```

[Federal Register Volume 89, Number 249 (Monday, December 30, 2024)]
[Notices]
[Pages 106715-106717]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-30917]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-102006; File No. SR-NASDAQ-2024-085]

Self-Regulatory Organizations; The Nasdaq Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend Exchange Rules 1015, 9261, 9341, 9524 and 9830 To Permit Hearings 
by Video Conference

December 19, 2024.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on December 19, 2024, The Nasdaq Stock Market LLC (``Nasdaq'' or 
``Exchange'') 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 
Exchange. The Commission is publishing this notice to solicit comments 
on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend Exchange Rules 1015, 9261, 9341, 
9524 and 9830 to allow for video conference hearings before the Office 
of Hearing Officers (``OHO'') and the Exchange Review Council (``ERC'') 
under specified conditions.
    The text of the proposed rule change is available on the Exchange's 
website at https://listingcenter.nasdaq.com/rulebook/nasdaq/rules, 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 Exchange 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 Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to harmonize Exchange Rules 1015, 9261, 9341, 
9524 and 9830 with changes by the Financial Industry Regulatory 
Authority, Inc. (``FINRA'') to its Rules 1015, 9261, 9341, 9524 and 
9830 that would allow for the use of video conference for reasons in 
addition to COVID-19. The proposal also deletes expired references to 
temporary amendments.\3\ The Exchange originally filed proposed rule 
change SR-NASDAQ-2020-076, which allowed the Exchange's Office of 
Hearing Officers (``OHO'') and the Exchange Review Council (``ERC'') to 
conduct hearings, on a temporary basis, by video conference, if 
warranted by the COVID-19-related public health risks posed by an in-
person hearing.\4\ These were extended several times due to the 
continuing public health risks and logistical challenges related to 
COVID-19, including whether hearing participants could safely travel 
and abide by state or local quarantine requirements.\5\ The use of high 
quality, secure and user-friendly video conference technology in 
hearings has demonstrated that video is an effective and efficient 
alternative to in-person hearings.\6\
---------------------------------------------------------------------------

    \3\ See Securities Exchange Act Release No. 96282 (November 
9,2022), 87 FR 68788 (November 16, 2022) (Notice of Filing and 
Immediate Effectiveness of File No. SR-NASDAQ-2022-059) (temporary 
amendments expiring on January 31, 2023).
    \4\ See Securities Exchange Act Release No. 90390 (November 10, 
2020), 85 FR 73302 (November 17, 2020) (Notice of Filing and 
Immediate Effectiveness of File No. SR-NASDAQ-2020-076).
    \5\ See Securities Exchange Act Release No. 90774 (December 22, 
2020), 85 FR 86614 (December 30, 2020) (Notice of Filing and 
Immediate Effectiveness of File No. SR-NASDAQ-2020-092); Securities 
Exchange Act Release No. 91763 (May 4, 2021), 86 FR 25055 (May 10, 
2021) (Notice of Filing and Immediate Effectiveness of File No. SR-
NASDAQ-2021-033); Securities Exchange Act Release No. 92911 
(September 9, 2021), 86 FR 51395 (September 15, 2021) (Notice of 
Filing and Immediate Effectiveness of File No. SR-NASDAQ-2021-067); 
Securities Exchange Act Release No. 93852 (December 22, 2021), 86 FR 
74201 (December 29, 2021) (Notice of Filing and Immediate 
Effectiveness of File No. SR-NASDAQ-2021-104); Securities Exchange 
Act Release No. 94610 (April 5, 2022), 87 FR 21225 (April 11, 2022) 
(Notice of Filing and Immediate Effectiveness of File No. SR-NASDAQ-
2022-028); Securities Exchange Act Release No. 95436 (August 5, 
2022), 87 FR 49624 (August 11, 2022) (Notice of Filing and Immediate 
Effectiveness of File No. SR-NASDAQ-2022-044); Securities Exchange 
Act Release No. 96282 (November 9,2022), 87 FR 68788 (November 16, 
2022) (Notice of Filing and Immediate Effectiveness of File No. SR-
NASDAQ-2022-059).
    \6\ See Securities Exchange Act Release No. 97403 (April 28, 
2023), 88 FR 28645 (May 4, 2023) (SR-FINRA-2023-008).
---------------------------------------------------------------------------

    The Exchange is proposing to make the temporary amendments 
regarding video conference hearings permanent, with some modifications 
that would allow for the use of video conference for reasons in 
addition to COVID-19. The proposed rule change will continue to improve 
and modernize the Exchange's operations so that parties, panelists, and 
the Exchange staff may proceed expeditiously by video conference in the 
event of certain circumstances, including where unforeseen events make 
appearing in person difficult or impracticable. As described below, 
impracticability is intended to account for an uncommon situation or 
extraordinary circumstance. The proposed rule change further promotes 
efficiency by giving OHO and the ERC authority to act quickly if a 
future unexpected event impaired their ability to conduct in-person 
hearings safely.
    OHO conducts hearings in disciplinary proceedings and hearings for 
temporary and permanent cease and desist orders. When orders in 
disciplinary proceedings are appealed, the ERC holds hearings on oral 
argument. The ERC also conducts hearings in membership proceedings and 
eligibility proceedings. Under the proposed rule change, OHO and the 
ERC's authority to order hearings by

[[Page 106716]]

video conference would extend beyond the public health risks posed by 
COVID-19 to other similar situations in which proceeding in person may 
endanger the health or safety of the participants or would be 
impracticable. For example, appearing in person may be impracticable in 
the event of a natural disaster or terrorist attack that caused travel 
to be cancelled for a period of time. As with the temporary amendments, 
under the proposed rule change, in-person hearings will remain the 
default method for hearings before OHO and the ERC, and their exercise 
of authority under the proposed rule change would be discretionary. In-
person hearings may take place where safe and appropriate.
Evidentiary Hearings
    For evidentiary hearings, the proposed rule change would give OHO 
or the ERC authority to order an evidentiary hearing to occur by video 
conference, in whole or in part, if OHO or the ERC determines that 
proceeding in person may endanger the health or safety of the 
participants or would be impracticable. OHO and the ERC would have such 
authority on their own. In addition, under the proposed rule change, 
parties could file a joint motion requesting the hearing to occur, in 
whole or in part, by video conference based on a showing of good cause. 
Whether acting on its own or based on a joint motion of the parties, 
OHO and the ERC would have reasonable discretion to exercise their 
authority under the proposed rule change. In deciding whether to 
schedule a hearing by video conference, OHO and the ERC could consider 
and balance a variety of factors including, for example and without 
limitation, a hearing participant's individual health concerns and 
access to the connectivity and technology necessary to participate in a 
video conference hearing.
Oral Argument
    The proposed rule change would give the ERC authority to order an 
oral argument hearing to occur by video conference, in whole or in 
part, if it determines that proceeding in person may endanger the 
health or safety of the participants or would be impracticable. The ERC 
would have such authority on its own. In addition, under the proposed 
rule change, the ERC would have authority--on its own or on 
consideration of a motion by any party--to order oral argument to occur 
by video conference, in whole or in part, for other reasons (i.e. 
reasons not limited to public health, safety or impracticability). 
Under such circumstances, an opposing party would have the opportunity 
to demonstrate that the hearing should proceed in person because 
proceeding by video conference would materially disadvantage that 
party. Whether a party has shown material disadvantage would depend on 
the facts and circumstances. Considerations may include, for example 
and without limitation, case complexity, the issues on appeal, and 
whether the respondent is pro se and desires to appear in person. 
Whether acting on its own or based on a motion of a party, the ERC 
would have reasonable discretion to exercise its authority under the 
proposed rule change. In deciding whether to order an oral argument 
hearing by video conference, the ERC could consider and balance a 
variety of factors including, for example and without limitation, a 
hearing participant's individual health concerns, access to video 
conference technology, whether a party has delayed or refused to appear 
in person, and whether proceeding by video conference would materially 
disadvantage any party.
2. Statutory Basis
    The Exchange believes that its proposal 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 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, 
by continuing to provide greater harmonization between the Exchange 
rules and FINRA rules of similar purpose,\9\ resulting in less 
burdensome and more efficient regulatory compliance. The proposal also 
deletes expired references to temporary amendments.
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
    \9\ See Securities Exchange Act Release No. 97403 (April 28, 
2023), 88 FR 28645 (May 4, 2023) (SR-FINRA-2023-008).
---------------------------------------------------------------------------

    The Exchange believes that the proposed rule change protects 
investors and the public interest by permitting the use of broadly 
available technology to allow hearings to proceed by video conference 
under certain circumstances. The Exchange's disciplinary and 
eligibility proceedings and other review processes serve a critical 
role in providing investor protection and maintaining fair and orderly 
markets by, for example, sanctioning misconduct and preventing further 
customer harm by members and associated persons. The proposed rule 
change would encourage the prompt resolution of these cases while 
preserving a fair process.
    The proposed rule change promotes efficiency by permitting hearings 
to occur by video conference in situations where the hearings would 
otherwise be postponed for an uncertain period of time. As discussed, 
COVID-19 necessitated the Exchange to propose the temporary amendments, 
which were extended due to the continuing health risks of COVID-19, as 
well as limitations on travel, quarantine requirements, and other 
logistical challenges to safely conducting hearings in person. The 
proposed rule change further promotes efficiency by giving OHO and the 
ERC authority to act quickly if a future unexpected event impaired 
their ability to conduct in-person hearings safely.
    The proposed rule change also serves to provide a fair procedure 
for the disciplining of members and persons associated with members by 
allowing hearings to proceed by video conference not only due to public 
health or safety reasons, but also at a party or the parties' request 
for reasons particular to them. The Adjudicator could allow a hearing 
to proceed by video conference in the exercise of reasonable discretion 
and subject to procedural safeguards that ensure fairness.
    Thus, the proposed rule change represents a significant step toward 
modernizing the Exchange's procedures in a manner that preserves in-
person hearings, but allows for the use of high quality, secure and 
user-friendly video conference technology under certain circumstances.

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 not necessary or appropriate in 
furtherance of the purposes of the Act. The proposed rule change is not 
intended to address competitive issues but is rather intended solely to 
allow for the use of video conference for reasons in addition to COVID-
19 where unforeseen events make appearing in person difficult or 
impracticable. In its filing, FINRA provided an economic impact 
assessment analyzing the potential impacts of the proposed rule change, 
including anticipated costs, benefits,

[[Page 106717]]

and distributional and competitive effects.\10\
---------------------------------------------------------------------------

    \10\ See Securities Exchange Act Release No. 97403 (April 28, 
2023), 88 FR 28645 (May 4, 2023) (SR-FINRA-2023-008).
---------------------------------------------------------------------------

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

    No written comments were either solicited or received.

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 from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A)(iii) of the Act \11\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\12\
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \12\ 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 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.
---------------------------------------------------------------------------

    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-NASDAQ-2024-085 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-NASDAQ-2024-085. 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-NASDAQ-2024-085 and 
should be submitted on or before January 21, 2025.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
---------------------------------------------------------------------------

    \13\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Vanessa A. Countryman,
Secretary.
[FR Doc. 2024-30917 Filed 12-27-24; 8:45 am]
BILLING CODE 8011-01-P
```