Self-Regulatory Organizations; NASDAQ Stock Market, LLC; Notice of Filing of Proposed Rule Change To Amend The NASDAQ OMX Group, Inc. By-Laws, 10418-10420 [2011-4117]
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10418
Federal Register / Vol. 76, No. 37 / Thursday, February 24, 2011 / Notices
the rules thereunder that are applicable
to the proposed rule change include:
• Section 6(b)(5) of the Act, which
requires, among other things, that the
rules of a national securities exchange
be designed to promote just and
equitable principles of trade, to remove
impediments to and perfect the
mechanism of a free and open market
and a national market system and, in
general, to protect investors and the
public interest, and not be designed to
permit unfair discrimination between
customers, issuers, brokers, or
dealers; 18 and
• Section 11A(a) of the Act, in which
Congress found that it is in the public
interest and appropriate for the
protection of investors and the
maintenance of fair and orderly markets
to assure ‘‘economically efficient
execution of securities transactions,’’
‘‘fair competition among brokers and
dealers and among exchange markets,’’
‘‘the availability to brokers, dealers, and
investors of information with respect to
quotations for and transactions in
securities,’’ and ‘‘the practicability of
brokers executing investors’ orders in
the best market.’’ 19
V. Procedure: Request for Written
Comments
The Commission requests written
views, data, and arguments with respect
to the concerns identified above as well
as any other relevant concerns. Such
comments should be submitted by April
11, 2011. Rebuttal comments should be
submitted by April 25, 2011. Although
there do not appear to be any issues
relevant to disapproval which would be
facilitated by an oral presentation of
views, data, and arguments, the
Commission will consider, pursuant to
Rule 19b–4, any request for an
opportunity to make an oral
presentation.20
The Commission asks that
commenters address the merit of the
Exchange’s statements in support of the
proposal, in addition to any other
comments they may wish to submit
about the proposed rule change.
Interested persons are invited to submit
written data, views, and arguments
concerning the proposed rule change,
including whether the proposed rule
18 15
U.S.C. 78f(b)(5).
U.S.C. 78k–1(a)(1)(C)(i)–(iv).
20 15 U.S.C. 78s(b)(2). Section 19(b)(2) of the Act
grants the Commission flexibility to determine what
type of proceeding—either oral or notice and
opportunity for written comments—is appropriate
for consideration of a particular proposal by a selfregulatory organization. See Securities Acts
Amendments of 1975, Report of the Senate
Committee on Banking, Housing and Urban Affairs
to Accompany S. 249, S. Rep. No. 75, 94th Cong.,
1st Sess. 30 (1975).
emcdonald on DSK2BSOYB1PROD with NOTICES
19 15
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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/other.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–EDGA–2010–18 on the
subject line.
Paper Comments
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.21
Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011–4158 Filed 2–23–11; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–63925; File No. SR–
NASDAQ–2011–025]
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–1090.
Self-Regulatory Organizations;
NASDAQ Stock Market, LLC; Notice of
Filing of Proposed Rule Change To
Amend The NASDAQ OMX Group, Inc.
By-Laws
All submissions should refer to File
Number SR–EDGA–2010–18. The 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/other.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 Web site viewing and
printing 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–EDGA–
2010–18 and should be submitted on or
before April 11, 2011. Rebuttal
comments should be submitted by April
25, 2011.
February 17, 2011.
PO 00000
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’) 1 and Rule 19b–4 2 thereunder,
notice is hereby given that on February
8, 2011, The NASDAQ Stock Market
LLC (‘‘NASDAQ’’ 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 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
The NASDAQ Stock Market LLC
proposes to amend the By-Laws of its
parent corporation, The NASDAQ OMX
Group, Inc. (‘‘NASDAQ OMX’’).
The text of the proposed rule change
is available on the Exchange’s Web site
at https://www.nasdaq.cchwall
street.com, at the principal office of the
Exchange, on the Commission’s Web
site at https://www.sec.gov, and at the
Commission’s Public Reference Room.
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
Exchange included statements
concerning the purpose of and basis for
the proposed rule change. The text of
these statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in Sections A, B, and C below,
21 17
CFR 200.30–3(a)(57).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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Federal Register / Vol. 76, No. 37 / Thursday, February 24, 2011 / Notices
of the most significant aspects of such
statements.
emcdonald on DSK2BSOYB1PROD with NOTICES
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
NASDAQ OMX is proposing to make
certain clarifying amendments to its ByLaws. Specifically, NASDAQ OMX is
proposing to amend: (i) The name of the
Nominating Committee to the
‘‘Nominating & Governance Committee’’;
(ii) a NASDAQ OMX PHLX, Inc.
reference to reflect a recent conversion
to a limited liability company; and (iii)
By-Law Article IV, Section 4.4 to clarify
that broker nonvotes are not counted as
a vote cast either ‘‘for’’ or ‘‘against’’ a
Director.
Currently, NASDAQ OMX By-Laws
provide for a Nominating Committee
which Committee is appointed pursuant
to the By-Laws. The Exchange is
proposing to name this Committee the
‘‘Nominating & Governance Committee.’’
The Exchange proposes to amend the
By-Laws to change all references to
‘‘Nominating Committee’’ to state
‘‘Nominating & Governance Committee.’’
The Exchange is proposing to rename
the Nominating Committee in order that
all of its current functions are reflected
in the title of the committee. The
current functions of the Nominating
Committee encompass certain functions
that are deemed governance functions.
By way of example, and in addition
to the responsibilities listed in By-Law
Article IV, Section 4.13(h), the
Nominating Committee consults with
the Board and the management of the
Company to determine the
characteristics, skills and experience
desired for the Board as a whole and for
its individual members, with the
objective of having a Board that reflects
diverse backgrounds. The NonExecutive Chairman of the Board and
the Nominating Committee is also
responsible for overseeing the annual
director evaluation. As part of the
annual process of determining director
representation on the corporate
committees, the Non-Executive
Chairman solicits input from each
committee chair and Board members on
the effectiveness of the committee, the
committee chair and the individual
Board member. The Nominating
Committee receives the results and
reviews the overall effectiveness of the
Board.
This proposed amendment to rename
the Nominating Committee does not
change the function of this committee.
This proposal is merely to clarify the
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17:21 Feb 23, 2011
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current function of this committee and
its governance role with respect to the
Board selection process.
Second, NASDAQ OMX PHLX, Inc.
recently filed a rule change to convert
NASDAQ OMX PHLX from a Delaware
corporation to a Delaware limited
liability company agreement.3 At this
time NASDAQ OMX proposes to amend
the definitions at Article 1, specifically
section (o) to change the reference to
‘‘NASDAQ OMX PHLX, Inc.’’ to
‘‘NASDAQ OMX PHLX LLC.’’ This
amendment is not substantive and
merely seeks to correct the name of a
NASDAQ OMX subsidiary.
Finally, NASDAQ OMX proposes to
add the words ‘‘and broker nonvotes’’ to
By-Law Article IV, Section 4–4 [sic] to
clarify that broker nonvotes are not
counted as a vote cast either ‘‘for’’ or
‘‘against’’ that Director’s election.
In 2009, New York Stock Exchange
LLC (‘‘NYSE’’) Rule 452 was amended to
eliminate broker discretionary voting for
the election of Directors with one
exception.4 Previously, NYSE Rule 452
permitted brokers to vote without voting
instructions from the beneficial owner 5
on uncontested elections of directors.
The rule change requires instructions
from the beneficial owner to give a
proxy to vote for a director with an
exception for companies registered
under the Investment Company Act of
1940.6 Therefore, when brokers do not
have discretion to vote uninstructed
shares on a particular proposal, the
stockholder’s failure to instruct the
broker will result in a ‘‘broker nonvote.’’
Under Delaware case law, broker nonvotes are not considered as votes cast for
or against a proposal or director
nominee.7 In its election of directors,
NASDAQ OMX is proposing to clarify
its current practice of not counting a
broker nonvote as a vote cast either for
3 See Securities Exchange Act Release No. 62783
(August 27, 2010), 75 FR 54204 (September 3, 2010)
(SR–Phlx–2010–104).
4 See Securities Exchange Act Release No. 60215
(July 1, 2009), 74 FR 33293 (July 10, 2009) (SR–
NYSE–2006–92) (a rule change to eliminate broker
discretionary voting for all elections of directors at
shareholder meetings held on or after January 1,
2010, whether contested or not, except for
companies registered under the 1940 Act).
5 A shareholder of a public company may hold
shares either directly, as the record holder, or
indirectly, as the beneficial holder, with the shares
held in the name of the beneficial shareholder’s
broker-dealer, bank nominee, or custodian
(‘‘securities intermediary’’), which is the record
holder. The latter generally is referred to as holding
securities in ‘‘street name.’’ Securities
intermediaries, on behalf of beneficial owners, hold
a substantial majority of exchange securities.
6 See NYSE Rule 452.10(3) [sic]. The Commission
notes that the correct reference is NYSE Rule
452.11(19).
7 See Berlin v. Emerald Partners, Del Supr. 552
A.2d 482 (1988).
PO 00000
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10419
or against a director’s election. In 2010,
NASDAQ OMX amended its By-Laws to
state that in an uncontested election, a
majority voting standard would apply to
the election of its directors.8 This
requires directors to be elected by the
holders of a majority of the votes cast at
any meeting for the election of directors
at which a quorum is present in an
uncontested election. A plurality
standard still remains in a contested
election. The practice of not counting a
broker nonvote as a vote cast either for
or against a director’s election remains
unchanged by the amendment to a
majority vote standard. The Exchange is
proposing to retain its current practice
and codify such practice in its By-Laws
at Article IV, Section 4.4. This Section
4.4 currently specifies that abstentions 9
are similarly not counted as a vote cast
either for or against the director’s
election.10
This proposal is non-substantive and
merely clarifies the existing practice of
counting broker non votes [sic]. The
Exchange believes that this additional
language to Article IV, Section 4.4 will
assist shareholders in understanding the
manor [sic] in which directors are
elected pursuant to NASDAQ OMX’s
By-Laws.
2. Statutory Basis
The NASDAQ Exchange believes that
the proposed rule change is consistent
with the provisions of Section 6 of the
Act,11 in general, and with Sections
6(b)(5) of the Act,12 in particular, in that
the proposal enables the NASDAQ
Exchange to be so organized as to have
the capacity to be able to carry out the
purposes of the Act and to comply with
and enforce compliance by members
and persons associated with members
with provisions of the Act, the rules and
regulations thereunder, and selfregulatory organization rules, and is
designed to prevent fraudulent and
manipulative acts and practices, to
promote just and equitable principles of
trade, 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
8 See Securities Exchange Act Release No. 61876
(April 8, 2010), 75 FR 19436 (April 8, 2010) [sic]
(SR–NASDAQ–2010–025).
9 An abstention is the voluntary act of not voting
by a stockholder who is present at a meeting and
entitled to vote.
10 In either a majority or plurality election, broker
non-votes and abstentions are considered for
purposes of establishing a quorum. A quorum is a
majority of the shares entitled to vote, present in
person or by proxy.
11 15 U.S.C. 78f.
12 15 U.S.C. 78f(b)(2), [sic] (5).
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Federal Register / Vol. 76, No. 37 / Thursday, February 24, 2011 / Notices
mechanism of a free and open market
and a national market system, and, in
general, to protect investors and the
public interest.
The Exchange believes that the
proposed amendments are clarifying
amendments or are non-substantive.
The proposals would provide the proper
Committee and entity names, with
respect to the proposals to change the
Nominating Committee and NASDAQ
OMX PHLX names, and in the case of
the broker nonvote proposal, would
provide additional information to
shareholders. The Exchange believes
that these proposed amendments protect
investors and the public interest,
including NASDAQ OMX shareholders,
in that the proposed changes would
serve to clarify NASDAQ OMX’s ByLaws and processes for its annual
election.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will result in
any burden on competition not
necessary or appropriate in furtherance
of the purposes of the Act.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants or Others
No written comments were either
solicited or received.
emcdonald on DSK2BSOYB1PROD with NOTICES
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Within 45 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
shall: (a) By order approve or
disapprove 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
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17:21 Feb 23, 2011
Jkt 223001
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–NASDAQ–2011–025 on the
subject line.
Notice of delegation of
authority.
ACTION:
This document provides the
public notice of the delegation of
Paper Comments
authority for certain investment
activities by the Administrator of the
• Send paper comments in triplicate
Small Business Administration (SBA) to
to Elizabeth M. Murphy, Secretary,
the Agency Licensing Committee.
Securities and Exchange Commission,
FOR FURTHER INFORMATION CONTACT:
100 F Street, NE., Washington, DC
Sean Greene, Associate Administrator
20549–1090.
for Investment, U.S. Small Business
All submissions should refer to File
Administration, 409 3rd Street, SW.,
Number SR–NASDAQ–2011–025. This
Washington, DC 20416; (202) 205–2227
file number should be included on the
or sbic@sba.gov.
subject line if e-mail is used. To help the
SUPPLEMENTARY INFORMATION: This
Commission process and review your
document provides the public notice of
comments more efficiently, please use
the Administrator’s delegation of
only one method. The Commission will
authority to the Agency Licensing
post all comments on the Commission’s
Committee to review and recommend to
Internet Web site (https://www.sec.gov/
the Administrator for approval
rules/sro.shtml). Copies of the
applications for licenses to operate as a
submission, all subsequent
small business investment company
amendments, all written statements
under the Small Business Investment
with respect to the proposed rule
Act of 1958, as amended.
change that are filed with the
This delegation of authority reads as
Commission, and all written
follows:
communications relating to the
Pursuant to the authority vested in me
proposed rule change between the
pursuant to section 301 of the Small
Commission and any person, other than Business Investment Act of 1958, as
those that may be withheld from the
amended, the authority to take any and
public in accordance with the
all actions necessary to review
provisions of 5 U.S.C. 552, will be
applications for licensing under section
available for website viewing and
301 of the Small Business Investment
printing in the Commission’s Public
Act of 1958, as amended, and to
Reference Room, 100 F Street, NE.,
recommend to the Administrator which
Washington, DC 20549, on official
such applications should be approved is
business days between the hours of 10
delegated to the Agency Licensing
a.m. and 3 p.m. Copies of such filing
Committee.
also will be available for inspection and
The Agency Licensing Committee
copying at the principal office of the
shall be composed of the following
Exchange. All comments received will
members: Deputy Administrator, Chair;
be posted without change; the
Associate Administrator for Capital
Commission does not edit personal
Access; Associate Administrator for
identifying information from
Investment; General Counsel; Deputy
submissions. You should submit only
General Counsel; Chief Financial
information that you wish to make
Officer.
This authority revokes all other
available publicly. All submissions
authorities granted by the Administrator
should refer to File No. SR–NASDAQ–
to recommend and approve applications
2011–025 and should be submitted on
for a license to operate as a small
or before March 17, 2011.
business investment company under the
For the Commission, by the Division of
Small Business Investment Act of 1958,
Trading and Markets, pursuant to delegated
as amended. This authority may not be
authority.13
re-delegated; however, in the event that
Cathy H. Ahn,
the person serving in one of the
Deputy Secretary.
positions listed as a member of the
[FR Doc. 2011–4117 Filed 2–23–11; 8:45 am]
Agency Licensing Committee is absent
BILLING CODE 8011–01–P
from the office, as defined in SBA
Standard Operating Procedure 00 01 2,
Chapter 3, paragraph 2, or is unable to
perform the functions and duties of his
SMALL BUSINESS ADMINISTRATION
or her position, the individual serving
in an acting capacity, pursuant to a
Delegation of Authority
written and established line of
AGENCY: U.S. Small Business
succession, shall serve on the
Administration.
Committee during such absence or
inability. In addition, if one of the
13 17 CFR 200.30–3(a)(12).
positions listed as a member of the
PO 00000
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SUMMARY:
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]]>Agencies
[Federal Register Volume 76, Number 37 (Thursday, February 24, 2011)]
[Notices]
[Pages 10418-10420]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-4117]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-63925; File No. SR-NASDAQ-2011-025]
Self-Regulatory Organizations; NASDAQ Stock Market, LLC; Notice
of Filing of Proposed Rule Change To Amend The NASDAQ OMX Group, Inc.
By-Laws
February 17, 2011.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 \2\ thereunder, notice is hereby given
that on February 8, 2011, The NASDAQ Stock Market LLC (``NASDAQ'' 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
NASDAQ. The Commission is publishing this notice to solicit comments on
the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The NASDAQ Stock Market LLC proposes to amend the By-Laws of its
parent corporation, The NASDAQ OMX Group, Inc. (``NASDAQ OMX'').
The text of the proposed rule change is available on the Exchange's
Web site at https://www.nasdaq.cchwallstreet.com, at the principal
office of the Exchange, on the Commission's Web site at https://www.sec.gov, and at the Commission's Public Reference Room.
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 Exchange included statements
concerning the purpose of and basis for the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
Sections A, B, and C below,
[[Page 10419]]
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 OMX is proposing to make certain clarifying amendments to
its By-Laws. Specifically, NASDAQ OMX is proposing to amend: (i) The
name of the Nominating Committee to the ``Nominating & Governance
Committee''; (ii) a NASDAQ OMX PHLX, Inc. reference to reflect a recent
conversion to a limited liability company; and (iii) By-Law Article IV,
Section 4.4 to clarify that broker nonvotes are not counted as a vote
cast either ``for'' or ``against'' a Director.
Currently, NASDAQ OMX By-Laws provide for a Nominating Committee
which Committee is appointed pursuant to the By-Laws. The Exchange is
proposing to name this Committee the ``Nominating & Governance
Committee.'' The Exchange proposes to amend the By-Laws to change all
references to ``Nominating Committee'' to state ``Nominating &
Governance Committee.'' The Exchange is proposing to rename the
Nominating Committee in order that all of its current functions are
reflected in the title of the committee. The current functions of the
Nominating Committee encompass certain functions that are deemed
governance functions.
By way of example, and in addition to the responsibilities listed
in By-Law Article IV, Section 4.13(h), the Nominating Committee
consults with the Board and the management of the Company to determine
the characteristics, skills and experience desired for the Board as a
whole and for its individual members, with the objective of having a
Board that reflects diverse backgrounds. The Non-Executive Chairman of
the Board and the Nominating Committee is also responsible for
overseeing the annual director evaluation. As part of the annual
process of determining director representation on the corporate
committees, the Non-Executive Chairman solicits input from each
committee chair and Board members on the effectiveness of the
committee, the committee chair and the individual Board member. The
Nominating Committee receives the results and reviews the overall
effectiveness of the Board.
This proposed amendment to rename the Nominating Committee does not
change the function of this committee. This proposal is merely to
clarify the current function of this committee and its governance role
with respect to the Board selection process.
Second, NASDAQ OMX PHLX, Inc. recently filed a rule change to
convert NASDAQ OMX PHLX from a Delaware corporation to a Delaware
limited liability company agreement.\3\ At this time NASDAQ OMX
proposes to amend the definitions at Article 1, specifically section
(o) to change the reference to ``NASDAQ OMX PHLX, Inc.'' to ``NASDAQ
OMX PHLX LLC.'' This amendment is not substantive and merely seeks to
correct the name of a NASDAQ OMX subsidiary.
---------------------------------------------------------------------------
\3\ See Securities Exchange Act Release No. 62783 (August 27,
2010), 75 FR 54204 (September 3, 2010) (SR-Phlx-2010-104).
---------------------------------------------------------------------------
Finally, NASDAQ OMX proposes to add the words ``and broker
nonvotes'' to By-Law Article IV, Section 4-4 [sic] to clarify that
broker nonvotes are not counted as a vote cast either ``for'' or
``against'' that Director's election.
In 2009, New York Stock Exchange LLC (``NYSE'') Rule 452 was
amended to eliminate broker discretionary voting for the election of
Directors with one exception.\4\ Previously, NYSE Rule 452 permitted
brokers to vote without voting instructions from the beneficial owner
\5\ on uncontested elections of directors. The rule change requires
instructions from the beneficial owner to give a proxy to vote for a
director with an exception for companies registered under the
Investment Company Act of 1940.\6\ Therefore, when brokers do not have
discretion to vote uninstructed shares on a particular proposal, the
stockholder's failure to instruct the broker will result in a ``broker
nonvote.''
---------------------------------------------------------------------------
\4\ See Securities Exchange Act Release No. 60215 (July 1,
2009), 74 FR 33293 (July 10, 2009) (SR-NYSE-2006-92) (a rule change
to eliminate broker discretionary voting for all elections of
directors at shareholder meetings held on or after January 1, 2010,
whether contested or not, except for companies registered under the
1940 Act).
\5\ A shareholder of a public company may hold shares either
directly, as the record holder, or indirectly, as the beneficial
holder, with the shares held in the name of the beneficial
shareholder's broker-dealer, bank nominee, or custodian
(``securities intermediary''), which is the record holder. The
latter generally is referred to as holding securities in ``street
name.'' Securities intermediaries, on behalf of beneficial owners,
hold a substantial majority of exchange securities.
\6\ See NYSE Rule 452.10(3) [sic]. The Commission notes that the
correct reference is NYSE Rule 452.11(19).
---------------------------------------------------------------------------
Under Delaware case law, broker non-votes are not considered as
votes cast for or against a proposal or director nominee.\7\ In its
election of directors, NASDAQ OMX is proposing to clarify its current
practice of not counting a broker nonvote as a vote cast either for or
against a director's election. In 2010, NASDAQ OMX amended its By-Laws
to state that in an uncontested election, a majority voting standard
would apply to the election of its directors.\8\ This requires
directors to be elected by the holders of a majority of the votes cast
at any meeting for the election of directors at which a quorum is
present in an uncontested election. A plurality standard still remains
in a contested election. The practice of not counting a broker nonvote
as a vote cast either for or against a director's election remains
unchanged by the amendment to a majority vote standard. The Exchange is
proposing to retain its current practice and codify such practice in
its By-Laws at Article IV, Section 4.4. This Section 4.4 currently
specifies that abstentions \9\ are similarly not counted as a vote cast
either for or against the director's election.\10\
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\7\ See Berlin v. Emerald Partners, Del Supr. 552 A.2d 482
(1988).
\8\ See Securities Exchange Act Release No. 61876 (April 8,
2010), 75 FR 19436 (April 8, 2010) [sic] (SR-NASDAQ-2010-025).
\9\ An abstention is the voluntary act of not voting by a
stockholder who is present at a meeting and entitled to vote.
\10\ In either a majority or plurality election, broker non-
votes and abstentions are considered for purposes of establishing a
quorum. A quorum is a majority of the shares entitled to vote,
present in person or by proxy.
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This proposal is non-substantive and merely clarifies the existing
practice of counting broker non votes [sic]. The Exchange believes that
this additional language to Article IV, Section 4.4 will assist
shareholders in understanding the manor [sic] in which directors are
elected pursuant to NASDAQ OMX's By-Laws.
2. Statutory Basis
The NASDAQ Exchange believes that the proposed rule change is
consistent with the provisions of Section 6 of the Act,\11\ in general,
and with Sections 6(b)(5) of the Act,\12\ in particular, in that the
proposal enables the NASDAQ Exchange to be so organized as to have the
capacity to be able to carry out the purposes of the Act and to comply
with and enforce compliance by members and persons associated with
members with provisions of the Act, the rules and regulations
thereunder, and self-regulatory organization rules, and is designed to
prevent fraudulent and manipulative acts and practices, to promote just
and equitable principles of trade, 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
[[Page 10420]]
mechanism of a free and open market and a national market system, and,
in general, to protect investors and the public interest.
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\11\ 15 U.S.C. 78f.
\12\ 15 U.S.C. 78f(b)(2), [sic] (5).
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The Exchange believes that the proposed amendments are clarifying
amendments or are non-substantive. The proposals would provide the
proper Committee and entity names, with respect to the proposals to
change the Nominating Committee and NASDAQ OMX PHLX names, and in the
case of the broker nonvote proposal, would provide additional
information to shareholders. The Exchange believes that these proposed
amendments protect investors and the public interest, including NASDAQ
OMX shareholders, in that the proposed changes would serve to clarify
NASDAQ OMX's By-Laws and processes for its annual election.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
result in any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 45 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 shall:
(a) By order approve or disapprove 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-2011-025 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-2011-025. 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 website
viewing and printing 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
available publicly. All submissions should refer to File No. SR-NASDAQ-
2011-025 and should be submitted on or before March 17, 2011.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
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\13\ 17 CFR 200.30-3(a)(12).
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Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-4117 Filed 2-23-11; 8:45 am]
BILLING CODE 8011-01-P
