[Federal Register Volume 89, Number 213 (Monday, November 4, 2024)]
[Notices]
[Pages 87661-87663]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-25526]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-101457; File No. SR-NYSEAMER-2024-61]


Self-Regulatory Organizations; NYSE American LLC; Notice of 
Filing of Proposed Change Amending Section 1003 of the NYSE American 
LLC Company Guide To Provide for the Suspension and Delisting of Any 
Company That: (i) Has Effected One or More Reverse Stock Splits Over 
the Prior Two-Year Period With a Cumulative Ratio of 200 Shares or More 
to One; or (ii) Has Effectuated a Reverse Stock Split and the 
Effectuation of Such Reverse Stock Split Results in the Company's 
Security Falling Below Any of the Continued Listing Requirements of 
Section 1003

October 29, 2024.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given 
that, on October 16, 2024, NYSE American LLC (``NYSE American'' or 
``Exchange'') 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 the self-regulatory 
organization. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 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 Section 1003 of the NYSE American 
LLC Company Guide to provide for the suspension and delisting of any 
company that: (i) has effected one or more reverse stock splits over 
the prior two-year period with a cumulative ratio of 200 shares or more 
to one; or (ii) has effectuated a reverse stock split and the 
effectuation of such reverse stock split results in the company's 
security falling below any of the continued listing requirements of 
Section 1003. The proposed rule change is available on the Exchange's 
website 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend subsection (f) (``Other Events'') of 
Section 1003 (``Application of Policies'') of the Company Guide to add 
two additional circumstances under which the Exchange would have the 
authority to suspend and delist a listed company. Specifically, 
proposed Section 1003(f)(vi) would give the Exchange the authority to 
suspend and delist any listed company that has effected one or more 
reverse stock splits over the prior two-year period with a cumulative 
ratio of 200 shares or more to one. In addition, proposed Section 
1003(f)(vii) would give the Exchange the authority to suspend and 
delist any listed company that has effected a reverse stock split if 
the effectuation of such reverse stock split results in the company's 
security falling below any of the continued listing requirements of 
Section 1003. Any action taken by a listed company that is governed by 
proposed Sections 1003(f)(vi) and 1003(f)(vii) would result in the 
immediate commencement of suspension and delisting procedures in 
accordance with the procedures set out in Section 1010 of the Company 
Guide.\4\ A listed issuer would not be eligible to follow the 
procedures outlined in Section 1009 with respect to any action in 
violation of proposed Sections 1003(f)(vi) or (vii).
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    \4\ Part 12 of the Company Guide provides that these companies 
can seek review of a delisting determination from the Committee for 
Review of the Board of Directors of the Exchange.
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    Section 1003(f)(v) (``Low Selling Price Issues'') of the Company 
Guide provides that, in the case of a common stock selling for a 
substantial period of time at a low price per share, the Exchange may 
suspend and delist a company if such company shall fail to effect a 
reverse split of such shares within a reasonable time after being 
notified that the Exchange deems such action to be appropriate under 
all the circumstances. In its review of the question of whether it 
deems a reverse split of a given issue to be appropriate, the Exchange 
will consider all pertinent factors including, market conditions in 
general, the number of shares outstanding, plans which may have been 
formulated by management, applicable regulations of the state or 
country of incorporation or of any governmental agency having 
jurisdiction over the issuer, the relationship to other Exchange 
policies regarding continued listing, and, in respect of securities of 
foreign issuers, the general practice in the country of origin of 
trading in low-selling price issues. Proposed Section 1003(f)(vii) is 
consistent with the provisions of Section 1003(f)(v) as described 
above, as well as with the Exchange's consistent policy that it would 
immediately suspend and delist a listed company if the company effects 
a reverse stock split to cure a low selling price issue under Section 
1003(f)(v) and the company would fall below another quantitative 
continued listing standard as a direct result of effecting that reverse 
stock split.
    Many companies seek to address low selling price issues under 
Section 1003(f)(v) by effectuating a reverse stock

[[Page 87662]]

split. However, the Exchange has observed that some companies, 
typically those in financial distress or experiencing a prolonged 
operational downturn, engage in a pattern of repeated reverse stock 
splits. The Exchange believes that such behavior is often indicative of 
deep financial or operational distress within such companies rendering 
them inappropriate for trading on the Exchange for investor protection 
reasons. In these situations, the Exchange has observed that the 
challenges facing such companies, generally, are not temporary and may 
be so severe that the company is not likely to regain compliance on a 
sustained basis.
    The Exchange believes that it is consistent with the protection of 
investors and the public interest to delist any company that (i) has 
effected one or more reverse stock splits over the prior two-year 
period with a cumulative ratio of 200 shares or more to one or (ii) 
takes a deliberate action that causes it to fall below an Exchange 
listing standard, including as in the current proposal, the 
effectuation of a reverse split that causes a company to fall below a 
quantitative continued listing standard.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\5\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act,\6\ in particular, because it 
is designed to prevent fraudulent and manipulative acts and practices, 
to promote just and equitable principles of trade, to foster 
cooperation and coordination with persons engaged in regulating, 
clearing, settling, processing information with respect to, and 
facilitating transactions in securities, to remove impediments to and 
perfect the mechanism of a free and open market and a national market 
system, and, in general, to protect investors and the public interest. 
Specifically, the Exchange believes that the proposal is consistent 
with the protection of investors and the public interest because it 
enhances the Exchange's listing requirements and limits the ability of 
listed companies with a history of having a low stock price to use 
reverse stock splits as a means to remain qualified for listing. In 
that regard, the Exchange has observed that the challenges facing such 
companies generally are not temporary and may be so severe that the 
company is not likely to remain compliant with Exchange listing 
standards after curing its low selling price by means of a reverse 
stock split. Moreover, the price concerns with these companies can be a 
leading indicator of other listing compliance concerns, and these 
companies often become subject to delisting for other reasons within a 
short period of time. The Exchange believes that it is consistent with 
the protection of investors and the public interest to immediately 
commence suspension and delisting procedures with respect to any 
company that (i) has effected one or more reverse stock splits over the 
prior two-year period with a cumulative ratio of 200 shares or more to 
one or (ii) takes a deliberate action that causes it to fall below an 
Exchange listing standard, including as in the current proposal, the 
effectuation of a reverse split that causes a company to fall below a 
quantitative continued listing standard.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes the proposed rule change furthers the 
objectives of Section 6(b)(7) of the Act \7\ in that the Exchange 
continues to provide a fair procedure for companies subject to these 
enhanced listing requirements. Part 12 of the Company Guide provides 
that these companies can seek review of a delisting determination from 
the Committee for Review of the Board of Directors of the Exchange. As 
a result, the Exchange believes that the proposed rule appropriately 
balances the need for appropriate listing standards with the statutory 
requirement to protect investors and the public interest.
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    \7\ 15 U.S.C. 78f(b)(7).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange believes that the proposal will not impose any burden 
on competition that is not necessary or appropriate in furtherance of 
the purposes of Section 6(b)(8) of the Act.\8\ While the Exchange does 
not believe there will be any impact on competition from the proposed 
change, any impact on competition that does arise will be necessary to 
better protect investors, in furtherance of a central purpose of the 
Act.
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    \8\ 15 U.S.C. 78f(b)(8).
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    The Exchange believes that the proposal will not impose a burden on 
intermarket competition that is not necessary or appropriate in 
furtherance of the purposes of the Act because the proposed rule change 
is designed to protect investors and facilitate a fair and orderly 
market, which are both important purposes of the Act. To the extent 
that there is any impact on intermarket competition, it is incidental 
to these objectives.
    The Exchange does not believe that the proposed rule change imposes 
a burden on intra-market competition because the provisions apply to 
all market participants and issuers on the Exchange equally.

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 within such longer period 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

    <bullet> Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
    <bullet> Send an email to <a href="/cdn-cgi/l/email-protection#e496918881c9878b8989818a9097a4978187ca838b92"><span class="__cf_email__" data-cfemail="fa888f969fd7999597979f948e89ba899f99d49d958c">[email protected]</span></a>. Please include 
file number SR-NYSEAMER-2024-61 on the subject line.

Paper Comments

    <bullet> 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-NYSEAMER-2024-61. 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 website (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule

[[Page 87663]]

change that are filed with the Commission, and all written 
communications relating to the proposed rule change between the 
Commission and any person, other than those that may be withheld from 
the public in accordance with the provisions of 5 U.S.C. 552, will be 
available for website viewing and printing in the Commission's Public 
Reference Room, 100 F Street NE, Washington, DC 20549, on official 
business days between the hours of 10 a.m. and 3 p.m. Copies of the 
filing also will be available for inspection and copying at the 
principal office of the Exchange. Do not include personal identifiable 
information in submissions; you should submit only information that you 
wish to make available publicly. We may redact in part or withhold 
entirely from publication submitted material that is obscene or subject 
to copyright protection. All submissions should refer to file number 
SR-NYSEAMER-2024-61 and should be submitted on or before November 25, 
2024.
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    \9\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-25526 Filed 11-1-24; 8:45 am]
BILLING CODE 8011-01-P


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