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[Federal Register Volume 89, Number 224 (Wednesday, November 20, 2024)]
[Notices]
[Pages 91840-91843]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-27021]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-101619; File No. SR-NYSEAMER-2024-67]

Self-Regulatory Organizations; NYSE American LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Change To Amend Section 
1003 of the NYSE American LLC Company Guide To Provide the Exchange 
With Discretion To Commence Suspension and Delisting Proceedings With 
Respect to a Listed Company That Has Changed Its Primary Business Focus

November 14, 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 November 4, 2024, NYSE American LLC (``NYSE American'' or the 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II below, which Items have been prepared by the Exchange. 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 the Exchange with discretion to commence 
suspension and delisting proceedings with respect to a listed company 
that has changed its primary business focus to a new area of business 
that it was not engaged in at the time of its original listing, or 
which was immaterial to its operations at the time of its original 
listing. 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,

[[Page 91841]]

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
    It has been the Exchange's experience that listed companies 
occasionally change the focus of their operations from the business 
they were engaged in at the time of initial listing to a business line 
that is completely unrelated or that was not material at the time of 
its original listing. The Exchange is concerned that, in such 
circumstances, investors who acquired the company's stock prior to this 
change in operations (including, in many cases, in connection with the 
company's initial public offering) may have made their investment 
decision based on the company's disclosure about its original business 
and might not have made their investment if they had been aware of how 
the company would change. In addition, a wholesale change in business 
operations may give rise to a concern about the suitability for listing 
of the company had it been in engaged in that line of business at the 
time of its application for listing. The Exchange notes that, in some 
circumstances, there has been significant downward price movement 
subsequent to such a change in business focus, which resulted in 
significant investor losses and an inability to meet exchange continued 
listing standards.\4\
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    \4\ For example, Bit Brother, a company listed on Nasdaq, 
initially focused on selling tea products but ultimately changed its 
business line to crypto. After three reverse splits, one of which 
was quite large (1000:1), the company was still unable to regain 
sustained compliance with listing standards. The stock was delisted 
from Nasdaq in February 2024. See https://www.wsj.com/finance/stocks/as-trading-frenzies-grip-penny-stocks-criticism-of-nasdaq-grows-8bd4118b (Feb 23, 2024).
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    In light of the foregoing, the Exchange proposes to amend Section 
1003 (``Application of Policies'') of the Guide to add proposed Section 
1003(i) (``Change in Primary Business Focus'') providing that the 
Exchange may in its sole discretion subject a listed company to 
immediate suspension and delisting if that listed company has changed 
its primary business focus to a new area of business that it was not 
engaged in at the time of its original listing or which was immaterial 
to its operations at the time of its original listing. The proposed 
rule text provides that any company that undertakes a change in its 
primary business focus must promptly provide notice of such change in 
writing to the Exchange. The Exchange will undertake the continued 
listing analysis and potentially take delisting action under the 
proposed provision regardless of whether the listed company complies 
with its obligation to provide written notification to the Exchange. 
Listed companies who would meet the requirements to provide written 
notification to the Exchange under the new provision but do not do so 
would be considered non-compliant with the notification requirement. If 
the Exchange determines that a listed company is unsuitable for 
continued listing due to a change in its primary business focus, the 
Exchange will commence suspension and delisting procedures immediately 
in accordance with the procedures set out in Section 1010.\5\ A listed 
company is not eligible to follow the procedures outlined in Section 
1009 with respect to proposed Section 1003(h). The Exchange notes that 
any company delisted under proposed Section 1003(h) will be entitled to 
avail itself of the due process rights provided by the appeal process 
set forth in Chapter 12.
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    \5\ Section 1010(b) states that whenever the Exchange 
determines, in accordance with Section 1009 or otherwise, that a 
class of securities should be removed from listing (or unlisted 
trading) for reasons other than the reasons specified in 1010(a), it 
will follow the procedures contained in Part 12.
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    The opening paragraph of Section 1003 states that companies that 
are noncompliant may utilize the cure periods set forth in Section 
1009. The Exchange proposes to qualify this provision to clarify that 
companies are not eligible for the cure provisions if the text of the 
applicable provision in Section 1003 provides otherwise. This proposed 
change is to distinguish the treatment of companies under proposed 
Section 1003(h) which would subject such companies to immediate 
suspension and delisting without recourse to the cure provisions in 
Section 1009.
    Upon becoming aware of such a change in the company's primary 
business focus, by notification from the listed company or otherwise, 
the Exchange's Staff would conduct a thorough assessment of the 
company's suitability for continued listing in light of such change. 
The Exchange would focus its analysis on whether it would have accepted 
the listed company for initial listing if it had been engaged in its 
modified business at the time of original listing. The Exchange notes 
that this analysis will focus on the qualitative aspects of the 
company's suitability for listing and will not entail an application of 
the quantitative standards for initial listing. In conducting this 
analysis, the Exchange would take into consideration other changes that 
may have occurred in connection with the change in the company's 
primary business focus, including in all cases, but not limited to, any 
changes in the management, board of directors, voting power, ownership, 
and financial structure of the company. The Exchange notes that the 
additional factors enumerated in the proposed rule text are consistent 
with areas that would be part of any initial listing review and are 
therefore a necessary part of any consideration of whether the company 
would have been suitable for initial listing in the form it took after 
its change of primary business focus. As discussed above, the 
Exchange's Staff would conduct a thorough assessment of the company's 
suitability for continued listing in light of such change. In addition, 
continued listing quantitative standards will continue to apply to a 
company that is being reviewed under the new standard just as with any 
company already listed on the Exchange.
    The Exchange acknowledges that seeking to suspend and delist a 
company's stock under this revised rule would be an extraordinary 
action. The Exchange therefore anticipates seldom relying on this new 
discretionary authority, and only after thorough analysis of all 
relevant facts and circumstances.
    The Exchange also notes that the proposal rule change is 
substantially similar to a recent amendment adopted by the NYSE to 
Section 802.01D of the NYSE Listed Company Manual that was approved by 
the Commission as consistent with the Act.\6\
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    \6\ See Securities Exchange Act Release No. 100585 (July 24, 
2024) (SR-NYSE-2024-21).
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\7\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act \8\ 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 
and is not designed to permit unfair

[[Page 91842]]

discrimination between customers, issuers, brokers, or dealers.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes it is consistent with the protection of 
investors to amend Section 1003 to provide the Exchange with the 
discretion to immediately commence suspension and delisting procedures 
with respect to a listed company that has changed its primary business 
focus to a new area of business that it was not engaged in at the time 
of its original listing or which was immaterial to its operations at 
the time of its original listing. The Exchange notes that investors who 
acquired the company's stock prior to this change in operations 
(including, in many cases, in connection with the company's initial 
public offering) may have made their investment decision based on the 
company's disclosure about its original business and might not have 
made their investment if they had been aware of how the company would 
change. In addition, the Exchange is concerned that a listed company 
may change its business operations to a line of business that would 
have given rise to a concern about the suitability for listing of the 
company had it been in engaged in that line of business at the time of 
its application for listing. The Exchange notes that taking delisting 
action in such cases would be discretionary and that the Exchange would 
undertake such action only after a careful analysis of the company's 
suitability for continued listing, taking into account all relevant 
factors, including, but not limited to, changes in the management, 
board of directors, voting power, ownership, and financial structure of 
the company. In making these determinations, the Exchange would focus 
its analysis on whether it would have accepted the listed company for 
initial listing if it had been engaged in its modified business at the 
time of original listing. The Exchange notes that this analysis will 
focus on the qualitative aspects of the company's suitability for 
listing and will not entail an application of the quantitative 
standards for initial listing. The Exchange believes that the proposed 
requirement that any listed company that undertakes a change in its 
primary business focus must promptly provide notice of such change in 
writing to the Exchange will enable the Exchange to more systematically 
identify circumstances where it is necessary to consider the 
appropriateness for continued listing of such companies.
    Finally, the Exchange also notes that a company that is subject to 
suspension and delisting under this new provision would be entitled to 
a review of the delisting determination under the procedures set forth 
in Part 12 of the Company Guide. The Exchange believes that this will 
provide, consistent with Section 6(b)(7) of the Act, a fair procedure 
for review of a suspension and delisting of a company under the new 
provision.

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 purposes of the Act. The Exchange notes that 
there are several listing venues and that any company that the Exchange 
deemed unsuitable for continued listing under the proposed rule could 
apply for listing on one or more other exchanges.

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

    Because the foregoing proposed rule change does not: (i) 
significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days after the date of the filing, or such 
shorter time as the Commission may designate if consistent with the 
protection of investors and the public interest, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \9\ and Rule 19b-
4(f)(6) \10\ thereunder.
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change, along 
with a brief description and text of the proposed rule change, at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has satisfied this requirement.
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule should be approved or 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 [email protected]. Please include 
file number SR-NYSEAMER-2024-67 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-NYSEAMER-2024-67. 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 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-2024-67 and should 
be submitted on or before December 11, 2024.

[[Page 91843]]

    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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Vanessa A. Countryman,
Secretary.
[FR Doc. 2024-27021 Filed 11-19-24; 8:45 am]
BILLING CODE 8011-01-P
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