Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Modify an Initial Listing Standard for the Nasdaq Global Select Market, 20744-20747 [2011-8914]
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Federal Register / Vol. 76, No. 71 / Wednesday, April 13, 2011 / Notices
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–2011–051 on the
subject line.
Paper Comments
mstockstill on DSKH9S0YB1PROD with NOTICES
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–1090.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.15
Cathy Ahn,
Deputy Secretary.
[FR Doc. 2011–8917 Filed 4–12–11; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–64264; File No. SR–FINRA–
2011–008]
Self-Regulatory Organizations;
Financial Industry Regulatory
Authority, Inc.; Notice of Designation
of a Longer Period for Commission
Action on Proposed Rule Change To
Require Public Disclosure of Any
Access or Post-Transaction Fees for
Executions Against a Public Quotation
in an OTC Equity Security
April 8, 2011.
On February 18, 2011, the Financial
Industry Regulatory Authority, Inc.
(‘‘FINRA’’) filed with the Securities and
All submissions should refer to File
Exchange Commission (‘‘Commission’’),
Number SR–NASDAQ–2011–051. This
pursuant to Section 19(b)(1) of the
file number should be included on the
Securities Exchange Act of 1934
subject line if e-mail is used. To help the
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a
Commission process and review your
proposed rule change to require each
comments more efficiently, please use
member to disclose on its website any
only one method. The Commission will fees imposed against its published
post all comments on the Commission’s quotation in any OTC Equity Security,
Internet Web site (https://www.sec.gov/
consistent with FINRA Rule 6450
rules/sro.shtml). Copies of the
(Restrictions on Access Fees). The
submission, all subsequent
proposed rule change was published for
amendments, all written statements
comment in the Federal Register on
with respect to the proposed rule
March 3, 2011.3 The Commission
change that are filed with the
received two comments on the
Commission, and all written
proposal.4
Section 19(b)(2) of the Act 5 provides
communications relating to the
that, within 45 days of the publication
proposed rule change between the
Commission and any person, other than of notice of the filing of a proposed rule
change, or within such longer period up
those that may be withheld from the
to 90 days as the Commission may
public in accordance with the
designate if it finds such longer period
provisions of 5 U.S.C. 552, will be
to be appropriate and publishes its
available for Web site viewing and
reasons for so finding or as to which the
printing in the Commission’s Public
self-regulatory organization consents,
Reference Room, 100 F Street, NE.,
the Commission shall either approve the
Washington, DC 20549, on official
proposed rule change, disapprove the
business days between the hours of 10
proposed rule change, or institute
a.m. and 3 p.m. Copies of such filing
proceedings to determine whether the
also will be available for inspection and
copying at the principal office of the
15 17 CFR 200.30–3(a)(12).
Exchange. All comments received will
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
be posted without change; the
3 See Securities Exchange Act Release No. 63960
Commission does not edit personal
(February 24, 2011), 76 FR 11829 (‘‘Notice’’).
identifying information from
4 See Letter from Daniel Zinn, General Counsel,
submissions. You should submit only
OTC Markets Group, Inc., to Elizabeth M. Murphy,
information that you wish to make
Secretary, Commission, dated March 22, 2011
(‘‘OTC Markets Letter’’) and letter from Kimberly
publicly available. All submissions
Unger, Executive Director, The Security Traders
should refer to File Number SR–
Association of New York, Inc. to Elizabeth M.
NASDAQ–2011–051 and should be
Murphy, Secretary, Commission, dated April 6,
2011 (‘‘STANY Letter’’).
submitted on or before May 4, 2011.
5 15
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U.S.C. 78s(b)(2).
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proposed rule change should be
disapproved. The 45th day for this filing
is April 17, 2011.
The Commission is hereby extending
the 45-day period for Commission
action on the proposed rule change. The
Commission finds that it is appropriate
to designate a longer period within
which to take action on the proposed
rule change. The extension of time will
ensure that the Commission has
sufficient time to consider and take
action on FINRA’s proposal in light of,
among other things, the comments
received on the proposal.
Accordingly, pursuant to Section
19(b)(2)(A)(ii)(I) of the Act 6 and for the
reasons stated above, the Commission
designates May 25, 2011, as the date by
which the Commission should either
approve or disapprove, or institute
proceedings to determine whether to
disapprove, the proposed rule change
File No. SR–FINRA–2011–008.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.7
Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011–8916 Filed 4–12–11; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–64263; File No. SR–
NASDAQ–2011–050]
Self-Regulatory Organizations; The
NASDAQ Stock Market LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Modify an
Initial Listing Standard for the Nasdaq
Global Select Market
April 8, 2011.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on April 1,
2011, The NASDAQ Stock Market LLC
(‘‘Nasdaq’’) filed with the Securities and
Exchange Commission (‘‘Commission’’)
the proposed rule change as described
in Items I and III below, which Items
have been prepared by Nasdaq. Nasdaq
has designated the proposed rule change
as effecting a change described under
Rule 19b–4(f)(6) under the Act,3 which
renders the proposal effective upon
filing with the Commission. The
Commission is publishing this notice to
6 15
U.S.C. 78s(b)(2)(A)(ii)(I).
CFR 200.30–3(a)(31).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 17 CFR 240.19b–4(f)(6).
7 17
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Federal Register / Vol. 76, No. 71 / Wednesday, April 13, 2011 / Notices
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of the Substance
of the Proposed Rule Change
Nasdaq proposes to modify an initial
listing standard for the Nasdaq Global
Select Market. Nasdaq will implement
the proposed rule change immediately.
The text of the proposed rule change
is below. Proposed new language is in
italics; proposed deletions are in
brackets.4
mstockstill on DSKH9S0YB1PROD with NOTICES
5310. Definitions and Computations
(a)–(i) No change.
(j) In computing total assets and
stockholders’ equity for purposes of
Rule 5315(f)(3)(D), Nasdaq will rely on
a Company’s most recent publicly
reported financial statements subject to
the adjustments described below:
(1) Application of Use of Proceeds—
If a company is in registration with the
SEC and is in the process of an equity
offering, adjustments should be made to
reflect the net proceeds of that offering,
and the specified intended
application(s) of such proceeds to:
(A) Pay off existing debt or other
financial instruments: The adjustment
will include elimination of the actual
historical interest expense on debt or
other financial instruments classified as
liabilities under generally accepted
accounting principles being retired with
offering proceeds of all relevant periods
or by conversion into common stock at
the time of an initial public offering
occurring in conjunction with the
company’s listing. If the event giving
rise to the adjustment occurred during
a time-period such that pro forma
amounts are not set forth in the SEC
registration statement (typically, the pro
forma effect of repayment of debt will be
provided in the current registration
statement only with respect to the last
fiscal year plus any interim period in
accordance with SEC rules), the
company must prepare the relevant
adjusted financial data to reflect the
adjustment to its historical financial
data, and its outside audit firm must
provide a report of having applied
agreed-upon procedures with respect to
such adjustments. Such report must be
prepared in accordance with the
standards established by the American
Institute of Certified Public
Accountants.
(B) Fund an acquisition:
(i) The adjustments will include those
applicable with respect to acquisition(s)
4 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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to be funded with the proceeds.
Adjustments will be made that are
disclosed as such in accordance with
Rule 3–05 ‘‘Financial Statements of
Business Acquired or to be Acquired’’
and Article 11 of Regulation S–X.
Adjustments will be made for all the
relevant periods for those acquisitions
for which historical financial
information of the acquiree is required
to be disclosed in the SEC registration
statement; and (ii) Adjustments
applicable to any period for which pro
forma numbers are not set forth in the
registration statement shall be
accompanied by the relevant adjusted
financial data to combine the historical
results of the acquiree (or relevant
portion thereof) and acquiror, as
disclosed in the company’s SEC filing.
Under SEC rules, the number of periods
disclosed depends upon the significance
level of the acquiree to the acquiror. The
adjustments will include those
necessary to reflect (a) the allocation of
the purchase price, including adjusting
assets and liabilities of the acquiree to
fair value recognizing any intangibles
(and associated amortization and
depreciation), and (b) the effects of
additional financing to complete the
acquisition. The company must prepare
the relevant adjusted financial data to
reflect the adjustment to its historical
financial data, and its outside audit
firm must provide a report of having
applied agreed-upon procedures with
respect to such adjustments. Such
report must be prepared in accordance
with the standards established by the
American Institute of Certified Public
Accountants.
(2) Acquisitions and Dispositions—In
instances other than acquisitions (and
related dispositions of part of the
acquiree) funded with the use of
proceeds, adjustments will be made for
those acquisitions and dispositions that
are disclosed as such in a company’s
financial statements in accordance with
Rule 3–05 ‘‘Financial Statements of
Business Acquired or to be Acquired’’
and Article 11 of Regulation S–X. If the
disclosure does not specify pre-tax
earnings from continuing operations,
minority interest, and equity in the
earnings or losses of investees, then
such data must be prepared by the
company’s outside audit firm for the
Exchange’s consideration. In this
regard, the audit firm would have to
issue an independent accountant’s
report on applying agreed-upon
procedures in accordance with the
standards established by the American
Institute of Certified Public
Accountants.
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5315. Initial Listing Requirements for
Primary Equity Securities
Rule 5310 provides guidance about
computations made under this Rule
5315.
(a)—(e) No change.
(f)
(1)–(2) No change
(3) Valuation Requirement
A Company, other than a closed end
management investment company, shall
meet the requirements of sub-paragraph
(A), (B), (C), or (D) below:
(A)–(C) No change.
(D) (i) Market capitalization of at least
$160 million, (ii) total assets of at least
$80 million [for the most recently
completed fiscal year], and (iii)
stockholders’ equity of at least $55
million.
*
*
*
*
*
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 recently adopted an initial
listing standard for the Nasdaq Global
Select Market that permits listing if the
company has: (i) $80 million in total
assets; (ii) $55 million in stockholders’
equity; and (iii) $160 million of market
capitalization.5 Companies qualifying
under this standard also have to meet all
other requirements of Rule 5315,
including the ownership and market
value requirements contained in Rule
5315(f) and, upon listing, are subject to
the Global Market continued listing
standards.
Nasdaq based this listing standard on
a listing standard adopted by the New
York Stock Exchange (‘‘NYSE’’), though
the numeric requirements of the Nasdaq
standard are higher than those of the
5 Securities Exchange Act Release No. 61904
(April 14, 2010), 75 FR 20651 (April 20, 2010) (SR–
NASDAQ–2010–047).
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mstockstill on DSKH9S0YB1PROD with NOTICES
NYSE.6 However, unlike the NYSE
requirement upon which the standard is
based, Nasdaq required that the total
assets portion of the requirement be met
at the end of the prior fiscal year. As a
result, companies are only able to
demonstrate compliance with the total
assets portion of this standard based on
a single point in time each year—the
year-end financials. To conform with
NYSE’s treatment under their
comparable standard, Nasdaq proposes
to delete the requirement in Rule
5315(f)(3)(D)(ii) that total assets be
demonstrated as of the close of the most
recent fiscal year. Nasdaq also proposes
to add a definition in Rule 5310
explaining what adjustments will be
made to total assets and stockholders’
equity to reflect the use of proceeds and
acquisitions and dispositions. These
adjustments are identical to the
adjustments specified in the NYSE
Listed Company Manual.7
Nasdaq believes that the proposed
amendment to Rule 5315(f)(3)(D) does
not affect the status of Global Select
Market-listed securities under Securities
Exchange Act Rule 3a51–1(a) (the
‘‘Penny Stock Rule’’),8 as the amended
standards satisfy the requirements of
Exchange Act Rule 3a51–1(a)(2).9 Rule
5315(f)(3)(D) requires stockholders’
equity of at least $55 million, which
exceeds the requirement in SEC Rule
3a51–1(a)(2)(i)(A)(1) of $5 million. Rule
5315(f)(3)(D) also requires a minimum
market capitalization of $160 million.
Nasdaq believes that this meets or
exceeds the requirement of SEC Rule
3a51–1(a)(2)(i)(B) that a company have a
market value of listed securities of at
least $50 million, although these are not
identical standards. Nasdaq believes
that its Global Select Market’s rules will
also exceed the Penny Stock Rules
remaining stock price and distribution
requirements. Rule 5315(e)(1) requires
companies initially listing on Nasdaq to
have a minimum bid price of $4 per
share, thereby satisfying the $4
requirement of SEC Rule 3a51–
1(a)(2)(i)(C). Rule 5315(f)(1) requires a
company’s securities to have either 450
round lot holders or at least 2,200 total
holders, although if a company is
6 Securities Exchange Act Release No. 58934
(November 12, 2008), 73 FR 69708 (November 19,
2008) (SR–NYSE–2008–098, modifying Section
102.01C of the Listed Company Manual). The NYSE
listing standard allows a company to list if it has
total assets of at least $75 million, stockholders’
equity of at least $50 million, and a global market
capitalization of at least $150 million.
7 See Section 102.01C(IV)(ii) of the Listed
Company Manual noting that total assets and
stockholders’ equity are adjusted pursuant to
Sections 102.01C(I)(3)(a) and (b).
8 17 CFR 240.a51–1(a).
9 17 CFR 240.a51–1(a)(2).
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publicly traded and has an average
monthly trading volume over the prior
12 months of at least 1.1 million shares
per month, it can list with 550 total
holders. Nasdaq believes that these
requirements are comparable to, or more
stringent than, the requirement of SEC
Rule 3a51–1(a)(2)(i)(D) that a security
have at least 300 round lot holders, and
satisfy the same objective by assuring
adequate liquidity in the security. Last,
SEC Rule 3a51–1(a)(2)(i)(E) requires at
least 1 million publicly held shares with
a market value of at least $5 million.
Rule 5315(e)(2) requires all securities
listing on the Nasdaq Global Select
Market to have at least 1.25 million
publicly held shares and Rule 5215(f)(2)
requires a minimum $45 million market
value of publicly held shares. As such,
Nasdaq believes its initial listing
standards for the Global Select Market
continue to meet or exceed the
requirements of the Penny Stock
Rules.10
2. Statutory Basis
Nasdaq 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 it 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 mechanism of a free and
open market and a national market
system, and, in general, to protect
investors and the public interest. The
proposed rule change is consistent with
the investor protection objectives of the
Act in that the proposed requirements
modify and provide transparency to the
calculation of total assets, but maintain
the requirement at a level high enough
so that only companies that are suitable
for listing on the Global Select Market
will qualify to list.
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.
10 Nasdaq notes that each of these requirements
exceed the comparable requirements of the NYSE.
See Securities Exchange Act Release No. 58934,
supra, note 6.
11 15 U.S.C. 78f.
12 15 U.S.C. 78f(b)(5).
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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
Because the proposed rule change: (i)
Does not significantly affect the
protection of investors or the public
interest; (ii) does not impose any
significant burden on competition; and
(iii) does not become operative for 30
days after the date of the filing, or such
shorter time as the Commission may
designate if consistent with the
protection of investors and the public
interest, the proposed rule change has
become effective pursuant to Section
19(b)(3)(A) of the Act 13 and Rule 19b–
4(f)(6) thereunder.14
A proposed rule change filed
pursuant to Rule 19b–4(f)(6) under the
Act 15 normally does not become
operative for 30 days after the date of its
filing. However, Rule 19b–4(f)(6)(iii) 16
permits the Commission to designate a
shorter time if such action is consistent
with the protection of investors and the
public interest. The Exchange has
requested that the Commission waive
the 30-day operative delay so that
companies may immediately take
advantage of the proposed rule change.
In support of the waiver, Nasdaq
believes that its proposal is consistent
with NYSE’s rules, which were
previously published for public
comment, and raise no new issues.
The Commission believes that waiver
of the operative delay is consistent with
the protection of investors and the
public interest. In making this
determination, the Commission notes
that Nasdaq’s proposed rule change is
consistent with the NYSE’s comparable
listing standard in Section 102.01C(IV)
of the NYSE’s Listed Company Manual
(‘‘Assets and Equity Test’’) and
applicable adjustments as set forth in
Section 102.01C(I) of the NYSE’s Listed
Company Manual.17 The Commission
believes that Nasdaq’s proposed rule
13 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6). Pursuant to Rule 19b–
4(f)(6)(iii) under the Act, the Exchange is required
to give the Commission written notice of its intent
to file the proposed rule change, along with a brief
description and text of the proposed rule change,
at least five business days prior to the date of filing
of the proposed rule change, or such shorter time
as designated by the Commission. The Commission
notes that the Exchange has satisfied this
requirement.
15 17 CFR 240.19b–4(f)(6).
16 17 CFR 240.19b–4(f)(6)(iii).
17 See supra notes 6 and 7.
14 17
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Federal Register / Vol. 76, No. 71 / Wednesday, April 13, 2011 / Notices
change does not raise any issues that
were not previously considered by the
Commission in its approval of the
NYSE’s Assets and Equities Test and
does not otherwise raise any new
regulatory issues. The Commission also
notes that the NYSE’s proposal to adopt
the Assets and Equity Test listing
standard, with the applicable
adjustments noted above, was subject to
full notice and comment, and the
Commission received no comments on
the NYSE’s rule proposal. For these
reasons, the Commission designates,
consistent with the protection of
investors and the public interest, that
the proposed rule change become
operative immediately upon filing.18
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend the 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.
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
NASDAQ. 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–
2011–050 and should be submitted on
or before May 4, 2011.
IV. Solicitation of Comments
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.19
Cathy H. Ahn,
Deputy Secretary.
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
No. SR–NASDAQ–2011–050 on the
subject line.
mstockstill on DSKH9S0YB1PROD with NOTICES
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 No.
SR–NASDAQ–2011–050. 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
18 For purposes only of waiving the 30-day
operative delay, the Commission has considered the
proposed rule’s impact on efficiency, competition,
and capital formation. 15 U.S.C. 78c(f).
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[FR Doc. 2011–8914 Filed 4–12–11; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–64262; File No. SR–
NASDAQ–2011–047]
Self-Regulatory Organizations; The
NASDAQ Stock Market LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Conform
Rules 2360, 2361, 2370, 6951 to FINRA
Rule Changes
April 8, 2011.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’) 1, and Rule 19b–4 thereunder,2
notice is hereby given that on April 1,
2011, The NASDAQ Stock Market LLC
(‘‘NASDAQ’’) 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 NASDAQ. The Commission
is publishing this notice to solicit
comments on the proposed rule change
from interested persons.
19 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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20747
I. Self-Regulatory Organization’s
Statement of the Terms of the Substance
of the Proposed Rule Change
NASDAQ is filing with the Securities
Commission [sic] a proposal for
NASDAQ to amend NASDAQ Rules
2360 (Approval Procedures for DayTrading Accounts); 2361 (Day-Trading
Risk Disclosure Statement); 2370
(Borrowing From or Lending to
Customers); and 6951 (Definitions) to
make non-substantive changes that
reflect recent changes to corresponding
rules of the Financial Industry
Regulatory Authority (‘‘FINRA’’).
The text of the proposed rule change
is available from NASDAQ’s Web site at
https://nasdaq.cchwallstreet.com/
Filings/, at NASDAQ’s principal office,
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,
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
The Exchange is not making any
substantive changes to the content of its
rules. The purpose of this proposal is to
update NASDAQ Rules 2360, 2361,
2370, and 6951 to reflect proper crossreferences to corresponding FINRA
rules.
Many of NASDAQ’s rules are based
on rules of FINRA (formerly the
National Association of Securities
Dealers (‘‘NASD’’)). During 2008, FINRA
embarked on an extended process of
moving rules formerly designated as
‘‘NASD Rules’’ into a consolidated
FINRA rulebook. In most cases, FINRA
has renumbered these rules, and in
some cases has substantively amended
them. Accordingly, NASDAQ also
proposes to initiate a process of
modifying its rulebook to ensure that
NASDAQ rules corresponding to
FINRA/NASD rules continue to mirror
them as closely as practicable. In some
cases, it will not be possible for the rule
E:\FR\FM\13APN1.SGM
13APN1
]]>Agencies
[Federal Register Volume 76, Number 71 (Wednesday, April 13, 2011)]
[Notices]
[Pages 20744-20747]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-8914]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-64263; File No. SR-NASDAQ-2011-050]
Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Modify an Initial Listing Standard for the Nasdaq Global Select Market
April 8, 2011.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on April 1, 2011, The NASDAQ Stock Market LLC (``Nasdaq'') filed with
the Securities and Exchange Commission (``Commission'') the proposed
rule change as described in Items I and III below, which Items have
been prepared by Nasdaq. Nasdaq has designated the proposed rule change
as effecting a change described under Rule 19b-4(f)(6) under the
Act,\3\ which renders the proposal effective upon filing with the
Commission. The Commission is publishing this notice to
[[Page 20745]]
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 240.19b-4.
\3\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of the
Substance of the Proposed Rule Change
Nasdaq proposes to modify an initial listing standard for the
Nasdaq Global Select Market. Nasdaq will implement the proposed rule
change immediately.
The text of the proposed rule change is below. Proposed new
language is in italics; proposed deletions are in brackets.\4\
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\4\ 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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5310. Definitions and Computations
(a)-(i) No change.
(j) In computing total assets and stockholders' equity for purposes
of Rule 5315(f)(3)(D), Nasdaq will rely on a Company's most recent
publicly reported financial statements subject to the adjustments
described below:
(1) Application of Use of Proceeds--If a company is in registration
with the SEC and is in the process of an equity offering, adjustments
should be made to reflect the net proceeds of that offering, and the
specified intended application(s) of such proceeds to:
(A) Pay off existing debt or other financial instruments: The
adjustment will include elimination of the actual historical interest
expense on debt or other financial instruments classified as
liabilities under generally accepted accounting principles being
retired with offering proceeds of all relevant periods or by conversion
into common stock at the time of an initial public offering occurring
in conjunction with the company's listing. If the event giving rise to
the adjustment occurred during a time-period such that pro forma
amounts are not set forth in the SEC registration statement (typically,
the pro forma effect of repayment of debt will be provided in the
current registration statement only with respect to the last fiscal
year plus any interim period in accordance with SEC rules), the company
must prepare the relevant adjusted financial data to reflect the
adjustment to its historical financial data, and its outside audit firm
must provide a report of having applied agreed-upon procedures with
respect to such adjustments. Such report must be prepared in accordance
with the standards established by the American Institute of Certified
Public Accountants.
(B) Fund an acquisition:
(i) The adjustments will include those applicable with respect to
acquisition(s) to be funded with the proceeds. Adjustments will be made
that are disclosed as such in accordance with Rule 3-05 ``Financial
Statements of Business Acquired or to be Acquired'' and Article 11 of
Regulation S-X. Adjustments will be made for all the relevant periods
for those acquisitions for which historical financial information of
the acquiree is required to be disclosed in the SEC registration
statement; and (ii) Adjustments applicable to any period for which pro
forma numbers are not set forth in the registration statement shall be
accompanied by the relevant adjusted financial data to combine the
historical results of the acquiree (or relevant portion thereof) and
acquiror, as disclosed in the company's SEC filing. Under SEC rules,
the number of periods disclosed depends upon the significance level of
the acquiree to the acquiror. The adjustments will include those
necessary to reflect (a) the allocation of the purchase price,
including adjusting assets and liabilities of the acquiree to fair
value recognizing any intangibles (and associated amortization and
depreciation), and (b) the effects of additional financing to complete
the acquisition. The company must prepare the relevant adjusted
financial data to reflect the adjustment to its historical financial
data, and its outside audit firm must provide a report of having
applied agreed-upon procedures with respect to such adjustments. Such
report must be prepared in accordance with the standards established by
the American Institute of Certified Public Accountants.
(2) Acquisitions and Dispositions--In instances other than
acquisitions (and related dispositions of part of the acquiree) funded
with the use of proceeds, adjustments will be made for those
acquisitions and dispositions that are disclosed as such in a company's
financial statements in accordance with Rule 3-05 ``Financial
Statements of Business Acquired or to be Acquired'' and Article 11 of
Regulation S-X. If the disclosure does not specify pre-tax earnings
from continuing operations, minority interest, and equity in the
earnings or losses of investees, then such data must be prepared by the
company's outside audit firm for the Exchange's consideration. In this
regard, the audit firm would have to issue an independent accountant's
report on applying agreed-upon procedures in accordance with the
standards established by the American Institute of Certified Public
Accountants.
5315. Initial Listing Requirements for Primary Equity Securities
Rule 5310 provides guidance about computations made under this Rule
5315.
(a)--(e) No change.
(f)
(1)-(2) No change
(3) Valuation Requirement
A Company, other than a closed end management investment company,
shall meet the requirements of sub-paragraph (A), (B), (C), or (D)
below:
(A)-(C) No change.
(D) (i) Market capitalization of at least $160 million, (ii) total
assets of at least $80 million [for the most recently completed fiscal
year], and (iii) stockholders' equity of at least $55 million.
* * * * *
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 recently adopted an initial listing standard for the Nasdaq
Global Select Market that permits listing if the company has: (i) $80
million in total assets; (ii) $55 million in stockholders' equity; and
(iii) $160 million of market capitalization.\5\ Companies qualifying
under this standard also have to meet all other requirements of Rule
5315, including the ownership and market value requirements contained
in Rule 5315(f) and, upon listing, are subject to the Global Market
continued listing standards.
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\5\ Securities Exchange Act Release No. 61904 (April 14, 2010),
75 FR 20651 (April 20, 2010) (SR-NASDAQ-2010-047).
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Nasdaq based this listing standard on a listing standard adopted by
the New York Stock Exchange (``NYSE''), though the numeric requirements
of the Nasdaq standard are higher than those of the
[[Page 20746]]
NYSE.\6\ However, unlike the NYSE requirement upon which the standard
is based, Nasdaq required that the total assets portion of the
requirement be met at the end of the prior fiscal year. As a result,
companies are only able to demonstrate compliance with the total assets
portion of this standard based on a single point in time each year--the
year-end financials. To conform with NYSE's treatment under their
comparable standard, Nasdaq proposes to delete the requirement in Rule
5315(f)(3)(D)(ii) that total assets be demonstrated as of the close of
the most recent fiscal year. Nasdaq also proposes to add a definition
in Rule 5310 explaining what adjustments will be made to total assets
and stockholders' equity to reflect the use of proceeds and
acquisitions and dispositions. These adjustments are identical to the
adjustments specified in the NYSE Listed Company Manual.\7\
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\6\ Securities Exchange Act Release No. 58934 (November 12,
2008), 73 FR 69708 (November 19, 2008) (SR-NYSE-2008-098, modifying
Section 102.01C of the Listed Company Manual). The NYSE listing
standard allows a company to list if it has total assets of at least
$75 million, stockholders' equity of at least $50 million, and a
global market capitalization of at least $150 million.
\7\ See Section 102.01C(IV)(ii) of the Listed Company Manual
noting that total assets and stockholders' equity are adjusted
pursuant to Sections 102.01C(I)(3)(a) and (b).
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Nasdaq believes that the proposed amendment to Rule 5315(f)(3)(D)
does not affect the status of Global Select Market-listed securities
under Securities Exchange Act Rule 3a51-1(a) (the ``Penny Stock
Rule''),\8\ as the amended standards satisfy the requirements of
Exchange Act Rule 3a51-1(a)(2).\9\ Rule 5315(f)(3)(D) requires
stockholders' equity of at least $55 million, which exceeds the
requirement in SEC Rule 3a51-1(a)(2)(i)(A)(1) of $5 million. Rule
5315(f)(3)(D) also requires a minimum market capitalization of $160
million. Nasdaq believes that this meets or exceeds the requirement of
SEC Rule 3a51-1(a)(2)(i)(B) that a company have a market value of
listed securities of at least $50 million, although these are not
identical standards. Nasdaq believes that its Global Select Market's
rules will also exceed the Penny Stock Rules remaining stock price and
distribution requirements. Rule 5315(e)(1) requires companies initially
listing on Nasdaq to have a minimum bid price of $4 per share, thereby
satisfying the $4 requirement of SEC Rule 3a51-1(a)(2)(i)(C). Rule
5315(f)(1) requires a company's securities to have either 450 round lot
holders or at least 2,200 total holders, although if a company is
publicly traded and has an average monthly trading volume over the
prior 12 months of at least 1.1 million shares per month, it can list
with 550 total holders. Nasdaq believes that these requirements are
comparable to, or more stringent than, the requirement of SEC Rule
3a51-1(a)(2)(i)(D) that a security have at least 300 round lot holders,
and satisfy the same objective by assuring adequate liquidity in the
security. Last, SEC Rule 3a51-1(a)(2)(i)(E) requires at least 1 million
publicly held shares with a market value of at least $5 million. Rule
5315(e)(2) requires all securities listing on the Nasdaq Global Select
Market to have at least 1.25 million publicly held shares and Rule
5215(f)(2) requires a minimum $45 million market value of publicly held
shares. As such, Nasdaq believes its initial listing standards for the
Global Select Market continue to meet or exceed the requirements of the
Penny Stock Rules.\10\
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\8\ 17 CFR 240.a51-1(a).
\9\ 17 CFR 240.a51-1(a)(2).
\10\ Nasdaq notes that each of these requirements exceed the
comparable requirements of the NYSE. See Securities Exchange Act
Release No. 58934, supra, note 6.
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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,\11\ in general and with
Sections 6(b)(5) of the Act,\12\ in particular in that it 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 mechanism of a
free and open market and a national market system, and, in general, to
protect investors and the public interest. The proposed rule change is
consistent with the investor protection objectives of the Act in that
the proposed requirements modify and provide transparency to the
calculation of total assets, but maintain the requirement at a level
high enough so that only companies that are suitable for listing on the
Global Select Market will qualify to list.
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\11\ 15 U.S.C. 78f.
\12\ 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
Because the proposed rule change: (i) Does not significantly affect
the protection of investors or the public interest; (ii) does not
impose any significant burden on competition; and (iii) does not become
operative for 30 days after the date of the filing, or such shorter
time as the Commission may designate if consistent with the protection
of investors and the public interest, the proposed rule change has
become effective pursuant to Section 19(b)(3)(A) of the Act \13\ and
Rule 19b-4(f)(6) thereunder.\14\
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\13\ 15 U.S.C. 78s(b)(3)(A).
\14\ 17 CFR 240.19b-4(f)(6). Pursuant to Rule 19b-4(f)(6)(iii)
under the Act, the Exchange is required to give the Commission
written notice of its intent to file the proposed rule change, along
with a brief description and text of the proposed rule change, at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Commission notes that the Exchange has satisfied this
requirement.
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A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the
Act \15\ normally does not become operative for 30 days after the date
of its filing. However, Rule 19b-4(f)(6)(iii) \16\ permits the
Commission to designate a shorter time if such action is consistent
with the protection of investors and the public interest. The Exchange
has requested that the Commission waive the 30-day operative delay so
that companies may immediately take advantage of the proposed rule
change. In support of the waiver, Nasdaq believes that its proposal is
consistent with NYSE's rules, which were previously published for
public comment, and raise no new issues.
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\15\ 17 CFR 240.19b-4(f)(6).
\16\ 17 CFR 240.19b-4(f)(6)(iii).
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The Commission believes that waiver of the operative delay is
consistent with the protection of investors and the public interest. In
making this determination, the Commission notes that Nasdaq's proposed
rule change is consistent with the NYSE's comparable listing standard
in Section 102.01C(IV) of the NYSE's Listed Company Manual (``Assets
and Equity Test'') and applicable adjustments as set forth in Section
102.01C(I) of the NYSE's Listed Company Manual.\17\ The Commission
believes that Nasdaq's proposed rule
[[Page 20747]]
change does not raise any issues that were not previously considered by
the Commission in its approval of the NYSE's Assets and Equities Test
and does not otherwise raise any new regulatory issues. The Commission
also notes that the NYSE's proposal to adopt the Assets and Equity Test
listing standard, with the applicable adjustments noted above, was
subject to full notice and comment, and the Commission received no
comments on the NYSE's rule proposal. For these reasons, the Commission
designates, consistent with the protection of investors and the public
interest, that the proposed rule change become operative immediately
upon filing.\18\
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\17\ See supra notes 6 and 7.
\18\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. 15 U.S.C. 78c(f).
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend the 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:
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 No. SR-NASDAQ-2011-050 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 No. SR-NASDAQ-2011-050. 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 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 NASDAQ. 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-2011-050 and should be
submitted on or before May 4, 2011.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\19\
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\19\ 17 CFR 200.30-3(a)(12).
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Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-8914 Filed 4-12-11; 8:45 am]
BILLING CODE 8011-01-P
