Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing of Proposed Rule Change Amending Its Continued Listing Requirements in Relation to the Late Filing of a Company's Annual Report With the Securities and Exchange Commission as set Forth in Section 802.01E of the Exchange's Listed Company Manual, 75217-75220 [2014-29498]

Download as PDF Federal Register / Vol. 79, No. 242 / Wednesday, December 17, 2014 / Notices Reference Room, 100 F Street NE., Washington, DC 20549–1090, on official business days between the hours of 10:00 a.m. and 3:00 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 Number SR– NYSEMKT–2014–81, and should be submitted on or before January 7, 2015. V. Accelerated Approval of Proposed Rule Change, As Modified by Amendment No. 1 As discussed above, the Exchange submitted Amendment No. 1 to provide further justification as to why the Exchange believes the proposed rule change is consistent with the Act. The Exchange states in Amendment No. 1, among other things, that to the extent a Clearing Member might reasonably require a User to provide access to its risk settings as a prerequisite to continuing to clear trades on the User’s behalf, the Exchange’s proposal to share those risk settings directly reduces the administrative burden on Users and ensures that Clearing Members are receiving information that is up-to-date and conforms to the settings active in Exchange systems. The Exchange further notes in Amendment No. 1 that any User may become a Clearing Member, which would enable that User to avoid sharing risk settings with any third party. The Commission believes that Amendment No. 1 does not materially affect the substance of the proposed rule change or raise any novel or unique regulatory issues. Accordingly, the Commission finds good cause, pursuant to Section 19(b)(2) of the Act,27 for approving the proposed rule change, as modified by Amendment No. 1, on an accelerated basis. mstockstill on DSK4VPTVN1PROD with NOTICES VI. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,28 that the proposed rule change (SR–NYSEMKT– 2014–81), as modified by Amendment No. 1 thereto, be and it hereby is, approved on an accelerated basis. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.29 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2014–29495 Filed 12–16–14; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–73821; File No. SR–NYSE– 2014–65] Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing of Proposed Rule Change Amending Its Continued Listing Requirements in Relation to the Late Filing of a Company’s Annual Report With the Securities and Exchange Commission as set Forth in Section 802.01E of the Exchange’s Listed Company Manual December 11, 2014. Pursuant to Section 19(b)(1) 1 of the Securities Exchange Act of 1934 (the ‘‘Act’’) 2 and Rule 19b–4 thereunder,3 notice is hereby given that, on December 4, 2014, New York Stock Exchange LLC (‘‘NYSE’’ or the ‘‘Exchange’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the selfregulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend its continued listing requirements in relation to the late filing of a company’s annual report with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) as set forth in Section 802.01E of the Exchange’s Listed Company Manual (the ‘‘Manual’’). The text of the proposed rule change is available on the Exchange’s Web site at www.nyse.com, at the principal office of the Exchange, 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 self-regulatory organization included 29 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 15 U.S.C. 78a. 3 17 CFR 240.19b–4. 1 15 27 15 U.S.C. 78s(b)(2). 28 Id. VerDate Sep<11>2014 19:49 Dec 16, 2014 Jkt 235001 PO 00000 Frm 00104 Fmt 4703 Sfmt 4703 75217 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 those 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, of the most significant parts 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 proposes to amend its continued listing requirements in relation to the late filing of a company’s annual report with the SEC as set forth in Section 802.01E (the ‘‘Late Filer Rule’’) of the Manual. As amended, the Late Filer Rule will (i) expand the rule to impose a maximum period within which a company must file a late quarterly report on Form 10–Q in order to maintain its listing and (ii) clarify the Exchange’s treatment of companies whose annual or quarterly reports are defective at the time of filing or become defective at some subsequent date. In its current form, the Late Filer Rule deems a listed company to be delinquent in filing its annual report on Forms 10–K, 20–F, 40–F or N–CSR with the SEC if it fails to submit the filing by the date such report was required to be filed by the applicable form, or if a Form 12b–25 was timely filed with the SEC, the extended filing due date for the annual report. During the six-month period from the date of such delinquency, the Exchange monitors the company and the status of the delinquent annual report, including through contact with the company, until the filing delinquency is cured. If the company fails to cure such delinquency within the initial six-month period, the Exchange may, in its sole discretion, allow the company’s securities to be traded for up to an additional six-month period depending on the company’s specific circumstances. If the Exchange determines that an additional trading period of up to six months is not appropriate, suspension and delisting procedures are commenced in accordance with the procedures set out in Section 804.00 of the Listed Company Manual. A company is not currently subject to the compliance periods set forth in the Late Filer Rule in connection with a failure to timely file a quarterly report E:\FR\FM\17DEN1.SGM 17DEN1 75218 Federal Register / Vol. 79, No. 242 / Wednesday, December 17, 2014 / Notices mstockstill on DSK4VPTVN1PROD with NOTICES on Form 10–Q with the SEC.4 The Exchange now proposes to extend the application of the rule to the late filing of Form 10–Qs. As proposed, a company would be deemed to be a delinquent filer under the amended rule as of the due date (or extended due date if a Form 12b–25 is timely filed with the SEC) (the ‘‘Filing Due Date’’) of the first 10–Q or annual report with respect to which a company incurs a delinquency (a ‘‘Late Filing Delinquency’’).5 The Exchange will also deem a company to have incurred a Late Filing Delinquency if it submits an annual report or Form 10– Q to the SEC by the applicable Filing Due Date, but such filing is deficient in some respect in meeting the requirements of the applicable SEC form and the Exchange determines in its sole discretion that such deficiency is material in nature.6 In addition, the Exchange proposes to clarify its treatment of a company: • That files its annual report without an audit report from its independent auditor for any or all of the periods included in such annual report (a ‘‘Required Audit Report’’ and the 4 While a company is not currently subject to the compliance periods in the Late Filer Rule in connection with the failure to timely file a Form 10–Q, such companies are subject to the Exchange’s late filer (or ‘‘.LF’’) indicator process. The .LF indicator is appended to the company’s trading symbol as disseminated on the consolidated tape and to market data vendors and the company’s name is included on the late filer list on the Exchange’s Web site. The .LF indicator and web posting commence five days after the due date or extended due date (if applicable) of the first late annual report or Form 10–Q (unless the company has submitted the required report within that five day period) and continue until the company becomes current again with respect to all required periodic reports. 5 The annual report or quarterly report on Form 10–Q that gives rise to a Late Filing Delinquency shall be referred to in the Late Filer Rule as amended as the ‘‘Delinquent Report.’’ 6 The following is a non-exclusive list of elements that, if missing from a filing, would cause the Exchange to deem the company to have incurred a Late Filing Delinquency: The filing does not include required financial statements or a required audit opinion; a required financial statement audit opinion includes qualifying or disclaiming language or the auditor provides an adverse financial statement audit opinion; a required financial statement audit opinion is unsigned or undated; there is a discrepancy between the period end date for required financial statements and the date cited in the related audit report; the company’s auditor has not conducted a SAS 100 review with respect to the company’s Form 10–Q; required chief executive officer or chief financial officer certifications are missing; missing Sarbanes-Oxley Act Section 404 required internal control report or auditor certification; the filing does not comply with the applicable SEC XBRL requirements; or the filing does not include signatures of officers or directors required by the applicable form. In making this determination, the Exchange is simply applying its own rules and is not making any judgment as to the sufficiency of the filing in question for purposes of compliance with any requirement under SEC rules. VerDate Sep<11>2014 19:49 Dec 16, 2014 Jkt 235001 absence of a Required Audit Report, a ‘‘Required Audit Report Delinquency’’); • whose independent auditor withdraws a Required Audit Report or the company files a Form 8–K with the SEC pursuant to Item 4.02(b) thereof disclosing that it has been notified by its independent auditor that a Required Audit Report or completed interim review should no longer be relied upon (a ‘‘Required Audit Report Withdrawal Delinquency’’); or • that files a Form 8–K with the SEC pursuant to Item 4.02(a) thereof to disclose that previously issued financial statements should no longer be relied upon because of an error in such financial statements or, in the case of a foreign private issuer, makes a similar disclosure in a Form 6–K filed with the SEC or by other means (a ‘‘Non-Reliance Disclosure’’) and, in either case, the company does not refile all required corrected financial statements within 60 days of the issuance of the Non-Reliance Disclosure (an ‘‘Extended Non-Reliance Disclosure Event’’ and, together with a Late Filing Delinquency, a Required Audit Report Delinquency and a Required Audit Report Withdrawal Delinquency, a ‘‘Filing Delinquency’’).7 Upon the occurrence of a Filing Delinquency, the Exchange will promptly (typically within five business days) send written notification to a company of its procedures relating to late filings. During the six-month period from the date of the Filing Delinquency (the ‘‘Initial Cure Period’’), the Exchange will monitor the company and the status of the Delinquent Report and any subsequent annual report or quarterly report on Form 10–Q the company fails to file by the applicable Filing Due Date (a ‘‘Subsequent Report’’), through contact with the company, until the Filing Delinquency is cured.8 If the company fails to cure the Filing Delinquency within the Initial Cure Period, the Exchange may, in its sole discretion, allow the company’s 7 For purposes of the cure periods described herein, an Extended Non-Reliance Disclosure Event will be deemed to have occurred on the date of original issuance of the Non-Reliance Disclosure. If the Exchange believes that a company is unlikely to refile all required corrected financial statements within 60 days after a Non-Reliance Disclosure or that the errors giving rise to such Non-Reliance Disclosure are particularly severe in nature, the Exchange may, in its sole discretion, determine earlier than 60 days that the applicable company has incurred a Filing Delinquency as a result of such Non-Reliance Disclosure. 8 Under the Late Filer Rule as amended, a company that has an uncured Filing Delinquency will not incur an additional Filing Delinquency if it fails to file a Subsequent Report by the applicable Filing Due Date. However, in order to cure its initial Filing Delinquency, no Subsequent Report may be delinquent or deficient on the date by which the initial Filing Delinquency is required to be cured. PO 00000 Frm 00105 Fmt 4703 Sfmt 4703 securities to be traded for up to an additional six-month period (the ‘‘Additional Cure Period’’) depending on the company’s specific circumstances. If the Exchange determines that an Additional Cure Period is not appropriate, suspension and delisting procedures will commence in accordance with the procedures set out in Section 804.00 of the Listed Company Manual. A company is not eligible to follow the procedures outlined in Sections 802.02 and 802.03 with respect to this criterion. Notwithstanding the foregoing, however, the Exchange may in its sole discretion decide (i) not to afford a company any Initial Cure Period or Additional Cure Period, as the case may be, at all or (ii) at any time during the Initial Cure Period or Additional Cure Period, as the case may be, to truncate the Initial Cure Period or Additional Cure Period, as the case may be, and immediately commence suspension and delisting procedures if the company is subject to delisting pursuant to any other provision of the Listed Company Manual, including if the Exchange believes, in its sole discretion, that continued listing and trading of a company’s securities on the Exchange is inadvisable or unwarranted in accordance with Sections 802.01A, 802.01B, 802.01C or 802.01D of the Listed Company Manual. The Exchange may also commence suspension and delisting procedures if it believes, in its sole discretion, that it is advisable to do so on the basis of an analysis of all relevant factors, including, but not limited to, the following: • Whether there are allegations of financial fraud or other illegality in relation to the company’s financial reporting; • the resignation or termination by the company of the company’s independent auditor due to a disagreement; • any extended delay in appointing a new independent auditor after a prior auditor’s resignation or termination; • the resignation of members of the company’s audit committee or other directors; • the resignation or termination of the company’s chief executive officer, chief financial officer or other key senior executives; • any evidence that it may be impossible for the company to cure its Filing Delinquency within the cure periods otherwise available under the Late Filer Rule; and • any past history of late filings. In determining whether an Additional Cure Period after the expiration of the Initial Cure Period is appropriate, the E:\FR\FM\17DEN1.SGM 17DEN1 Federal Register / Vol. 79, No. 242 / Wednesday, December 17, 2014 / Notices mstockstill on DSK4VPTVN1PROD with NOTICES Exchange will consider the likelihood that the Delinquent Report and all Subsequent Reports can be filed or refiled, as applicable, during the Additional Cure Period, as well as the company’s general financial status, based on information provided by a variety of sources, including the company, its audit committee, its outside auditors, the staff of the SEC and any other regulatory body. The Exchange strongly encourages companies to provide ongoing disclosure on the status of the Delinquent Report and any Subsequent Reports to the market through press releases, and will also take the frequency and detail of such information into account in determining whether an additional trading period is appropriate. If the Exchange determines that an Additional Cure Period is appropriate and the company fails to file the Delinquent Report and all Subsequent Reports by the end of such additional period, suspension and delisting procedures will commence immediately in accordance with the procedures set out in Section 804.00. In no event will the Exchange continue to trade a company’s securities if (i) it has failed to cure its Filing Delinquency and (ii) is not current with all Subsequent Reports, on the date that is twelve months after its initial Filing Delinquency. The Exchange proposes that the revised Late Filer Rule will become operative on March 1, 2015. Accordingly, the current provisions of Section 802.01E of the Manual will be applicable to any listed company that fails to timely file an annual report (Forms 10–K, 20–F, 40–F or N–CSR) prior to March 1, 2015. On or after March 1, 2015, any listed company that fails to timely file an annual report (Forms 10–K, 20–F, 40–F or N–CSR) or quarterly report on Form 10–Q will be subject to the amended provisions of Section 802.01E. Any listed company that is late as of March 1, 2015, in filing a Form 10–Q with a due date prior to that date will not be subject to the proposed amended rule with respect to that filing. However, any such company will be subject to the proposed amended rule with respect to any periodic report it does not file on a timely basis whose due date is on or after March 1, 2015. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act,9 in general, and furthers the objectives of Section 6(b)(5) 9 15 U.S.C. 78f(b). VerDate Sep<11>2014 19:49 Dec 16, 2014 of the Act,10 in particular in that it is designed 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 Exchange believes that the proposed amendment is consistent with the investor protection objectives of Section 6(b)(5) because: (i) It strengthens the Exchange’s continued listing requirements with respect to delinquent SEC filings by deeming companies delinquent if they fail to file their annual report or Form 10–Q on a timely basis and by subjecting companies to the late filer process if there are material inadequacies in their required annual or quarterly filings; and (ii) the more stringent requirements will encourage listed companies to submit timely and compliant periodic reports to the SEC. (B) institute proceedings to determine whether the proposed rule change should be disapproved. B. Self-Regulatory Organization’s Statement on Burden on Competition All submissions should refer to File Number SR–NYSE–2014–65. This file number should be included on the subject line if email 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 10:00 a.m. and 3:00 p.m. Copies of the 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 Number SR–NYSE– 2014–65 and should be submitted on or before January 7, 2015. The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purpose of the Act. The proposed rule change does not affect competition in any way, but rather simply seeks to protect investors by insuring that companies cannot remain listed for any extended period of time without appropriately filing their required periodic financial reports with the SEC. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were solicited or received with respect to the proposed rule change. 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 up to 90 days (i) as the Commission may designate 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 or disapprove the proposed rule change, or 10 15 Jkt 235001 75219 PO 00000 U.S.C. 78f(b)(5). Frm 00106 Fmt 4703 Sfmt 4703 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 email to rule-comments@ sec.gov. Please include File Number SR– NYSE–2014–65 on the subject line. Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. E:\FR\FM\17DEN1.SGM 17DEN1 75220 Federal Register / Vol. 79, No. 242 / Wednesday, December 17, 2014 / Notices For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.11 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2014–29498 Filed 12–16–14; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–73820; File No. SR– NASDAQ–2014–111] Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Modify a Level 2 Professional Subscriber Fee December 11, 2014 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 November 28, 2014, 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 the Substance of the Proposed Rule Change NASDAQ proposes to modify the NASDAQ Level 2 Professional Subscriber (‘‘Subscriber’’) fee. While the changes proposed herein are effective upon filing, the Exchange has designated that the amendments be operative on January 1, 2015. * * * * * mstockstill on DSK4VPTVN1PROD with NOTICES 7023. NASDAQ Depth-of-Book Data (a) No change. (b) Subscriber Fees. (1) NASDAQ Level 2. (A) Non-Professional Subscribers pay a monthly fee of $9 each; (B) Professional Subscribers pay a monthly fee of $[4]50 each for Display Usage based upon Direct or Indirect Access, or for Non-Display Usage based upon Indirect Access only; (C)–(E) No Change. (2)–(4) No change. (c)–(e) No change. * * * * * 11 17 CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. VerDate Sep<11>2014 19:49 Dec 16, 2014 Jkt 235001 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 purpose of the proposed rule change is to increase the NASDAQ Level 2 Professional Subscriber fee (‘‘Level 2 fee’’). Specifically, the Exchange proposes to increase the Level 2 fee by $5 from $45 to $50 for display usage based upon direct or indirect access, or for non-display usage based upon indirect access only. This proposed rule change will not affect the pricing of the NASDAQ OpenView NonProfessional and Professional Subscriber fees. The NASDAQ Level 2 product is completely optional. NASDAQ has enhanced this product through capacity upgrades and regulatory data sets over the last approximately 30 years and the release of a new (more efficient) binary version this year. The network capacity for NASDAQ Level 2 has increased from a 56 Kb feed in 1983 to the current 33 Mb feed. Additionally, since NASDAQ Level 2 is also used for market making functions, NASDAQ has invested over the years to add regulatory data sets, such as Market Maker Mode, Trading Action status, Limit Up—Limit Down, Market Wide Circuit Breaker (MWCB) messaging, Short Sale Threshold Indicator, as well as other regulatory information. In 2014 NASDAQ expanded the reference data available for each security. Level 2 had also been improved with the release this year to give more transparency on Issue Classification and associated Issue SubType, as well as the IPO flag and the flags to help further identify exchange traded products. Additionally, NASDAQ is taking steps to increase resiliency with the upcoming additional back-up feed (also referred to as the ‘‘B’’ feed) in the Carteret co-location facility. This helps to reduce cost for customers PO 00000 Frm 00107 Fmt 4703 Sfmt 4703 by receiving both the ‘‘A’’ feed and ‘‘B’’ feed from the same co-location facility while retaining an additional ‘‘B’’ feed out of the mid-Atlantic co-location facility to reduce proximity risk. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with the provisions of Section 6 of the Act,3 in general, and with Section 6(b)(4) and 6(b)(5) of the Act,4 in particular, in that it provides an equitable allocation of reasonable fees among Subscribers and recipients of NASDAQ data and is not designed to permit unfair discrimination between them. NASDAQ’s proposal to increase the Level 2 fee by $5 from $45 to $50 for display usage based upon direct or indirect access, or for non-display usage based upon indirect access only, is also consistent with the Act in that it reflects an equitable allocation of reasonable fees. The Commission has long recognized the fair and equitable and not unreasonably discriminatory nature of assessing different fees for Professional and Non-Professional Users of the same data. NASDAQ also believes it is equitable to assess a higher fee per Professional User than to an ordinary Non-Professional User due to the enhanced flexibility, lower overall costs and value that it offers Distributors. In adopting Regulation NMS, the Commission granted self-regulatory organizations and broker-dealers increased authority and flexibility to offer new and unique market data to the public. The Commission concluded that Regulation NMS—by deregulating the market in proprietary data—would itself further the Act’s goals of facilitating efficiency and competition: [E]fficiency is promoted when broker-dealers who do not need the data beyond the prices, sizes, market center identifications of the NBBO and consolidated last sale information are not required to receive (and pay for) such data. The Commission also believes that efficiency is promoted when broker-dealers may choose to receive (and pay for) additional market data based on their own internal analysis of the need for such data.5 By removing ‘‘unnecessary regulatory restrictions’’ on the ability of exchanges to sell their own data, Regulation NMS advanced the goals of the Act and the principles reflected in its legislative history. If the free market should determine whether proprietary data is sold to broker-dealers at all, it follows 3 15 U.S.C. 78f. U.S.C. 78f(b)(4) and (5). 5 Securities Exchange Act Release No. 51808 (June 9, 2005), 70 FR 37496 (June 29, 2005). 4 15 E:\FR\FM\17DEN1.SGM 17DEN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 79, Number 242 (Wednesday, December 17, 2014)]
[Notices]
[Pages 75217-75220]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-29498]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-73821; File No. SR-NYSE-2014-65]


Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing of Proposed Rule Change Amending Its Continued Listing 
Requirements in Relation to the Late Filing of a Company's Annual 
Report With the Securities and Exchange Commission as set Forth in 
Section 802.01E of the Exchange's Listed Company Manual

December 11, 2014.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that, on December 4, 2014, New York Stock Exchange LLC (``NYSE'' 
or the ``Exchange'') filed with the Securities and Exchange Commission 
(the ``Commission'') the proposed rule change as described in Items I, 
II, and III below, which Items have been prepared by the self-
regulatory organization. The Commission is publishing this notice to 
solicit comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend its continued listing requirements 
in relation to the late filing of a company's annual report with the 
Securities and Exchange Commission (``SEC'' or ``Commission'') as set 
forth in Section 802.01E of the Exchange's Listed Company Manual (the 
``Manual''). The text of the proposed rule change is available on the 
Exchange's Web site at www.nyse.com, at the principal office of the 
Exchange, 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 self-regulatory organization 
included statements concerning the purpose of, and basis for, the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of those 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, of the most 
significant parts 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 proposes to amend its continued listing requirements 
in relation to the late filing of a company's annual report with the 
SEC as set forth in Section 802.01E (the ``Late Filer Rule'') of the 
Manual. As amended, the Late Filer Rule will (i) expand the rule to 
impose a maximum period within which a company must file a late 
quarterly report on Form 10-Q in order to maintain its listing and (ii) 
clarify the Exchange's treatment of companies whose annual or quarterly 
reports are defective at the time of filing or become defective at some 
subsequent date.
    In its current form, the Late Filer Rule deems a listed company to 
be delinquent in filing its annual report on Forms 10-K, 20-F, 40-F or 
N-CSR with the SEC if it fails to submit the filing by the date such 
report was required to be filed by the applicable form, or if a Form 
12b-25 was timely filed with the SEC, the extended filing due date for 
the annual report. During the six-month period from the date of such 
delinquency, the Exchange monitors the company and the status of the 
delinquent annual report, including through contact with the company, 
until the filing delinquency is cured. If the company fails to cure 
such delinquency within the initial six-month period, the Exchange may, 
in its sole discretion, allow the company's securities to be traded for 
up to an additional six-month period depending on the company's 
specific circumstances. If the Exchange determines that an additional 
trading period of up to six months is not appropriate, suspension and 
delisting procedures are commenced in accordance with the procedures 
set out in Section 804.00 of the Listed Company Manual.
    A company is not currently subject to the compliance periods set 
forth in the Late Filer Rule in connection with a failure to timely 
file a quarterly report

[[Page 75218]]

on Form 10-Q with the SEC.\4\ The Exchange now proposes to extend the 
application of the rule to the late filing of Form 10-Qs. As proposed, 
a company would be deemed to be a delinquent filer under the amended 
rule as of the due date (or extended due date if a Form 12b-25 is 
timely filed with the SEC) (the ``Filing Due Date'') of the first 10-Q 
or annual report with respect to which a company incurs a delinquency 
(a ``Late Filing Delinquency'').\5\ The Exchange will also deem a 
company to have incurred a Late Filing Delinquency if it submits an 
annual report or Form 10-Q to the SEC by the applicable Filing Due 
Date, but such filing is deficient in some respect in meeting the 
requirements of the applicable SEC form and the Exchange determines in 
its sole discretion that such deficiency is material in nature.\6\
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    \4\ While a company is not currently subject to the compliance 
periods in the Late Filer Rule in connection with the failure to 
timely file a Form 10-Q, such companies are subject to the 
Exchange's late filer (or ``.LF'') indicator process. The .LF 
indicator is appended to the company's trading symbol as 
disseminated on the consolidated tape and to market data vendors and 
the company's name is included on the late filer list on the 
Exchange's Web site. The .LF indicator and web posting commence five 
days after the due date or extended due date (if applicable) of the 
first late annual report or Form 10-Q (unless the company has 
submitted the required report within that five day period) and 
continue until the company becomes current again with respect to all 
required periodic reports.
    \5\ The annual report or quarterly report on Form 10-Q that 
gives rise to a Late Filing Delinquency shall be referred to in the 
Late Filer Rule as amended as the ``Delinquent Report.''
    \6\ The following is a non-exclusive list of elements that, if 
missing from a filing, would cause the Exchange to deem the company 
to have incurred a Late Filing Delinquency: The filing does not 
include required financial statements or a required audit opinion; a 
required financial statement audit opinion includes qualifying or 
disclaiming language or the auditor provides an adverse financial 
statement audit opinion; a required financial statement audit 
opinion is unsigned or undated; there is a discrepancy between the 
period end date for required financial statements and the date cited 
in the related audit report; the company's auditor has not conducted 
a SAS 100 review with respect to the company's Form 10-Q; required 
chief executive officer or chief financial officer certifications 
are missing; missing Sarbanes-Oxley Act Section 404 required 
internal control report or auditor certification; the filing does 
not comply with the applicable SEC XBRL requirements; or the filing 
does not include signatures of officers or directors required by the 
applicable form. In making this determination, the Exchange is 
simply applying its own rules and is not making any judgment as to 
the sufficiency of the filing in question for purposes of compliance 
with any requirement under SEC rules.
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    In addition, the Exchange proposes to clarify its treatment of a 
company:
     That files its annual report without an audit report from 
its independent auditor for any or all of the periods included in such 
annual report (a ``Required Audit Report'' and the absence of a 
Required Audit Report, a ``Required Audit Report Delinquency'');
     whose independent auditor withdraws a Required Audit 
Report or the company files a Form 8-K with the SEC pursuant to Item 
4.02(b) thereof disclosing that it has been notified by its independent 
auditor that a Required Audit Report or completed interim review should 
no longer be relied upon (a ``Required Audit Report Withdrawal 
Delinquency''); or
     that files a Form 8-K with the SEC pursuant to Item 
4.02(a) thereof to disclose that previously issued financial statements 
should no longer be relied upon because of an error in such financial 
statements or, in the case of a foreign private issuer, makes a similar 
disclosure in a Form 6-K filed with the SEC or by other means (a ``Non-
Reliance Disclosure'') and, in either case, the company does not refile 
all required corrected financial statements within 60 days of the 
issuance of the Non-Reliance Disclosure (an ``Extended Non-Reliance 
Disclosure Event'' and, together with a Late Filing Delinquency, a 
Required Audit Report Delinquency and a Required Audit Report 
Withdrawal Delinquency, a ``Filing Delinquency'').\7\
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    \7\ For purposes of the cure periods described herein, an 
Extended Non-Reliance Disclosure Event will be deemed to have 
occurred on the date of original issuance of the Non-Reliance 
Disclosure. If the Exchange believes that a company is unlikely to 
refile all required corrected financial statements within 60 days 
after a Non-Reliance Disclosure or that the errors giving rise to 
such Non-Reliance Disclosure are particularly severe in nature, the 
Exchange may, in its sole discretion, determine earlier than 60 days 
that the applicable company has incurred a Filing Delinquency as a 
result of such Non-Reliance Disclosure.
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    Upon the occurrence of a Filing Delinquency, the Exchange will 
promptly (typically within five business days) send written 
notification to a company of its procedures relating to late filings. 
During the six-month period from the date of the Filing Delinquency 
(the ``Initial Cure Period''), the Exchange will monitor the company 
and the status of the Delinquent Report and any subsequent annual 
report or quarterly report on Form 10-Q the company fails to file by 
the applicable Filing Due Date (a ``Subsequent Report''), through 
contact with the company, until the Filing Delinquency is cured.\8\ If 
the company fails to cure the Filing Delinquency within the Initial 
Cure Period, the Exchange may, in its sole discretion, allow the 
company's securities to be traded for up to an additional six-month 
period (the ``Additional Cure Period'') depending on the company's 
specific circumstances. If the Exchange determines that an Additional 
Cure Period is not appropriate, suspension and delisting procedures 
will commence in accordance with the procedures set out in Section 
804.00 of the Listed Company Manual. A company is not eligible to 
follow the procedures outlined in Sections 802.02 and 802.03 with 
respect to this criterion. Notwithstanding the foregoing, however, the 
Exchange may in its sole discretion decide (i) not to afford a company 
any Initial Cure Period or Additional Cure Period, as the case may be, 
at all or (ii) at any time during the Initial Cure Period or Additional 
Cure Period, as the case may be, to truncate the Initial Cure Period or 
Additional Cure Period, as the case may be, and immediately commence 
suspension and delisting procedures if the company is subject to 
delisting pursuant to any other provision of the Listed Company Manual, 
including if the Exchange believes, in its sole discretion, that 
continued listing and trading of a company's securities on the Exchange 
is inadvisable or unwarranted in accordance with Sections 802.01A, 
802.01B, 802.01C or 802.01D of the Listed Company Manual. The Exchange 
may also commence suspension and delisting procedures if it believes, 
in its sole discretion, that it is advisable to do so on the basis of 
an analysis of all relevant factors, including, but not limited to, the 
following:
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    \8\ Under the Late Filer Rule as amended, a company that has an 
uncured Filing Delinquency will not incur an additional Filing 
Delinquency if it fails to file a Subsequent Report by the 
applicable Filing Due Date. However, in order to cure its initial 
Filing Delinquency, no Subsequent Report may be delinquent or 
deficient on the date by which the initial Filing Delinquency is 
required to be cured.
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     Whether there are allegations of financial fraud or other 
illegality in relation to the company's financial reporting;
     the resignation or termination by the company of the 
company's independent auditor due to a disagreement;
     any extended delay in appointing a new independent auditor 
after a prior auditor's resignation or termination;
     the resignation of members of the company's audit 
committee or other directors;
     the resignation or termination of the company's chief 
executive officer, chief financial officer or other key senior 
executives;
     any evidence that it may be impossible for the company to 
cure its Filing Delinquency within the cure periods otherwise available 
under the Late Filer Rule; and
     any past history of late filings.
    In determining whether an Additional Cure Period after the 
expiration of the Initial Cure Period is appropriate, the

[[Page 75219]]

Exchange will consider the likelihood that the Delinquent Report and 
all Subsequent Reports can be filed or refiled, as applicable, during 
the Additional Cure Period, as well as the company's general financial 
status, based on information provided by a variety of sources, 
including the company, its audit committee, its outside auditors, the 
staff of the SEC and any other regulatory body. The Exchange strongly 
encourages companies to provide ongoing disclosure on the status of the 
Delinquent Report and any Subsequent Reports to the market through 
press releases, and will also take the frequency and detail of such 
information into account in determining whether an additional trading 
period is appropriate.
    If the Exchange determines that an Additional Cure Period is 
appropriate and the company fails to file the Delinquent Report and all 
Subsequent Reports by the end of such additional period, suspension and 
delisting procedures will commence immediately in accordance with the 
procedures set out in Section 804.00. In no event will the Exchange 
continue to trade a company's securities if (i) it has failed to cure 
its Filing Delinquency and (ii) is not current with all Subsequent 
Reports, on the date that is twelve months after its initial Filing 
Delinquency.
    The Exchange proposes that the revised Late Filer Rule will become 
operative on March 1, 2015. Accordingly, the current provisions of 
Section 802.01E of the Manual will be applicable to any listed company 
that fails to timely file an annual report (Forms 10-K, 20-F, 40-F or 
N-CSR) prior to March 1, 2015. On or after March 1, 2015, any listed 
company that fails to timely file an annual report (Forms 10-K, 20-F, 
40-F or N-CSR) or quarterly report on Form 10-Q will be subject to the 
amended provisions of Section 802.01E. Any listed company that is late 
as of March 1, 2015, in filing a Form 10-Q with a due date prior to 
that date will not be subject to the proposed amended rule with respect 
to that filing. However, any such company will be subject to the 
proposed amended rule with respect to any periodic report it does not 
file on a timely basis whose due date is on or after March 1, 2015.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\9\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act,\10\ in particular in that it 
is designed 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 Exchange believes that the proposed amendment is consistent with 
the investor protection objectives of Section 6(b)(5) because: (i) It 
strengthens the Exchange's continued listing requirements with respect 
to delinquent SEC filings by deeming companies delinquent if they fail 
to file their annual report or Form 10-Q on a timely basis and by 
subjecting companies to the late filer process if there are material 
inadequacies in their required annual or quarterly filings; and (ii) 
the more stringent requirements will encourage listed companies to 
submit timely and compliant periodic reports to the SEC.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purpose of the Act. The proposed rule change does 
not affect competition in any way, but rather simply seeks to protect 
investors by insuring that companies cannot remain listed for any 
extended period of time without appropriately filing their required 
periodic financial reports with the SEC.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were solicited or received with respect to the 
proposed rule change.

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 up to 90 days (i) as the Commission may designate 
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 or disapprove the 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 email to rule-comments@sec.gov. Please include 
File Number SR-NYSE-2014-65 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSE-2014-65. This file 
number should be included on the subject line if email 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 
10:00 a.m. and 3:00 p.m. Copies of the 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 Number SR-NYSE-2014-65 and should be 
submitted on or before January 7, 2015.


[[Page 75220]]


    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-29498 Filed 12-16-14; 8:45 am]
BILLING CODE 8011-01-P

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