Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Order Approving a Proposed Rule Change Related to Notification and Disclosure of Reverse Stock Splits, 76867-76870 [2023-24522]

Download as PDF Federal Register / Vol. 88, No. 214 / Tuesday, November 7, 2023 / Notices with the policies of title 39. For request(s) that the Postal Service states concern Market Dominant product(s), applicable statutory and regulatory requirements include 39 U.S.C. 3622, 39 U.S.C. 3642, 39 CFR part 3030, and 39 CFR part 3040, subpart B. For request(s) that the Postal Service states concern Competitive product(s), applicable statutory and regulatory requirements include 39 U.S.C. 3632, 39 U.S.C. 3633, 39 U.S.C. 3642, 39 CFR part 3035, and 39 CFR part 3040, subpart B. Comment deadline(s) for each request appear in section II. II. Docketed Proceeding(s) 1. Docket No(s).: CP2023–95; Filing Title: USPS Notice of Amendment to Priority Mail Express, Priority Mail & First-Class Package Service Contract 80, Filed Under Seal; Filing Acceptance Date: October 31, 2023; Filing Authority: 39 CFR 3035.105; Public Representative: Christopher C. Mohr; Comments Due: November 8, 2023. 2. Docket No(s).: MC2024–30 and CP2024–30; Filing Title: USPS Request to Add Priority Mail & USPS Ground Advantage Contract 86 to Competitive Product List and Notice of Filing Materials Under Seal; Filing Acceptance Date: October 31, 2023; Filing Authority: 39 U.S.C. 3642, 39 CFR 3040.130 through 3040.135, and 39 CFR 3035.105; Public Representative: Christopher C. Mohr; Comments Due: November 8, 2023. This Notice will be published in the Federal Register. Erica A. Barker, Secretary. [FR Doc. 2023–24567 Filed 11–6–23; 8:45 am] BILLING CODE 7710–FW–P POSTAL REGULATORY COMMISSION [Docket Nos. MC2024–31 and CP2024–31; MC2024–32 and CP2024–32] New Postal Products Postal Regulatory Commission. Notice. AGENCY: ACTION: The Commission is noticing a recent Postal Service filing for the Commission’s consideration concerning a negotiated service agreement. This notice informs the public of the filing, invites public comment, and takes other administrative steps. DATES: Comments are due: November 9, 2023. ADDRESSES: Submit comments electronically via the Commission’s Filing Online system at https:// www.prc.gov. Those who cannot submit khammond on DSKJM1Z7X2PROD with NOTICES SUMMARY: VerDate Sep<11>2014 16:30 Nov 06, 2023 Jkt 262001 comments electronically should contact the person identified in the FOR FURTHER INFORMATION CONTACT section by telephone for advice on filing alternatives. FOR FURTHER INFORMATION CONTACT: David A. Trissell, General Counsel, at 202–789–6820. SUPPLEMENTARY INFORMATION: Table of Contents I. Introduction II. Docketed Proceeding(s) I. Introduction The Commission gives notice that the Postal Service filed request(s) for the Commission to consider matters related to negotiated service agreement(s). The request(s) may propose the addition or removal of a negotiated service agreement from the Market Dominant or the Competitive product list, or the modification of an existing product currently appearing on the Market Dominant or the Competitive product list. Section II identifies the docket number(s) associated with each Postal Service request, the title of each Postal Service request, the request’s acceptance date, and the authority cited by the Postal Service for each request. For each request, the Commission appoints an officer of the Commission to represent the interests of the general public in the proceeding, pursuant to 39 U.S.C. 505 (Public Representative). Section II also establishes comment deadline(s) pertaining to each request. The public portions of the Postal Service’s request(s) can be accessed via the Commission’s website (https:// www.prc.gov). Non-public portions of the Postal Service’s request(s), if any, can be accessed through compliance with the requirements of 39 CFR 3011.301.1 The Commission invites comments on whether the Postal Service’s request(s) in the captioned docket(s) are consistent with the policies of title 39. For request(s) that the Postal Service states concern Market Dominant product(s), applicable statutory and regulatory requirements include 39 U.S.C. 3622, 39 U.S.C. 3642, 39 CFR part 3030, and 39 CFR part 3040, subpart B. For request(s) that the Postal Service states concern Competitive product(s), applicable statutory and regulatory requirements include 39 U.S.C. 3632, 39 U.S.C. 3633, 39 U.S.C. 3642, 39 CFR part 3035, and 39 CFR part 3040, subpart B. Comment 76867 deadline(s) for each request appear in section II. II. Docketed Proceeding(s) 1. Docket No(s).: MC2024–31 and CP2024–31; Filing Title: USPS Request to Add Priority Mail & USPS Ground Advantage Contract 87 to Competitive Product List and Notice of Filing Materials Under Seal; Filing Acceptance Date: November 1, 2023; Filing Authority: 39 U.S.C. 3642, 39 CFR 3040.130 through 3040.135, and 39 CFR 3035.105; Public Representative: Kenneth R. Moeller; Comments Due: November 9, 2023. 2. Docket No(s).: MC2024–32 and CP2024–32; Filing Title: USPS Request to Add Priority Mail & USPS Ground Advantage Contract 88 to Competitive Product List and Notice of Filing Materials Under Seal; Filing Acceptance Date: November 1, 2023; Filing Authority: 39 U.S.C. 3642, 39 CFR 3040.130 through 3040.135, and 39 CFR 3035.105; Public Representative: Kenneth R. Moeller; Comments Due: November 9, 2023. This Notice will be published in the Federal Register. Erica A. Barker, Secretary. [FR Doc. 2023–24595 Filed 11–6–23; 8:45 am] BILLING CODE 7710–FW–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–98843; File No. SR– NASDAQ–2023–025] Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Order Approving a Proposed Rule Change Related to Notification and Disclosure of Reverse Stock Splits November 1, 2023. I. Introduction On June 21, 2023, The Nasdaq Stock Market LLC (‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a proposed rule change related to notification and disclosure of reverse stock splits. The proposed rule change was published for comment in the Federal Register on August 3, 2023.3 On September 14, 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 See Securities Exchange Act Release No. 98014 (July 28, 2023), 88 FR 51376 (‘‘Notice’’). Comment received by the Commission on the proposed rule 2 17 1 See Docket No. RM2018–3, Order Adopting Final Rules Relating to Non-Public Information, June 27, 2018, Attachment A at 19–22 (Order No. 4679). PO 00000 Frm 00149 Fmt 4703 Sfmt 4703 E:\FR\FM\07NON1.SGM Continued 07NON1 76868 Federal Register / Vol. 88, No. 214 / Tuesday, November 7, 2023 / Notices 2023, the Commission extended the time period within which to approve the proposed rule change, disapprove the proposed rule change, or institute proceedings to determine whether to approve or disapprove the proposed rule change to November 1, 2023.4 This order approves the proposed rule change. khammond on DSKJM1Z7X2PROD with NOTICES II. Description of the Proposed Rule Change Nasdaq is proposing to amend its rules regarding the notification and disclosure of reverse stock splits in light of recent increased volume in reverse stock split activity.5 Currently, a reverse stock split is considered a ‘‘Substitution Listing Event’’ under Nasdaq Rule 5005(a)(44).6 Nasdaq Rule 5250(e)(4) requires a company to notify Nasdaq about any ‘‘Substitution Listing Event (other than a re-incorporation or a change to a company’s place of organization) no later than 15 calendar days prior to the implementation of such event by filing the appropriate form as designated by Nasdaq.’’ While public disclosure of a reverse stock split is not specifically addressed under Nasdaq’s current rules, Nasdaq Rule 5250(b)(1) requires a company to make ‘‘prompt disclosure’’ of ‘‘any material information that would reasonably be change is available on the Commission’s website at: https://www.sec.gov/comments/sr-nasdaq-2023025/srnasdaq2023025.htm. The Commission received two comment letters in support of the proposed rule change. See Letter from Thomas M. Merritt, Deputy General Counsel, Virtu Financial, Inc., dated August 23, 2023 (‘‘Virtu Letter’’); Letter from Imran Javaid, Director and Association General Counsel, Robinhood Markets, Inc., dated October 24, 2023 (‘‘Robinhood Letter’’). 4 See Securities Exchange Act Release No. 98386, 88 FR 64936 (Sept. 20, 2023). 5 Nasdaq states that in 2022, Nasdaq processed 196 reverse stock splits, compared to 31 in 2021 and 94 in 2020. See Notice, supra note 3, at 51376. As of June 23, 2023, Nasdaq states that it has processed 164 reverse stock splits, and projects significantly more throughout 2023. See id. In most cases, Nasdaq observes, companies are conducting reverse stock splits to achieve compliance with Nasdaq’s $1 bid price requirement to remain on the Capital Market tier. See id. Nasdaq Rule 5550(a)(2) states that a company that has its Primary Equity Security listed on the Capital Market must have a minimum bid price of at least $1 per share. See also Nasdaq Rule 5450(a)(1) (Global and Global Select Markets). 6 Nasdaq Rule 5505(a)(44) states, in part, that a ‘‘Substitution Listing Event’’ means: ‘‘a reverse stock split, re-incorporation or a change in the Company’s place of organization, the formation of a holding company that replaces a listed Company, reclassification or exchange of a Company’s listed shares for another security, the listing of a new class of securities in substitution for a previously-listed class of securities, a business combination described in IM–5101–2, a change in the obligor of a listed debt security, or any technical change whereby the Shareholders of the original Company receive a share-for-share interest in the new Company without any change in their equity position or rights.’’ VerDate Sep<11>2014 16:30 Nov 06, 2023 Jkt 262001 expected to affect the value of its securities or influence investors’ decisions,’’ which Nasdaq interprets to include details on reverse stock splits.7 While ‘‘prompt’’ disclosure is not expressly defined in the Exchange’s rules, Nasdaq states that it has published an FAQ stating that ‘‘[t]his disclosure should be disseminated prior to, or in conjunction with, the announcements that Corporate Data Operations will make on the day prior to the market effective date at approximately 1:00 p.m.’’ 8 Accordingly, Nasdaq proposes to amend its rules to require a company conducting a reverse stock split to notify Nasdaq about certain details of the reverse stock split no later than 12 p.m. ET five business days prior to the anticipated market effective date, and to expressly require in its rules a company to make public disclosure about the reverse stock split at least two business days (no later than 12:00 p.m. ET) prior to the anticipated market effective date.9 Specifically, Nasdaq proposes to add new Rules 5250(b)(4), 5250(e)(7), and IM–5250–3, as discussed in more detail below, as well as update the information that a company must disclose about a reverse stock split to the Exchange on the Company Event Notification Form.10 Nasdaq also proposes to amend Rule 5250(b)(1) concerning disclosure of material information to specify that a company should refer to Rules 5250(b)(4) and 5250(e)(7) for the disclosure and notification requirements related to reverse stock splits.11 7 See Notice, supra note 3, at 51376. Nasdaq FAQs-Listings #317, available at https://listingcenter.nasdaq.com/Material_ search.aspx?materials=317&mcd= LQ&criteria=2&cid=120%2C1%2C145%2C108 %2C157%2C14%2C22%2C126 %2C142%2C29%2C107%2C34%2C37%2C38 %2C45%2C16%2C110%2C52%2C71%2C156 %2C69%0A%0A. Nasdaq states that these announcements are published as Equity Corporate Action Alerts on https://www.nasdaqtrader.com/ (the ‘‘Nasdaq Trader website’’) on the day prior to the reverse stock split. See Notice, supra note 3, at 51377, n.7. See also infra note 12. 9 For example, Nasdaq states that if a company desires to effect a reverse stock split with a market effective date of Monday, July 24, the company would have to provide Nasdaq with a draft of the disclosure required by proposed Nasdaq Rule 5250(b)(4) and a complete Company Event Notification Form by 12:00 p.m. ET on Monday, July 17, and provide the public disclosure by 12:00 p.m. ET by Thursday, July 20 (assuming there are no holidays during these dates). See id. at 51376, n.5. 10 Nasdaq also proposes to delete the existing reference to a reverse stock split in Nasdaq Rule 5005(a)(44) that currently defines a ‘‘Substitution Listing Event’’ to include a reverse stock split. See supra note 6 and accompanying text. 11 Nasdaq also proposes clarifying edits in Nasdaq Rule 5250(b)(1) to specify that the time deadlines refer to Eastern Time. 8 See PO 00000 Frm 00150 Fmt 4703 Sfmt 4703 Proposed Nasdaq Rule 5250(b)(4) will specify that a company must provide public notice about a reverse stock split using a Regulation FD compliant method no later than 12:00 p.m. ET at least two business days prior to the proposed market effective date.12 In addition, the company shall, prior to the release of this information, provide notice of such disclosure to Nasdaq’s MarketWatch Department, at least ten minutes prior to public announcement if the public release of the material information is made between 7:00 a.m. to 8:00 p.m. ET.13 If the public release of this information is made outside the hours of 7:00 a.m. to 8:00 p.m. ET, Nasdaq companies must notify MarketWatch of the material information prior to 6:50 a.m. ET.14 The prior notice of this disclosure must be made to the MarketWatch Department through the electronic disclosure submission system available at https:// www.nasdaq.net, except in emergency situations, when notification may instead be provided by telephone or facsimile.15 Proposed Nasdaq Rule 5250(e)(7) will specify that, for a reverse stock split, the company must notify Nasdaq by submitting a complete Company Event Notification Form 16 no later than 12:00 12 Currently, the Nasdaq Trader website announcement and the company’s press release are published the day prior to a reverse split, and includes material information such as the CUSIP number and split ratio. Nasdaq states that if a market participant inadvertently misses the announcement, they may continue to accept orders at the pre-split price, rather than the post-split adjusted price, which could lead to volatility in the stock price and trading inaccurate share amounts. See id. at 51378. Accordingly, proposed Nasdaq Rule 5250(b)(4) would provide market participants with at least one additional business day to review the company’s public disclosure about the reverse stock split and update their systems. See id. 13 See proposed Nasdaq Rule 5250(b)(4). The timing for notifying Nasdaq about disclosure of material news before the public announcement of a reverse stock split in the proposed rule mirrors the timing for notifying Nasdaq’s MarketWatch Department about the disclosure of other material news in current Nasdaq Rule 5250(b)(1). 14 See id. 15 See id. See also IM–5250–1, which states that examples of an emergency situation include: lack of computer or internet access; technical problems on either the company or Nasdaq system or an incompatibility between those systems; and a material development such that no draft disclosure document exists, but immediate notification to MarketWatch is important based on the material event. 16 Nasdaq filed the text of the proposed Company Event Notification Form (‘‘Form’’) as Exhibit 3 to Nasdaq’s rule filing. See Notice, supra note 3, at 51377, n.9. The proposed Company Event Notification Form to be used for reverse mergers is being modified, in conjunction with the rule changes being approved in this order, to require a company to provide additional information to Nasdaq on the reverse merger than is currently required in the Company Event Notification Form. See Exhibit 3 to Nasdaq’s rule filing. The Form will E:\FR\FM\07NON1.SGM 07NON1 Federal Register / Vol. 88, No. 214 / Tuesday, November 7, 2023 / Notices khammond on DSKJM1Z7X2PROD with NOTICES p.m. ET five business days prior to the proposed market effective date. The submission must include all information required by the form and a draft of the disclosure required by proposed Nasdaq Rule 5250(b)(4).17 Nasdaq will not process a reverse stock split unless the requirements set forth in proposed Rules 5250(b)(4) and 5250(e)(7) have been timely satisfied.18 Additionally, if a company takes legal action to effect a reverse stock split notwithstanding its failure to timely satisfy these requirements, or provides incomplete or inaccurate information about the timing or ratio of the reverse stock split in its public disclosure,19 Nasdaq will halt the stock in accordance with the procedure set forth in Nasdaq Equity 4, Rule 4120, that provides Nasdaq with the authority to halt trading to permit the dissemination of material news.20 Proposed Nasdaq IM–5250–3 repeats the requirements of both proposed Nasdaq Rules 5250(b)(4) and (e)(7). According to Nasdaq this will provide issuers and market participants with additional transparency by having all information related to the reverse split process in one location in the Nasdaq rulebook.21 Nasdaq believes the proposed amendments will provide additional transparency and clarity to companies and market participants by specifying the notification and disclosure requirements related to reverse stock splits.22 Nasdaq states that the requirement for companies to submit a completed Company Event Notification Form no later than 12:00 p.m. ET five business days prior to the market effective date will help ensure that Nasdaq has timely and complete indicate the requirements for the company’s notification to the Exchange and public under the newly adopted rules herein as well as require the company to provide information including: (1) split ratio; (2) new CUSIP number; (3) dates of board approval, shareholder approval, and DTC eligibility; and (4) the effective date of the reverse stock split. 17 See proposed Nasdaq Rule 5250(e)(7). 18 See id. 19 For example, Nasdaq states that it will not process a proposed reverse stock split if the Company Event Notification Form does not include the new CUSIP number or a split ratio if the press release contains a split ratio or market effective date that is inconsistent with the draft submission previously provided to Nasdaq. See Notice, supra note 3, at 51377, n.12. 20 See proposed Nasdaq Rule 4120(a)(1) and 5250(e)(7). Nasdaq has submitted a separate rule filing to adopt a new regulatory halt procedure specific to the pre-market trading and opening of a Nasdaq-listed security undergoing a reverse stock split. See Securities Exchange Act Release No. 98489 (September 22, 2023), 88 FR 66913 (September 28, 2023) (Notice of Filing of Proposed Rule Change to Amend Rule 4120 and Rule 4753). 21 See id. at 51377. 22 See id. VerDate Sep<11>2014 16:30 Nov 06, 2023 Jkt 262001 information to process the reverse stock split prior to the effective date.23 Nasdaq also states that by shortening the deadline for the notification from 15 calendar days to five business days, Nasdaq believes that companies will be able to provide complete information in a single submission of the form, which they often cannot do today.24 As such, Nasdaq states the shorter time frame will simplify a company’s ability to submit a completed Company Event Notification Form because all relevant information can be provided in one submission closer to the market effective date and thereby improve Nasdaq’s processing of the forms and reduce the possibility of errors to the forms.25 Additionally, Nasdaq states the requirement under proposed Nasdaq Rule 5250(e)(7) for companies to submit a draft of the Regulation FD disclosure required by proposed Rule 5250(b)(4) will help ensure that the information disseminated to the market by the company aligns with Nasdaq’s announcement, including the split ratio and market effective date.26 Nasdaq also states that it would publish an announcement through the Nasdaq Trader website one and two business days prior to the market effective date.27 Furthermore, Nasdaq states that the requirement under proposed Nasdaq Rule 5250(b)(4) for a company to make public disclosure about a reverse stock split no later than 12:00 p.m. ET two business days prior to the market 23 See id. id. For example, Nasdaq states that currently some companies may submit a form without CUSIP information, and then will email the CUSIP information to Nasdaq a few days later. See id. Additionally, some companies may not have received confirmation of DTC eligibility, and receive it closer to the market effective date of the reverse stock split. See id. Nasdaq also indicated that where a company is conducting a reverse stock split to demonstrate compliance with the minimum $1 bid price requirement, as many companies are doing to remain on Nasdaq’s Capital Market tier, as described above in note 5, supra, the company may need to modify the ratio of the reverse stock split after providing initial notice due to changes in market conditions and the company’s stock price. See id. 25 See id. Nasdaq represents that the five business day timeframe still provides sufficient time for Nasdaq to process the notification. See id. at 51377, n.13. 26 See id. at 51377. 27 See id. at 51378. Nasdaq states that a company may publish a press release earlier than two business days prior to the market effective date of the reverse stock split. See id. at 51377, n. 15. However, Nasdaq states that it will only publish an announcement through the Nasdaq Trader website one and two business days prior to the reverse stock split. See id. As an example, Nasdaq states that if a company publishes a press release on Monday announcing a reverse stock split with a market effective date on Friday, Nasdaq will only publish an announcement through the Nasdaq Trader website on Wednesday and Thursday. See id. 24 See PO 00000 Frm 00151 Fmt 4703 Sfmt 4703 76869 effective date will help ensure that sufficient notice is provided to market participants, thereby allowing them to process the event in their systems.28 III. Discussion and Commission Findings After careful review, the Commission finds that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange.29 In particular, the Commission finds that the proposed rule change is consistent with section 6(b)(5) of the Act,30 which requires, among other things, that a national securities exchange have rules 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; and are not designed to permit unfair discrimination between customers, issuers, brokers, or dealers. As noted above, current Nasdaq Rule 5250(b)(1) requires a company to make ‘‘prompt disclosure’’ of ‘‘any material information that would reasonably be expected to affect the value of its securities or influence investors’ decisions,’’ which Nasdaq interprets to include details on reverse stock splits.31 In light of recent increased volume in reverse stock split activity, Nasdaq proposes to expressly set forth new notification and disclosure requirements for reverse stock splits in Nasdaq Rules 5250(b)(4), 5250(e)(7), and IM–5250– 3.32 The Exchange’s proposal is reasonably designed to address this recent market activity, including for companies that are listed on the Nasdaq Capital Market tier, by providing additional transparency of reverse stock splits to investors through public disclosure of material information about such splits,33 thus allowing them to better manage investment decisions. Further, the Exchange has represented that the requirement for companies to 28 See id. See also supra note 12. U.S.C. 78f(b). In approving this proposed rule change, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 30 15 U.S.C. 78f(b)(5). 31 See supra notes 7 and 8. 32 See supra notes 10 and 11 and accompanying text. 33 See supra note 16. 29 15 E:\FR\FM\07NON1.SGM 07NON1 khammond on DSKJM1Z7X2PROD with NOTICES 76870 Federal Register / Vol. 88, No. 214 / Tuesday, November 7, 2023 / Notices submit a completed Company Event Notification Form no later than 12:00 p.m. ET five business days prior to the market effective date will help ensure that Nasdaq has timely, complete, and accurate information to process the reverse stock split prior to the effective date.34 While Nasdaq currently is required to receive notification and certain information about a reverse stock split no later than 15 calendar days before it is scheduled to occur, Nasdaq has represented in its proposal that this longer time frame creates issues because some of the terms of the reverse stock split may not be set or available at that time or may change before the reverse stock split is to occur. As Nasdaq has stated, shortening the timeframe for notifying the Exchange about a reverse stock split to five business days should help to reduce the possibility of errors and allow companies to provide more complete and accurate information about a reverse stock split in a single submission to Nasdaq. This can also inure to the benefit of investors by ultimately providing the marketplace with improved and timely information about a reverse stock split. The Commission also believes that the other changes in proposed Nasdaq Rule 5250(e)(7) and to the Company Notification Form appear to be reasonable additions to address Nasdaq’s and market participants’ concerns about having adequate, accurate, and complete information in a timely manner about reverse stock splits. As described above, these changes include, among others, requiring companies to submit a draft of its public disclosure of the reverse stock split no later than 12 p.m. ET five business days prior to the market effective date so that the Exchange can ensure the disclosure aligns with the announcement Nasdaq will be making, including on the split ratio and effective date of the reverse split. In addition, as described above, new Nasdaq Rule 5250(e)(7) will specifically indicate that in certain circumstances such as when a company takes action to effect a reverse stock split but has failed to satisfy the rule’s requirements or a company provides incomplete or inaccurate information about the timing or ratio of the reverse stock split in its public disclosure, Nasdaq will halt the trading in the stock in accordance with its provisions on material news halts in Equity Rule 4, Rule 4120(a)(1). The proposal will also provide the investing public and other market participants with at least one additional 34 See supra note 23. VerDate Sep<11>2014 16:30 Nov 06, 2023 Jkt 262001 business day of public notice to help reduce the risk that investors and brokers inadvertently miss the public announcement of the reverse stock split or fail to process the event in their systems, helping to maintain fair and orderly markets, and protecting investors and the public interest.35 The Commission also finds that the other changes in proposed Nasdaq Rule 5250(b)(1) and the addition of Nasdaq Rule 5250(b)(4) and IM–5250–3 will enhance the transparency of the reverse stock split disclosure process to issuers and investors. Finally, the Commission notes that the two comment letters received on the proposal were supportive.36 For the reasons discussed above, the Commission finds that the proposed rule change is consistent with section 6(b)(5) of the Act 37 and the rules and regulations thereunder applicable to a national securities exchange. IV. Conclusion It is therefore ordered, pursuant to section 19(b)(2) of the Act,38 that the proposed rule change (SR–NASDAQ– 2023–025), be, and hereby is, approved. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.39 Sherry R. Haywood, Assistant Secretary. [FR Doc. 2023–24522 Filed 11–6–23; 8:45 am] BILLING CODE 8011–01–P 35 See supra note 12 (noting concerns about market volatility in stock prices if a market participant misses the current one business day announcement and continues to accept orders at pre-split prices and trading inaccurate share amounts). The Exchange also state that it believes the changes to both the notification and disclosure requirements should help to address these concerns about trading volatility and potential price mistakes. See Notice, supra note 3, at 51378. See also proposed Nasdaq Rule 5250(b)(4). 36 See Virtu Letter, supra note 3 (stating that, among other things, (i) shortening the notice requirement to Nasdaq from 15 calendar days to five business days before the planned reverse stock split would ‘‘provide issuers with additional time to obtain more complete data and thorough information before reporting the planned corporate action to Nasdaq,’’ and ‘‘result in Nasdaq having more complete information in advance of the planned reverse split date to ensure that all of the technical requirements have been satisfied’’; and (ii) increasing the public notice requirement to two business days ‘‘will enable market participants to plan more effectively for a reverse stock split, which will contribute to the maintenance of fair, orderly, and efficient markets’’); Robinhood Letter, supra note 3 (expressing general support for the proposal and, in particular, the requirement to increase the public notice requirement to two business days). 37 15 U.S.C. 78f(b)(5). 38 15 U.S.C. 78s(b)(2). 39 17 CFR 200.30–3(a)(12). PO 00000 Frm 00152 Fmt 4703 Sfmt 4703 SECURITIES AND EXCHANGE COMMISSION [Release No. 34–98833; File No. SR–ICC– 2023–014] Self-Regulatory Organizations; ICE Clear Credit LLC; Notice of Filing of Proposed Rule Change Relating to the Clearance of Additional Credit Default Swap Contracts November 1, 2023. Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934,1 and Rule 19b–4,2 notice is hereby given that on October 25, 2023, ICE Clear Credit LLC (‘‘ICC’’) filed with the Securities and Exchange Commission the proposed rule change as described in Items I, II and III below, which Items have been prepared primarily by ICC. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Clearing Agency’s Statement of the Terms of Substance of the Proposed Rule Change The principal purpose of the proposed rule change is to revise the ICC Rulebook (the ‘‘Rules’’) to provide for the clearance of additional Standard Emerging Market Sovereign Single Name CDS contracts (‘‘EM Contracts’’). II. Clearing Agency’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, ICC 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. ICC has prepared summaries, set forth in sections (A), (B), and (C) below, of the most significant aspects of these statements. (A) Clearing Agency’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change (a) Purpose The purpose of the proposed rule change is to adopt rules that will provide the basis for ICC to clear additional CDS contracts. ICC proposes to make such change effective following Commission approval of the proposed rule change. ICC believes the addition of these EM Contracts will benefit the market for CDS by providing market participants the benefits of clearing, including reduction in counterparty risk, and safeguarding of margin assets 1 15 2 17 U.S.C. 78s(b)(1) CFR 240.19b–4 E:\FR\FM\07NON1.SGM 07NON1

Agencies

[Federal Register Volume 88, Number 214 (Tuesday, November 7, 2023)]
[Notices]
[Pages 76867-76870]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-24522]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-98843; File No. SR-NASDAQ-2023-025]


Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Order 
Approving a Proposed Rule Change Related to Notification and Disclosure 
of Reverse Stock Splits

November 1, 2023.

I. Introduction

    On June 21, 2023, The Nasdaq Stock Market LLC (``Nasdaq'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change related to notification and disclosure of reverse 
stock splits. The proposed rule change was published for comment in the 
Federal Register on August 3, 2023.\3\ On September 14,

[[Page 76868]]

2023, the Commission extended the time period within which to approve 
the proposed rule change, disapprove the proposed rule change, or 
institute proceedings to determine whether to approve or disapprove the 
proposed rule change to November 1, 2023.\4\ This order approves the 
proposed rule change.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 98014 (July 28, 
2023), 88 FR 51376 (``Notice''). Comment received by the Commission 
on the proposed rule change is available on the Commission's website 
at: https://www.sec.gov/comments/sr-nasdaq-2023-025/srnasdaq2023025.htm. The Commission received two comment letters in 
support of the proposed rule change. See Letter from Thomas M. 
Merritt, Deputy General Counsel, Virtu Financial, Inc., dated August 
23, 2023 (``Virtu Letter''); Letter from Imran Javaid, Director and 
Association General Counsel, Robinhood Markets, Inc., dated October 
24, 2023 (``Robinhood Letter'').
    \4\ See Securities Exchange Act Release No. 98386, 88 FR 64936 
(Sept. 20, 2023).
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II. Description of the Proposed Rule Change

    Nasdaq is proposing to amend its rules regarding the notification 
and disclosure of reverse stock splits in light of recent increased 
volume in reverse stock split activity.\5\ Currently, a reverse stock 
split is considered a ``Substitution Listing Event'' under Nasdaq Rule 
5005(a)(44).\6\ Nasdaq Rule 5250(e)(4) requires a company to notify 
Nasdaq about any ``Substitution Listing Event (other than a re-
incorporation or a change to a company's place of organization) no 
later than 15 calendar days prior to the implementation of such event 
by filing the appropriate form as designated by Nasdaq.'' While public 
disclosure of a reverse stock split is not specifically addressed under 
Nasdaq's current rules, Nasdaq Rule 5250(b)(1) requires a company to 
make ``prompt disclosure'' of ``any material information that would 
reasonably be expected to affect the value of its securities or 
influence investors' decisions,'' which Nasdaq interprets to include 
details on reverse stock splits.\7\ While ``prompt'' disclosure is not 
expressly defined in the Exchange's rules, Nasdaq states that it has 
published an FAQ stating that ``[t]his disclosure should be 
disseminated prior to, or in conjunction with, the announcements that 
Corporate Data Operations will make on the day prior to the market 
effective date at approximately 1:00 p.m.'' \8\
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    \5\ Nasdaq states that in 2022, Nasdaq processed 196 reverse 
stock splits, compared to 31 in 2021 and 94 in 2020. See Notice, 
supra note 3, at 51376. As of June 23, 2023, Nasdaq states that it 
has processed 164 reverse stock splits, and projects significantly 
more throughout 2023. See id. In most cases, Nasdaq observes, 
companies are conducting reverse stock splits to achieve compliance 
with Nasdaq's $1 bid price requirement to remain on the Capital 
Market tier. See id. Nasdaq Rule 5550(a)(2) states that a company 
that has its Primary Equity Security listed on the Capital Market 
must have a minimum bid price of at least $1 per share. See also 
Nasdaq Rule 5450(a)(1) (Global and Global Select Markets).
    \6\ Nasdaq Rule 5505(a)(44) states, in part, that a 
``Substitution Listing Event'' means: ``a reverse stock split, re-
incorporation or a change in the Company's place of organization, 
the formation of a holding company that replaces a listed Company, 
reclassification or exchange of a Company's listed shares for 
another security, the listing of a new class of securities in 
substitution for a previously-listed class of securities, a business 
combination described in IM-5101-2, a change in the obligor of a 
listed debt security, or any technical change whereby the 
Shareholders of the original Company receive a share-for-share 
interest in the new Company without any change in their equity 
position or rights.''
    \7\ See Notice, supra note 3, at 51376.
    \8\ See Nasdaq FAQs-Listings #317, available at https://listingcenter.nasdaq.com/Material_search.aspx?materials=317&mcd=LQ&criteria=2&cid=120%2C1%2C145%2C108%2C157%2C14%2C22%2C126%2C142%2C29%2C107%2C34%2C37%2C38%2C45%2C16%2C110%2C52%2C71%2C156%2C69%0A%0A. Nasdaq states that these 
announcements are published as Equity Corporate Action Alerts on 
https://www.nasdaqtrader.com/ (the ``Nasdaq Trader website'') on the 
day prior to the reverse stock split. See Notice, supra note 3, at 
51377, n.7. See also infra note 12.
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    Accordingly, Nasdaq proposes to amend its rules to require a 
company conducting a reverse stock split to notify Nasdaq about certain 
details of the reverse stock split no later than 12 p.m. ET five 
business days prior to the anticipated market effective date, and to 
expressly require in its rules a company to make public disclosure 
about the reverse stock split at least two business days (no later than 
12:00 p.m. ET) prior to the anticipated market effective date.\9\ 
Specifically, Nasdaq proposes to add new Rules 5250(b)(4), 5250(e)(7), 
and IM-5250-3, as discussed in more detail below, as well as update the 
information that a company must disclose about a reverse stock split to 
the Exchange on the Company Event Notification Form.\10\ Nasdaq also 
proposes to amend Rule 5250(b)(1) concerning disclosure of material 
information to specify that a company should refer to Rules 5250(b)(4) 
and 5250(e)(7) for the disclosure and notification requirements related 
to reverse stock splits.\11\
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    \9\ For example, Nasdaq states that if a company desires to 
effect a reverse stock split with a market effective date of Monday, 
July 24, the company would have to provide Nasdaq with a draft of 
the disclosure required by proposed Nasdaq Rule 5250(b)(4) and a 
complete Company Event Notification Form by 12:00 p.m. ET on Monday, 
July 17, and provide the public disclosure by 12:00 p.m. ET by 
Thursday, July 20 (assuming there are no holidays during these 
dates). See id. at 51376, n.5.
    \10\ Nasdaq also proposes to delete the existing reference to a 
reverse stock split in Nasdaq Rule 5005(a)(44) that currently 
defines a ``Substitution Listing Event'' to include a reverse stock 
split. See supra note 6 and accompanying text.
    \11\ Nasdaq also proposes clarifying edits in Nasdaq Rule 
5250(b)(1) to specify that the time deadlines refer to Eastern Time.
---------------------------------------------------------------------------

    Proposed Nasdaq Rule 5250(b)(4) will specify that a company must 
provide public notice about a reverse stock split using a Regulation FD 
compliant method no later than 12:00 p.m. ET at least two business days 
prior to the proposed market effective date.\12\ In addition, the 
company shall, prior to the release of this information, provide notice 
of such disclosure to Nasdaq's MarketWatch Department, at least ten 
minutes prior to public announcement if the public release of the 
material information is made between 7:00 a.m. to 8:00 p.m. ET.\13\ If 
the public release of this information is made outside the hours of 
7:00 a.m. to 8:00 p.m. ET, Nasdaq companies must notify MarketWatch of 
the material information prior to 6:50 a.m. ET.\14\ The prior notice of 
this disclosure must be made to the MarketWatch Department through the 
electronic disclosure submission system available at https://www.nasdaq.net, except in emergency situations, when notification may 
instead be provided by telephone or facsimile.\15\
---------------------------------------------------------------------------

    \12\ Currently, the Nasdaq Trader website announcement and the 
company's press release are published the day prior to a reverse 
split, and includes material information such as the CUSIP number 
and split ratio. Nasdaq states that if a market participant 
inadvertently misses the announcement, they may continue to accept 
orders at the pre-split price, rather than the post-split adjusted 
price, which could lead to volatility in the stock price and trading 
inaccurate share amounts. See id. at 51378. Accordingly, proposed 
Nasdaq Rule 5250(b)(4) would provide market participants with at 
least one additional business day to review the company's public 
disclosure about the reverse stock split and update their systems. 
See id.
    \13\ See proposed Nasdaq Rule 5250(b)(4). The timing for 
notifying Nasdaq about disclosure of material news before the public 
announcement of a reverse stock split in the proposed rule mirrors 
the timing for notifying Nasdaq's MarketWatch Department about the 
disclosure of other material news in current Nasdaq Rule 5250(b)(1).
    \14\ See id.
    \15\ See id. See also IM-5250-1, which states that examples of 
an emergency situation include: lack of computer or internet access; 
technical problems on either the company or Nasdaq system or an 
incompatibility between those systems; and a material development 
such that no draft disclosure document exists, but immediate 
notification to MarketWatch is important based on the material 
event.
---------------------------------------------------------------------------

    Proposed Nasdaq Rule 5250(e)(7) will specify that, for a reverse 
stock split, the company must notify Nasdaq by submitting a complete 
Company Event Notification Form \16\ no later than 12:00

[[Page 76869]]

p.m. ET five business days prior to the proposed market effective date. 
The submission must include all information required by the form and a 
draft of the disclosure required by proposed Nasdaq Rule 
5250(b)(4).\17\ Nasdaq will not process a reverse stock split unless 
the requirements set forth in proposed Rules 5250(b)(4) and 5250(e)(7) 
have been timely satisfied.\18\ Additionally, if a company takes legal 
action to effect a reverse stock split notwithstanding its failure to 
timely satisfy these requirements, or provides incomplete or inaccurate 
information about the timing or ratio of the reverse stock split in its 
public disclosure,\19\ Nasdaq will halt the stock in accordance with 
the procedure set forth in Nasdaq Equity 4, Rule 4120, that provides 
Nasdaq with the authority to halt trading to permit the dissemination 
of material news.\20\
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    \16\ Nasdaq filed the text of the proposed Company Event 
Notification Form (``Form'') as Exhibit 3 to Nasdaq's rule filing. 
See Notice, supra note 3, at 51377, n.9. The proposed Company Event 
Notification Form to be used for reverse mergers is being modified, 
in conjunction with the rule changes being approved in this order, 
to require a company to provide additional information to Nasdaq on 
the reverse merger than is currently required in the Company Event 
Notification Form. See Exhibit 3 to Nasdaq's rule filing. The Form 
will indicate the requirements for the company's notification to the 
Exchange and public under the newly adopted rules herein as well as 
require the company to provide information including: (1) split 
ratio; (2) new CUSIP number; (3) dates of board approval, 
shareholder approval, and DTC eligibility; and (4) the effective 
date of the reverse stock split.
    \17\ See proposed Nasdaq Rule 5250(e)(7).
    \18\ See id.
    \19\ For example, Nasdaq states that it will not process a 
proposed reverse stock split if the Company Event Notification Form 
does not include the new CUSIP number or a split ratio if the press 
release contains a split ratio or market effective date that is 
inconsistent with the draft submission previously provided to 
Nasdaq. See Notice, supra note 3, at 51377, n.12.
    \20\ See proposed Nasdaq Rule 4120(a)(1) and 5250(e)(7). Nasdaq 
has submitted a separate rule filing to adopt a new regulatory halt 
procedure specific to the pre-market trading and opening of a 
Nasdaq-listed security undergoing a reverse stock split. See 
Securities Exchange Act Release No. 98489 (September 22, 2023), 88 
FR 66913 (September 28, 2023) (Notice of Filing of Proposed Rule 
Change to Amend Rule 4120 and Rule 4753).
---------------------------------------------------------------------------

    Proposed Nasdaq IM-5250-3 repeats the requirements of both proposed 
Nasdaq Rules 5250(b)(4) and (e)(7). According to Nasdaq this will 
provide issuers and market participants with additional transparency by 
having all information related to the reverse split process in one 
location in the Nasdaq rulebook.\21\
---------------------------------------------------------------------------

    \21\ See id. at 51377.
---------------------------------------------------------------------------

    Nasdaq believes the proposed amendments will provide additional 
transparency and clarity to companies and market participants by 
specifying the notification and disclosure requirements related to 
reverse stock splits.\22\ Nasdaq states that the requirement for 
companies to submit a completed Company Event Notification Form no 
later than 12:00 p.m. ET five business days prior to the market 
effective date will help ensure that Nasdaq has timely and complete 
information to process the reverse stock split prior to the effective 
date.\23\ Nasdaq also states that by shortening the deadline for the 
notification from 15 calendar days to five business days, Nasdaq 
believes that companies will be able to provide complete information in 
a single submission of the form, which they often cannot do today.\24\ 
As such, Nasdaq states the shorter time frame will simplify a company's 
ability to submit a completed Company Event Notification Form because 
all relevant information can be provided in one submission closer to 
the market effective date and thereby improve Nasdaq's processing of 
the forms and reduce the possibility of errors to the forms.\25\ 
Additionally, Nasdaq states the requirement under proposed Nasdaq Rule 
5250(e)(7) for companies to submit a draft of the Regulation FD 
disclosure required by proposed Rule 5250(b)(4) will help ensure that 
the information disseminated to the market by the company aligns with 
Nasdaq's announcement, including the split ratio and market effective 
date.\26\ Nasdaq also states that it would publish an announcement 
through the Nasdaq Trader website one and two business days prior to 
the market effective date.\27\ Furthermore, Nasdaq states that the 
requirement under proposed Nasdaq Rule 5250(b)(4) for a company to make 
public disclosure about a reverse stock split no later than 12:00 p.m. 
ET two business days prior to the market effective date will help 
ensure that sufficient notice is provided to market participants, 
thereby allowing them to process the event in their systems.\28\
---------------------------------------------------------------------------

    \22\ See id.
    \23\ See id.
    \24\ See id. For example, Nasdaq states that currently some 
companies may submit a form without CUSIP information, and then will 
email the CUSIP information to Nasdaq a few days later. See id. 
Additionally, some companies may not have received confirmation of 
DTC eligibility, and receive it closer to the market effective date 
of the reverse stock split. See id. Nasdaq also indicated that where 
a company is conducting a reverse stock split to demonstrate 
compliance with the minimum $1 bid price requirement, as many 
companies are doing to remain on Nasdaq's Capital Market tier, as 
described above in note 5, supra, the company may need to modify the 
ratio of the reverse stock split after providing initial notice due 
to changes in market conditions and the company's stock price. See 
id.
    \25\ See id. Nasdaq represents that the five business day 
timeframe still provides sufficient time for Nasdaq to process the 
notification. See id. at 51377, n.13.
    \26\ See id. at 51377.
    \27\ See id. at 51378. Nasdaq states that a company may publish 
a press release earlier than two business days prior to the market 
effective date of the reverse stock split. See id. at 51377, n. 15. 
However, Nasdaq states that it will only publish an announcement 
through the Nasdaq Trader website one and two business days prior to 
the reverse stock split. See id. As an example, Nasdaq states that 
if a company publishes a press release on Monday announcing a 
reverse stock split with a market effective date on Friday, Nasdaq 
will only publish an announcement through the Nasdaq Trader website 
on Wednesday and Thursday. See id.
    \28\ See id. See also supra note 12.
---------------------------------------------------------------------------

III. Discussion and Commission Findings

    After careful review, the Commission finds that the proposed rule 
change is consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to a national securities 
exchange.\29\ In particular, the Commission finds that the proposed 
rule change is consistent with section 6(b)(5) of the Act,\30\ which 
requires, among other things, that a national securities exchange have 
rules 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; 
and are not designed to permit unfair discrimination between customers, 
issuers, brokers, or dealers.
---------------------------------------------------------------------------

    \29\ 15 U.S.C. 78f(b). In approving this proposed rule change, 
the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
    \30\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    As noted above, current Nasdaq Rule 5250(b)(1) requires a company 
to make ``prompt disclosure'' of ``any material information that would 
reasonably be expected to affect the value of its securities or 
influence investors' decisions,'' which Nasdaq interprets to include 
details on reverse stock splits.\31\ In light of recent increased 
volume in reverse stock split activity, Nasdaq proposes to expressly 
set forth new notification and disclosure requirements for reverse 
stock splits in Nasdaq Rules 5250(b)(4), 5250(e)(7), and IM-5250-3.\32\ 
The Exchange's proposal is reasonably designed to address this recent 
market activity, including for companies that are listed on the Nasdaq 
Capital Market tier, by providing additional transparency of reverse 
stock splits to investors through public disclosure of material 
information about such splits,\33\ thus allowing them to better manage 
investment decisions.
---------------------------------------------------------------------------

    \31\ See supra notes 7 and 8.
    \32\ See supra notes 10 and 11 and accompanying text.
    \33\ See supra note 16.
---------------------------------------------------------------------------

    Further, the Exchange has represented that the requirement for 
companies to

[[Page 76870]]

submit a completed Company Event Notification Form no later than 12:00 
p.m. ET five business days prior to the market effective date will help 
ensure that Nasdaq has timely, complete, and accurate information to 
process the reverse stock split prior to the effective date.\34\ While 
Nasdaq currently is required to receive notification and certain 
information about a reverse stock split no later than 15 calendar days 
before it is scheduled to occur, Nasdaq has represented in its proposal 
that this longer time frame creates issues because some of the terms of 
the reverse stock split may not be set or available at that time or may 
change before the reverse stock split is to occur. As Nasdaq has 
stated, shortening the timeframe for notifying the Exchange about a 
reverse stock split to five business days should help to reduce the 
possibility of errors and allow companies to provide more complete and 
accurate information about a reverse stock split in a single submission 
to Nasdaq. This can also inure to the benefit of investors by 
ultimately providing the marketplace with improved and timely 
information about a reverse stock split.
---------------------------------------------------------------------------

    \34\ See supra note 23.
---------------------------------------------------------------------------

    The Commission also believes that the other changes in proposed 
Nasdaq Rule 5250(e)(7) and to the Company Notification Form appear to 
be reasonable additions to address Nasdaq's and market participants' 
concerns about having adequate, accurate, and complete information in a 
timely manner about reverse stock splits. As described above, these 
changes include, among others, requiring companies to submit a draft of 
its public disclosure of the reverse stock split no later than 12 p.m. 
ET five business days prior to the market effective date so that the 
Exchange can ensure the disclosure aligns with the announcement Nasdaq 
will be making, including on the split ratio and effective date of the 
reverse split. In addition, as described above, new Nasdaq Rule 
5250(e)(7) will specifically indicate that in certain circumstances 
such as when a company takes action to effect a reverse stock split but 
has failed to satisfy the rule's requirements or a company provides 
incomplete or inaccurate information about the timing or ratio of the 
reverse stock split in its public disclosure, Nasdaq will halt the 
trading in the stock in accordance with its provisions on material news 
halts in Equity Rule 4, Rule 4120(a)(1).
    The proposal will also provide the investing public and other 
market participants with at least one additional business day of public 
notice to help reduce the risk that investors and brokers inadvertently 
miss the public announcement of the reverse stock split or fail to 
process the event in their systems, helping to maintain fair and 
orderly markets, and protecting investors and the public interest.\35\
---------------------------------------------------------------------------

    \35\ See supra note 12 (noting concerns about market volatility 
in stock prices if a market participant misses the current one 
business day announcement and continues to accept orders at pre-
split prices and trading inaccurate share amounts). The Exchange 
also state that it believes the changes to both the notification and 
disclosure requirements should help to address these concerns about 
trading volatility and potential price mistakes. See Notice, supra 
note 3, at 51378. See also proposed Nasdaq Rule 5250(b)(4).
---------------------------------------------------------------------------

    The Commission also finds that the other changes in proposed Nasdaq 
Rule 5250(b)(1) and the addition of Nasdaq Rule 5250(b)(4) and IM-5250-
3 will enhance the transparency of the reverse stock split disclosure 
process to issuers and investors. Finally, the Commission notes that 
the two comment letters received on the proposal were supportive.\36\
---------------------------------------------------------------------------

    \36\ See Virtu Letter, supra note 3 (stating that, among other 
things, (i) shortening the notice requirement to Nasdaq from 15 
calendar days to five business days before the planned reverse stock 
split would ``provide issuers with additional time to obtain more 
complete data and thorough information before reporting the planned 
corporate action to Nasdaq,'' and ``result in Nasdaq having more 
complete information in advance of the planned reverse split date to 
ensure that all of the technical requirements have been satisfied''; 
and (ii) increasing the public notice requirement to two business 
days ``will enable market participants to plan more effectively for 
a reverse stock split, which will contribute to the maintenance of 
fair, orderly, and efficient markets''); Robinhood Letter, supra 
note 3 (expressing general support for the proposal and, in 
particular, the requirement to increase the public notice 
requirement to two business days).
---------------------------------------------------------------------------

    For the reasons discussed above, the Commission finds that the 
proposed rule change is consistent with section 6(b)(5) of the Act \37\ 
and the rules and regulations thereunder applicable to a national 
securities exchange.
---------------------------------------------------------------------------

    \37\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

IV. Conclusion

    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\38\ that the proposed rule change (SR-NASDAQ-2023-025), be, and 
hereby is, approved.
---------------------------------------------------------------------------

    \38\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\39\
---------------------------------------------------------------------------

    \39\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-24522 Filed 11-6-23; 8:45 am]
BILLING CODE 8011-01-P
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