14592 Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Notices 

13 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 94053 

(January 25, 2022), 87 FR 4982. 

4 15 U.S.C. 78s(b)(2). 

5 Id. 

6 17 CFR 200.30–3(a)(31). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 92344 

(July 7, 2021), 86 FR 36841 (‘‘Notice’’). Comments 

received on the proposal are available on the 

Commission’s website at: https://www.sec.gov/ 

comments/sr-nasdaq-2021-054/ 

srnasdaq2021054.htm. 

4 15 U.S.C. 78s(b)(2). 

5See Securities Exchange Act Release No. 92751, 

86 FR 48780 (August 31, 2021). The Commission 

designated October 11, 2021 as the date by which 

the Commission shall approve or disapprove, or 

institute proceedings to determine whether to 

approve or disapprove, the proposed rule change. 

6 15 U.S.C. 78s(b)(2)(B). 

7See Securities Exchange Act Release No. 93219, 

86 FR 55664 (October 6, 2021) (‘‘OIP’’). 

8See Securities Exchange Act Release No. 93891, 

87 FR 998 (January 7, 2022). 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–NYSE–2022–11. 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 (http://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 

10:00 a.m. and 3:00 p.m. Copies of the 

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number SR–NYSE–2022–11 and should 

be submitted on or before April 5, 2022. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.13

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–05371 Filed 3–14–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–94392; File No. SR–NYSE– 

2022–04] 

Self-Regulatory Organizations; New 

York Stock Exchange LLC; Notice of 

Designation of a Longer Period for 

Commission Action on a Proposed 

Rule Change To Amend Rules 5P, 

5.2(j)(8)(e), 8P, and 98 

March 9, 2022. 

On January 14, 2022, New York Stock 

Exchange LLC (‘‘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 to permit the listing and trading 

of certain exchange traded products that 

include in their portfolios a NMS Stock 

listed on the Exchange, or that are based 

on or represent an interest in an 

underlying index or reference asset that 

includes a NMS Stock listed on the 

Exchange. The proposed rule change 

was published for comment in the 

Federal Register on January 31, 2022.3

Section 19(b)(2) of the Act 4 provides 

that within 45 days of the publication of 

notice of the filing of a proposed rule 

change, or within such longer period up 

to 90 days as the Commission may 

designate if it finds such longer period 

to be appropriate and publishes its 

reasons for so finding, or as to which the 

self-regulatory organization consents, 

the Commission shall either approve the 

proposed rule change, disapprove the 

proposed rule change, or institute 

proceedings to determine whether the 

proposed rule change should be 

disapproved. The 45th day after 

publication of the notice for this 

proposed rule change is March 17, 2022. 

The Commission is extending the 45- 

day time period for Commission action 

on the proposed rule change. The 

Commission finds it appropriate to 

designate a longer period within which 

to take action on the proposed rule 

change so that it has sufficient time to 

consider the proposed rule change. 

Accordingly, pursuant to Section 

19(b)(2) of the Act,5 the Commission 

designates May 1, 2022 as the date by 

which the Commission shall either 

approve or disapprove, or institute 

proceedings to determine whether to 

disapprove, the proposed rule change 

(File No. SR–NYSE–2022–04). 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.6

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–05370 Filed 3–14–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–94389; File No. SR– 

NASDAQ–2021–054] 

Self-Regulatory Organizations; The 

Nasdaq Stock Market LLC; Order 

Disapproving a Proposed Rule Change 

To Modify Nasdaq IM–5101–2 To 

Permit an Acquisition Company To 

Contribute a Portion of Its Deposit 

Account to Another Entity in a Spin-Off 

or Similar Corporate Transaction 

March 9, 2022. 

I. Introduction 

On June 24, 2021, 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’’ or 

‘‘Exchange Act’’) 1 and Rule 19b–4 

thereunder,2 a proposed rule change to 

modify Nasdaq IM–5101–2 to permit an 

acquisition company to contribute a 

portion of the amount held in its deposit 

account to a deposit account of a new 

acquisition company in a spin-off or 

similar corporate transaction. The 

proposed rule change was published for 

comment in the Federal Register on July 

13, 2021.3

On August 25, 2021, pursuant to 

Section 19(b)(2) of the Act,4 the 

Commission designated a longer period 

within which to approve the proposed 

rule change, disapprove the proposed 

rule change, or institute proceedings to 

determine whether to disapprove the 

proposed rule change.5 On September 

30, 2021, the Commission instituted 

proceedings under Section 19(b)(2)(B) of 

the Act 6 to determine whether to 

approve or disapprove the proposed 

rule change.7 On January 3, 2022, the 

Commission extended the period for 

consideration of the proposed rule 

change to March 10, 2022.8


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9 15 U.S.C. 78f(b)(5). 

10See Nasdaq IM–5101–2. 

11See id. 

12See Nasdaq IM–5101–2(a). 

13See Nasdaq IM–5101–2(b). 

14See Nasdaq IM–5101–2(c). 

15See Nasdaq IM–5101–2(d). 

16See Nasdaq IM–5101–2(e). 

17See Notice, supra note 3, at 36841. The 

Exchange further states that ‘‘[t]his has resulted in 

the inefficient, current practice of SPAC sponsors 

creating multiple SPACs of different sizes at the 

same time, with the intention to use the SPAC that 

is closest in size to the amount a particular target 

needs.’’ Id. 

18See id. The 36-month period to complete a 

business combination under Nasdaq IM–5101–2 

would, however, be calculated for each SpinCo 

SPAC based on the date of the original SPAC’s 

effective registration statement. 

19See supra note 13 and accompanying text, for 

a description of the requirements of Nasdaq IM– 

5101–2(b). 

20As the Exchange states, this amount would be 

calculated after giving effect to the SpinCo SPAC’s 

contribution to a subsequent SpinCo SPAC, if any. 

See Notice, supra note 3, at 36842. 

This order disapproves the proposed 

rule change because, as discussed 

below, the Exchange has not met its 

burden under the Act and the 

Commission’s Rules of Practice to 

demonstrate that its proposal is 

consistent with the requirements of 

Exchange Act Section 6(b)(5), and, in 

particular, the requirements that the 

rules of a national securities exchange 

be designed to prevent fraudulent and 

manipulative acts and practices, to 

promote just and equitable principles of 

trade, and to protect investors and the 

public interest, and not be designed to 

permit unfair discrimination between 

customers, issuers, brokers, or dealers.9

II. Description of the Proposed Rule 

Change 

Generally, the Exchange will not 

permit the initial or continued listing of 

a company that has no specific business 

plan or that has indicated that its 

business plan is to engage in a merger 

or acquisition with an unidentified 

company or companies.10 However, the 

Exchange currently will permit the 

listing of a company whose business 

plan is to complete an initial public 

offering (‘‘IPO’’) and engage in a merger 

or acquisition with one or more 

unidentified companies within a 

specific period of time (‘‘Acquisition 

Company’’ or ‘‘SPAC’’), if the company 

meets all applicable initial listing 

requirements, as well as certain 

conditions described in Nasdaq IM– 

5101–2.11 Among other things, Nasdaq 

IM–5101–2 requires that at least 90% of 

the gross proceeds from the IPO and any 

concurrent sale by the Acquisition 

Company of equity securities must be 

deposited in a trust account maintained 

by an independent trustee, an escrow 

account maintained by an insured 

depository institution, or in a separate 

bank account established by a registered 

broker or dealer (collectively, a ‘‘deposit 

account’’).12 In addition, Nasdaq IM– 

5101–2 requires that within 36 months 

of the effectiveness of its IPO 

registration statement, or such shorter 

period that the Acquisition Company 

specifies in its registration statement, 

the Acquisition Company must 

complete one or more business 

combinations having an aggregate fair 

market value of at least 80% of the value 

of the deposit account (excluding any 

deferred underwriters fees and taxes 

payable on the income earned on the 

deposit account) at the time of the 

agreement to enter into the initial 

combination.13 Nasdaq IM–5101–2 

further requires each business 

combination to be approved by a 

majority of the Acquisition Company’s 

independent directors.14 If the 

Acquisition Company holds a 

shareholder vote on a business 

combination, the business combination 

must be approved by a majority of the 

shares of common stock voting at the 

meeting and public shareholders voting 

against the business combination must 

have the right to convert their shares of 

common stock into a pro rata share of 

the aggregate amount then in the deposit 

account (net of taxes payable and 

amounts distributed to management for 

working capital purposes) if the 

business combination is approved and 

consummated.15 If a shareholder vote 

on a business combination is not held, 

the Acquisition Company must provide 

all shareholders with the opportunity to 

redeem all their shares for cash equal to 

their pro rata share of the aggregate 

amount then in the deposit account (net 

of taxes payable and amounts 

distributed to management for working 

capital purposes), pursuant to Rule 13e– 

4 and Regulation 14E under the Act, 

which regulate issuer tender offers.16

The Exchange now proposes to 

modify Nasdaq IM–5101–2 to allow a 

SPAC listed under that rule to 

contribute a portion of its deposit 

account to a deposit account of a new 

entity in a spin-off or similar corporate 

transaction (‘‘SpinCo SPAC’’). 

According to the Exchange, when a 

SPAC conducts its IPO, it raises the 

amount of capital that it estimates will 

be necessary to finance a subsequent 

business combination with its ultimate 

target; however, the Exchange believes 

that because a SPAC cannot identify or 

select a specific target at the time of its 

IPO, often the amount raised is not 

optimal for the needs of a specific 

target.17 The Exchange states that it is 

proposing to modify Nasdaq IM–5101– 

2 to permit what it believes is a more 

efficient structure whereby a SPAC can 

raise in its IPO the maximum amount of 

capital it anticipates it may need for a 

business combination transaction and 

then ‘‘rightsize’’ itself by contributing 

any amounts not needed to a SpinCo 

SPAC, which would be subject to the 

provisions of Nasdaq IM–5101–2, in the 

same manner as the original SPAC, and 

spun off to the original SPAC’s 

shareholders.18

Specifically, proposed Nasdaq IM– 

5101–2(f) would provide that a SPAC 

will be permitted to contribute a portion 

of the amount held in the deposit 

account to a deposit account of another 

entity (the ‘‘Contribution’’) in a spin-off 

or similar corporate transaction, subject 

to the following conditions: 

(i) The requirements set forth in Nasdaq 

IM–5101–2(d) and (e) that shareholders of a 

SPAC must have the right to convert or 

redeem their shares of common stock into a 

pro rata share of the aggregate amount in the 

deposit account (net of taxes payable and 

amounts distributed to management for 

working capital purposes) at the times 

specified in such paragraphs may be based 

on the amounts in the deposit account of the 

SPAC at such times after having been 

reduced by the Contribution provided that, in 

connection with the Contribution, the 

SPAC’s public shareholders shall have had 

the right, through one or more corporate 

transactions, to redeem a portion of their 

shares of common stock (or, if units were 

sold in the SPAC’s IPO, units) for their pro 

rata portion of the amount of the 

Contribution in lieu of being entitled to 

receive shares or units in the SpinCo SPAC; 

(ii) the public shareholders of the SPAC 

receive shares or units of the SpinCo SPAC 

on a pro rata basis, except to the extent they 

have elected to redeem a portion of their 

shares of the SPAC in lieu of being entitled 

to receive shares or units in the SpinCo 

SPAC; 

(iii) the amount distributed to the SpinCo 

SPAC will remain in a deposit account for 

the benefit of the shareholders of the SpinCo 

SPAC in the same manner as described in 

Nasdaq IM–5101–2(a); 

(iv) the SpinCo SPAC meets all applicable 

initial listing requirements, as well as the 

conditions described in Nasdaq IM–5101– 

2(a) through (e); it being understood that, 

following such spin-off or similar corporate 

transaction: (A) For purposes of Nasdaq IM– 

5101–2(b) the 80% described therein shall,19

in the case of the SPAC, be calculated based 

on the aggregate amount remaining in the 

deposit account of the SPAC at the time of 

the agreement to enter into the initial 

combination after the Contribution to the 

SpinCo SPAC, and, in the case of the SpinCo 

SPAC, be calculated based on the aggregate 

amount in its deposit account at the time of 

its agreement to enter into its initial 

combination,20 and (B) for purposes of 


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21See supra notes 15–16 and accompanying text, 

for a description of the requirements of Nasdaq IM– 

5101–2(d) and (e). 

22Proposed Nasdaq IM–5101–2(f) provides that 

the conditions set forth in the proposed rule would 

similarly apply to successive spin-offs or similar 

corporate transactions, ‘‘mutatis mutandis.’’ 

23See Notice, supra note 3, at 36841–42. 

24See id. at 36842. 

25See id. According to the Exchange, the 

redemption could occur, for example, through a 

partial cash tender offer for shares of the Original 

SPAC pursuant to Rule 13e–4 and Regulation 14E 

of the Act, and the redemption may be of a separate 

class of shares distributed to unitholders of the 

Original SPAC for the purpose of facilitating the 

redemption. See id. at 36842 n.4. 

26See id. at 36842. 

27See id. The proposed rule would provide that, 

for purposes of Nasdaq IM–5101–2(b), the Original 

SPAC must complete one or more business 

combinations with an aggregate fair market value of 

at least 80% of the aggregate amount remaining in 

the Retained SPAC Deposit Account, after the 

contribution to the SpinCo SPAC, at the time of its 

agreement to enter into its initial combination. 

Nasdaq further states that, similarly, a SpinCo 

SPAC must complete one or more business 

combinations with an aggregate fair market value of 

at least 80% of the aggregate amount remaining in 

the SpinCo Deposit Account at the time of its 

agreement to enter into its initial combination after 

giving effect to its contribution to any subsequent 

SpinCo SPAC. 

28See id. 

29See letter from Kellen Carter, ARK Investment 

Management LLC, to Vanessa Countryman, 

Secretary, Commission, dated August 2, 2021, at 1– 

2. 

30See id. at 2. 

31See letter from White & Case LLP to Vanessa 

Countryman, Secretary, Commission, dated August 

3, 2021, at 1. 

32 15 U.S.C. 78f(b)(5). Pursuant to Section 19(b)(2) 

of the Exchange Act, 15 U.S.C. 78s(b)(2), the 

Commission must disapprove a proposed rule 

change filed by a national securities exchange if it 

does not find that the proposed rule change is 

consistent with the applicable requirements of the 

Exchange Act. 

33Rule 700(b)(3), Commission Rules of Practice, 

17 CFR 201.700(b)(3). 

34See id. 

Nasdaq IM–5101–2(d) and (e),21 the right to 

convert and opportunity to redeem shares of 

common stock on a pro rata basis, 

respectively, shall, in the case of the SPAC, 

be deemed to apply to the aggregate amount 

remaining in the deposit account of the SPAC 

after the contribution to the SpinCo SPAC, 

and, in the case of the SpinCo SPAC, be 

deemed to apply to the aggregate amount in 

its deposit account; 

(v) in the case of the SpinCo SPAC, and 

any additional entities spun off from the 

SpinCo SPAC, each of which will also be 

considered a SpinCo SPAC, the 36-month 

period described in Nasdaq IM–5101–2(b) (or 

such shorter period that the original SPAC 

specifies in its registration statement) will be 

calculated based on the date of effectiveness 

of the SPAC’s IPO registration statement; and 

(vi) in the aggregate, through one or more 

opportunities by the SPAC and one or more 

SpinCo SPACs, public shareholders will have 

the ability to convert or redeem shares, or 

receive amounts upon liquidation, for the full 

amount of the deposit account established by 

the SPAC as described in Nasdaq IM–5101– 

2(a) (excluding any deferred underwriters 

fees and taxes payable on the income earned 

on the deposit account).22

The Exchange states that, under the 

proposal, it expects that the new 

structure will be implemented in the 

following manner. If a listed SPAC (the 

‘‘Original SPAC’’) determines that it will 

not need all the cash in its deposit 

account for its initial business 

combination, the Original SPAC will 

designate the excess cash for a new 

deposit account of a SpinCo SPAC (the 

‘‘SpinCo Deposit Account,’’ and the 

amount retained in the deposit account 

of the Original SPAC, the ‘‘Retained 

SPAC Deposit Account’’).23 The 

Exchange states that the amount 

designated for the SpinCo Deposit 

Account must continue to be held for 

the benefit of the shareholders of the 

Original SPAC until the completion of 

the spin-off transaction and, following 

the spin-off of the SpinCo SPAC to the 

Original SPAC’s shareholders, the 

SpinCo Deposit Account would be 

subject to the same requirements as the 

deposit account of the Original SPAC.24

According to the Exchange, the 

SpinCo SPAC would file a registration 

statement under the Securities Act of 

1933 for purposes of effecting the spinoff of the SpinCo SPAC and, prior to the 

effectiveness of the registration 

statement, the Original SPAC would 

provide its public shareholders through 

one or more corporate transactions with 

the opportunity to redeem a pro rata 

amount of their holdings equal to the 

amount of the SpinCo Deposit Account 

divided by the per share amount in the 

Original SPAC’s deposit account (the 

‘‘redemption price’’).25 The Exchange 

further states that, after completing the 

tender offer for the redemption and the 

effectiveness of the SpinCo SPAC’s 

registration statement, the Original 

SPAC would contribute the SpinCo 

Deposit Account to a deposit account 

held by the SpinCo SPAC in exchange 

for shares or units of the SpinCo SPAC, 

which the Original SPAC would then 

distribute to its public shareholders on 

a pro rata basis through one or more 

corporate transactions pursuant to the 

SpinCo SPAC’s effective registration 

statement.26

According to the Exchange, the 

Original SPAC would then continue to 

operate as a SPAC until it completes its 

business combination and would offer 

redemption rights to its public 

shareholders in connection with that 

business combination in the same 

manner as a traditional SPAC, while the 

SpinCo SPAC would operate in the 

same manner as a traditional SPAC, 

except that it could effect a subsequent 

spin-off prior to its business 

combination like the Original SPAC.27

The Exchange states that if SpinCo 

SPAC does not elect to effect a spin-off, 

it would proceed to complete an initial 

business combination and offer 

redemption rights in connection 

therewith like a traditional SPAC.28

The Commission received comments 

broadly supporting the proposed rule 

change. Specifically, one commenter 

stated that the proposed rule change 

would introduce a ‘‘more efficient, costeffective[,] and flexible’’ structure than 

provided for by the current SPAC listing 

rules, ‘‘while continuing to offer 

significant and appropriate protections 

to SPAC investors.’’ 29 This commenter 

further argued that shareholders’ ability 

under the proposed rule change to 

redeem their investment in connection 

with each specific business combination 

by the Original SPAC or a SpinCo SPAC 

would both increase flexibility and 

investors’ ability to understand the 

companies that a SPAC plans to acquire 

and the risks associated with each such 

target company.30 Another commenter 

similarly argued that the proposed rule 

change would permit a more efficient 

SPAC structure while ‘‘maintaining all 

of the investor protections’’ in the 

current SPAC listing rules.31

III. Discussion and Commission 

Findings 

The Commission must consider 

whether the Exchange’s proposal is 

consistent with the Act, including 

Section 6(b)(5), which requires, among 

other things, that the rules of a national 

securities exchange be designed to 

prevent fraudulent and manipulative 

acts and practices, to promote just and 

equitable principles of trade, to protect 

investors and the public interest, and 

not be designed to permit unfair 

discrimination between customers, 

issuers, brokers, or dealers.32 Under the 

Commission’s Rules of Practice, the 

‘‘burden to demonstrate that a proposed 

rule change is consistent with the 

Exchange Act and the rules and 

regulations issued thereunder . . . is on 

the self-regulatory organization that 

proposed the rule change.’’ 33

The description of a proposed rule 

change, its purpose and operation, its 

effect, and a legal analysis of its 

consistency with applicable 

requirements must all be sufficiently 

detailed and specific to support an 

affirmative Commission finding,34 and 

any failure of a self-regulatory 

organization to provide this information 

may result in the Commission not 

having a sufficient basis to make an 

affirmative finding that a proposed rule 


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35See id. 

36Susquehanna Int’l Group, LLP v. Securities and 

Exchange Commission, 866 F.3d 442, 447 (D.C. Cir. 

2017). 

37The Commission has stated in approving 

national securities exchange listing requirements 

that the development and enforcement of adequate 

standards governing the listing of securities on an 

exchange is an activity of critical importance to the 

financial markets and the investing public. In 

addition, once a security has been approved for 

initial listing, maintenance criteria allow an 

exchange to monitor the status and trading 

characteristics of that issue to ensure that it 

continues to meet the exchange’s standards for 

market depth and liquidity so that fair and orderly 

markets can be maintained. See, e.g., Securities 

Exchange Act Release Nos. 91947 (May 19, 2021), 

86 FR 28169, 28172 n.47 (May 25, 2021) (SR– 

NASDAQ–2020–057) (‘‘Nasdaq 2021 Order’’); 90768 

(December 22, 2020), 85 FR 85807, 85811 n.55 

(December 29, 2020) (SR–NYSE–2019–67) (‘‘NYSE 

2020 Order’’); 82627 (February 2, 2018), 83 FR 

5650, 5653 n.53 (February 8, 2018) (SR–NYSE– 

2017–30) (‘‘NYSE 2018 Order’’); 81856 (October 11, 

2017), 82 FR 48296, 48298 (October 17, 2017) (SR– 

NYSE–2017–31); 81079 (July 5, 2017), 82 FR 32022, 

32023 (July 11, 2017) (SR–NYSE–2017–11). The 

Commission has stated that adequate listing 

standards, by promoting fair and orderly markets, 

are consistent with Section 6(b)(5) of the Exchange 

Act, in that they are, among other things, designed 

to prevent fraudulent and manipulative acts and 

practices, promote just and equitable principles of 

trade, and protect investors and the public interest. 

See, e.g., Nasdaq 2021 Order, 86 FR at 28172 n.47; 

NYSE 2020 Order, 85 FR at 85811 n.55; NYSE 2018 

Order, 83 FR at 5653 n.53; Securities Exchange Act 

Release Nos. 87648 (December 3, 2019), 84 FR 

67308, 67314 n.42 (December 9, 2019) (SR– 

NASDAQ–2019–059); 88716 (April 21, 2020), 85 FR 

23393, 23395 n.22 (April 27, 2020) (SR–NASDAQ– 

2020–001). 

38See Securities Exchange Act Release No. 58228 

(July 25, 2008), 73 FR 44794, 44796 (July 31, 2008) 

(Order Granting Approval to Proposed Rule Change, 

as modified by Amendment No. 1, to Adopt 

Additional Initial Listing Standards to list 

Securities of Special Purpose Acquisition 

Companies) (NASDAQ–2008–013) (‘‘2008 Order’’). 

39See Nasdaq IM–5101–2(a). 

40See Nasdaq IM–5101–2(b). 41See Nasdaq IM–5101–2(d). See also supra notes 

12–16 and accompanying text. 42See Notice, supra note 3, at 36843. Nasdaq also 

states that the proposal would provide public 

shareholders an additional, early redemption 

opportunity with respect to a portion of their 

holdings, before the time they would be able to do 

so in a traditional SPAC, and that public 

shareholders would maintain the ability to redeem 

the portion of their investment attributable to each 

specific acquisition after reviewing all disclosure 

with respect to that acquisition. See id. at 36842. 

Nasdaq further states that all other protections 

provided under IM–5101–2 would continue to 

apply, with adjustments only to reflect the potential 

for a spin-off of a new SPAC that is subject to all 

of the requirements of IM–5101–2, and any SpinCo 

SPAC would be required to satisfy all applicable 

initial listing requirements, like any other SPAC 

listing on Nasdaq. See id. at 36842–43. Nasdaq 

argues that the proposal would provide 

shareholders the opportunity to invest with a SPAC 

sponsor without spreading that investment across 

the sponsor’s multiple SPACs. See id. at 36842. 

43 In approving Nasdaq’s original listing 

standards for SPACs, the Commission found that 

the investor protection requirements in IM–5101–2, 

including that at least 90% of the IPO proceeds and 

any concurrent sale be placed in a deposit account 

and that the public shareholders have conversion 

rights based on their share of the proceeds in that 

deposit account, provide additional safeguards for 

investors who invest in SPAC securities, and will 

help ensure that public shareholders who disagree 

with management’s decision with respect to a 

business combination have adequate remedies. See 

2008 Order, supra note 38, at 44796. The 

Commission further stated that those safeguards 

should help to ensure that SPACs that list securities 

on Nasdaq will have taken certain additional steps 

to address investor protection and other matters and 

that the rules provided baseline investor 

Continued 

change is consistent with the Act and 

the applicable rules and regulations.35

Moreover, ‘‘unquestioning reliance’’ on 

a self-regulatory organization’s 

representations in a proposed rule 

change is not sufficient to justify 

Commission approval of a proposed rule 

change.36

The Commission has consistently 

recognized the importance of national 

securities exchange listing standards. 

Among other things, such listing 

standards help ensure that exchangelisted companies will have sufficient 

public float, investor base, and trading 

interest to provide the depth and 

liquidity necessary to promote fair and 

orderly markets.37 With respect to 

SPACs, Nasdaq’s current listing 

standards provide important investor 

protections,38 including that at least 

90% of the SPAC’s IPO proceeds be 

held in a deposit account; 39 that within 

36 months of the effectiveness of its IPO 

registration statement (or such shorter 

time period specified in the registration 

statement) the SPAC complete one or 

more business combinations having an 

aggregate fair market value of at least 

80% of the value of the deposit 

account; 40 and that public shareholders 

have a right to redeem their pro rata 

share of the full amount of the deposit 

account prior to any proposed business 

combination.41

As discussed above, Nasdaq now 

proposes to amend its listing standards 

to allow the SPAC to contribute a 

portion of the funds held in its deposit 

account to the deposit account of a new 

SpinCo SPAC, rather than use those 

funds for a business combination with 

the Original SPAC. While Nasdaq would 

provide shareholders in the original 

SPAC redemption rights with respect to 

the funds contributed to the SpinCo 

SPAC, such rights would not extend to 

the funds retained by the Original 

SPAC. Instead, shareholders would be 

required to make a separate, later 

redemption decision with respect to the 

remaining funds in the Original SPAC’s 

deposit account in connection with its 

business combination, once one is 

identified. Because Nasdaq proposes to 

permit successive SpinCo SPACs, 

shareholders could be required to 

evaluate multiple potential spin-offs 

and business combinations, and engage 

in multiple redemption processes if they 

desire to redeem their pro rata share of 

the full amount originally deposited in 

the SPAC’s deposit account. 

In support of its proposal, Nasdaq 

acknowledges this difference, but states 

its belief that it ‘‘does not adversely 

affect shareholders because the 

shareholders will still have the 

opportunity to redeem for the entire pro 

rata share of the trust account prior to 

completion of the business 

combination,’’ although ‘‘the 

redemption right may be effected 

through two decisions.’’ 42

Current SPAC listing standards 

provide important protections for 

investors in SPACs, where the business 

plan is to engage in mergers or 

acquisitions with unidentified 

companies. As discussed above, 

Nasdaq’s current SPAC listing standards 

require that SPAC IPO proceeds be held 

in a deposit account to be used for 

business combination purposes, and 

provide shareholders an efficient 

mechanism to redeem their entire pro 

rata share of those proceeds in a single 

transaction. This permits investors who 

do not support a business combination 

or otherwise lose faith in the abilities of 

the SPAC sponsors to fully redeem their 

pro rata share of the proceeds when a 

business combination is first presented 

to them. Under the Exchange’s proposal, 

shareholders would lose this ability, 

and instead would have to wait until 

business combinations are presented by 

all successive SpinCo SPACs to fully 

redeem their pro rata share of the 

proceeds. By proposing to permit funds 

in the deposit account to be used to 

create new SPACs and to require 

shareholders to engage in a series of 

redemption processes in order to fully 

redeem their pro rata share of the funds 

originally deposited in the trust 

account, the efficiency of shareholder 

redemption rights and the effectiveness 

of the investor protections they were 

designed to provide could be 

undermined. 

Further, by proposing to permit 

successive SpinCo SPACs, shareholders 

could be required to make assessments 

of a series of proposed business 

combinations of varying sizes as a result 

of their investment in the Original 

SPAC, rather than doing so once. As 

discussed above, SPACs are subject to 

heightened listing standards because of 

the special risks presented by an 

investment in a company where the 

business plan is to engage in a merger 

or acquisition of an unidentified 

company, and to ensure that appropriate 

investor protections are in place.43 By 


khammond on DSKJM1Z7X2PROD with NOTICES
14596 Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Notices 

protections. See id. at 44796–97. The Commission 

has subsequently stated that ‘‘[b]ecause of their 

unique structure, and the fact that at the outset 

investors will not know the ultimate business of the 

company similar to a blank check company, the 

Commission approved Nasdaq listing standards for 

SPACs that were similar in some respects to the 

investor protection measures contained in Rule 419 

under the Securities Act of 1933.’’ Securities 

Exchange Act Release No. 63607 (December 23, 

2010), 75 FR 82420, 82422 (December 30, 2010) 

(order approving SR–NASDAQ–2010–137). 

44See supra note 43 (describing how Nasdaq’s 

listing standards for SPACs are designed to address 

additional investor protection concerns presented 

by SPAC issuers given their unique structure). See 

also Securities Exchange Act Release No. 57785 

(May 6, 2008), 73 FR 27597, 27599 (May 13, 2008) 

(SR–NYSE–2008–17) (approving listing standards 

for SPACs on NYSE and stating that SPACs are 

‘‘essentially shell companies’’ and that the 

additional investor protection criteria on NYSE, 

which are comparable to those in IM–5101–2, 

‘‘should further the ability of investors to protect 

and monitor their investment pending a [b]usiness 

[c]ombination’’). 

45See Notice, supra note 3, at 36843; proposed 

IM–5101–2(f)(vi). 

46 17 CFR 201.700(b)(3). 

47 In disapproving 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). As described above, 

two commenters expressed their belief that the 

proposal would result in a more efficient SPAC 

structure and use of capital. See supra notes 29–31 

and accompanying text. For the reasons discussed 

throughout, however, the Commission is 

disapproving the proposed rule change because it 

does not find that the proposed rule change is 

consistent with the Exchange Act. 

48 15 U.S.C. 78s(b)(2). 

49 Id. 

50 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3 15 U.S.C. 78s(b)(3)(A). 

4 17 CFR 240.19b–4(f)(6). 

increasing the number of decisions with 

respect to unidentified companies that 

SPAC investors would be required to 

make, and determine whether or not to 

exercise redemption rights, the 

Exchange’s proposal could add 

considerable complexity to the structure 

and business combination strategies of 

SPACs, and exacerbate the investor 

protection concerns presented by 

companies where the business plan is to 

combine with another company that is 

unidentified at the time of investment.44

Nasdaq has not addressed these risks 

or how its proposal is consistent with 

Section 6(b)(5) of the Exchange Act in 

light of them, other than to state that 

shareholders will not be adversely 

affected because they still have the right 

to redeem their full pro rata share of the 

deposit account through more than one 

transaction.45 Based on the above, the 

Commission cannot find that the 

proposal is consistent with the 

requirement under Section 6(b)(5) of the 

Act that the proposal be designed, 

among other things, to protect investors 

and the public interest. 

As stated above, under the 

Commission’s Rules of Practice, the 

‘‘burden to demonstrate that a proposed 

rule change is consistent with the 

Exchange Act and the rules and 

regulations issued thereunder . . . is on 

the self-regulatory organization that 

proposed the rule change.’’ 46 For the 

foregoing reasons, the Exchange has not 

met its burden to demonstrate that its 

proposal is consistent with the 

Exchange Act. In particular, the 

Exchange has not adequately 

demonstrated that its proposal to allow 

a SPAC to contribute a portion of the 

amount held in its deposit account to 

the deposit account of a new SpinCo 

SPAC is consistent with investor 

protection, the public interest, and other 

relevant provisions of Section 6(b)(5) of 

the Exchange Act. Accordingly, for the 

reasons set forth above, the Commission 

must disapprove the proposed rule 

change because the Exchange has not 

met its burden to demonstrate that the 

proposal is consistent with Section 

6(b)(5) of the Exchange Act.47

IV. Conclusion 

The Commission does not find, 

pursuant to Section 19(b)(2) of the 

Exchange Act,48 that the proposed rule 

change is consistent with the Exchange 

Act and the rules and regulations 

thereunder applicable to a national 

securities exchange, and in particular, 

Section 6(b)(5) of the Exchange Act. 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Exchange Act,49

that the proposed rule change (SR– 

NASDAQ–2021–054) be, and hereby is, 

disapproved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.50

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–05369 Filed 3–14–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–94383; File No. SR–MSRB– 

2022–01] 

Self-Regulatory Organizations; 

Municipal Securities Rulemaking 

Board; Notice of Filing and Immediate 

Effectiveness of a Proposed Rule 

Change To Further Extend the 

Regulatory Relief and Permit Dealers 

To Conduct Office Inspections 

Remotely Until December 31, 2022 

Pursuant to MSRB Rule G–27, on 

Supervision 

March 9, 2022. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 (‘‘Act’’ 

or ‘‘Exchange Act’’) 1 and Rule 19b–4 

thereunder,2 notice is hereby given that 

on March 1, 2022, the Municipal 

Securities Rulemaking Board (‘‘MSRB’’) 

filed with the Securities and Exchange 

Commission (‘‘SEC’’ or ‘‘Commission’’) 

the proposed rule change as described 

in Items I, II, and III below, which Items 

have been prepared by the MSRB. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The MSRB filed with the Commission 

a proposed rule change to amend 

Supplementary Material .01, Temporary 

Relief for Completing Office 

Inspections, of MSRB Rule G–27, on 

supervision, to further extend the 

regulatory relief and permit brokers, 

dealers and municipal securities dealers 

(collectively, ‘‘dealers’’) to conduct 

office inspections, due to be completed 

during calendar year 2022, remotely 

until December 31, 2022 (the ‘‘proposed 

rule change’’). 

The MSRB has designated the 

proposed rule change as constituting a 

‘‘noncontroversial’’ rule change under 

Section 19(b)(3)(A) 3 of the Act and Rule 

19b–4(f)(6) 4 thereunder, which renders 

the proposal effective upon receipt of 

this filing by the Commission. The 

MSRB proposes an operative date of 

May 2, 2022. 

The text of the proposed rule change 

is available on the MSRB’s website at 

www.msrb.org/Rules-andInterpretations/SEC-Filings/2022- 

Filings.aspx, at the MSRB’s principal 

office, and at the Commission’s Public 

Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

MSRB 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. The MSRB has 

prepared summaries, set forth in 

Sections A, B, and C below, of the most 

significant aspects of such statements. 


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