliance.
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\14\ Rule 5810(c)(2) and IM-5810-2 provide the procedures
governing deficiencies for which a company may submit a plan of
compliance to Nasdaq staff. Nasdaq has posted frequently asked
questions at https://www.nasdaq.com/about/faqs-listing-information-questions.stm#continued, which discuss the information a company
should consider in preparing its plan of compliance.
\15\ It is anticipated that this authority would be used to
address cases where the company could not timely submit its plan due
to events outside the control of the company, such as when severe
weather interferes with the company's ability to provide the
necessary information before the deadline.
\16\ Nasdaq staff will determine whether to allow the company
additional time, and if so how much time to allow, based on a review
of the company's plan of compliance.
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As revised, the maximum amount of time that could be afforded to a
company that failed to meet a listing requirement that allows the
submission of a plan to regain compliance would be 18 months. A company
could only receive an extension up to this 18-month maximum length if:
(i) After reviewing the company's compliance plan, Nasdaq staff granted
the company the maximum 180-day period to regain compliance; \17\ (ii)
the company failed to comply within the time allowed by staff and
appealed to a Hearings Panel;\18\ and (iii) the Nasdaq Listing and
Hearing Review Council determined to call the matter for review, stay
the company's delisting, and, after reviewing the company's compliance
plan, provide the company with the maximum 360-day period from the date
of the Staff Delisting Determination to regain compliance.\19\
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\17\ Proposed Rule 5810(c)(2)(B)(i).
\18\ See footnote 10, supra.
\19\ See footnotes 11-13, supra.
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Implementation
Any company that had not yet been notified that is was non-
compliant with the market value of listed securities requirement upon
Commission approval of the proposed rule change would not be notified
until they were below the requirement for 30 consecutive trading
days.\20\ Any company that had already been notified that it was non-
compliant with either the market value of listed securities requirement
or the market value of publicly held shares requirement and that was
still in the 90 calendar day compliance period for such failure would
have their compliance period extended until 180 calendar days from the
date they were originally notified of the deficiency.\21\ No additional
time would be provided to a company that has received a Staff Delisting
Determination for failure to
[[Page 46270]]
meet either of those requirements before the proposed rule change is
approved.\22\
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\20\ For example, if a security is below the market value of
listed securities requirement for 7 consecutive trading days when
the proposed rule is approved, the company would not be notified
that it is deficient unless and until the security remains below the
requirement for another 23 consecutive trading days, such that it
remained below for a total of 30 consecutive trading days.
\21\ For example, if a company had been notified that its
security was below either the market value of listed securities or
market value of publicly held shares requirement 30 days before the
proposed rule is approved, such that it had 60 days remaining in its
compliance period, that compliance period would be extended by 90
days so that the company would have 150 days remaining in the
compliance period.
\22\ For example, if a company had been notified that its
security was below either the market value of listed securities or
market value of publicly held shares requirement 95 days before the
proposed rule is approved, the company would not receive any
additional time as a result of the proposed rule change. Such
companies would continue through the Hearings and Appeals process,
however, and could receive additional time as provided for in Rules
5815(c)(1)(A) and 5820(d)(1).
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With respect to the proposed changes to the compliance plan
process, if a company has not yet submitted its plan of compliance when
the proposed rule change is approved, the deadline to submit that plan
would be extended until 45 days from the date of staff's notification
of the deficiency. If the company had submitted its plan of compliance
when the proposed rule change is approved, but staff has not yet made a
determination with respect to whether to grant additional time, staff
would be permitted to grant the company up to 180 days from staff's
notification of the deficiency to regain compliance. If the company has
already received an extension of time to regain compliance from staff
when the proposed rule change is approved,\23\ at the end of that
exception staff could, based on a review of the company at the time,
grant additional time for the company to regain compliance, up to 180
days from staff's original notification of the deficiency.\24\ No
additional time would be provided to a company that had already
received a Staff Delisting Determination at the time the proposed rule
change is approved.\25\
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\23\ Rule 5810(c)(2)(B)(i).
\24\ The proposal to allow a company additional time at the end
of its extension based on staff's further review of the company is
consistent with Nasdaq's current practice of potentially allowing a
company additional time if it was not initially granted the full 105
days allowed by current Rule 5810(c)(2)(B)(i).
\25\ Such companies would continue through the Hearings and
Appeals process, however, and could receive additional time as
provided for in Rules 5815(c)(1)(A) and 5820(d)(1).
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2. Statutory Basis
Nasdaq believes that the proposed rule change is consistent with
the provisions of Section 6 of the Act,\26\ in general and with
Sections 6(b)(5) of the Act,\27\ in particular, which requires, among
other things, that a national securities exchange's rules must be
designed to prevent fraudulent and manipulative acts and practices, to
promote just and equitable principles of trade, and, in general, to
protect investors and the public interest. Nasdaq believes that the
proposed rule change is consistent with these requirements in that it
would enhance consistency within Nasdaq's rules and between Nasdaq and
other markets, thereby reducing investor confusion and facilitating
capital formation, while permitting reasonable periods of time for
companies to address instances of non-compliance with Nasdaq rules.
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\26\ 15 U.S.C. 78f.
\27\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
Nasdaq does not believe that the proposed rule change will result
in any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act, as amended.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others
Written 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 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, 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 (https://www.sec.gov/rules/sro.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-NASDAQ-2009-077 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-NASDAQ-2009-077. 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 (https://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 inspection
and copying 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 such 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 publicly available. All
submissions should refer to File Number SR-NASDAQ-2009-077 and should
be submitted on or before September 29, 2009.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\28\
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\28\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-21644 Filed 9-4-09; 8:45 am]
BILLING CODE 8010-01-P
