Federal Register / Vol. 90, No. 14 / Thursday, January 23, 2025 / Notices 8081 

9 15 U.S.C. 78s(b)(3)(A). 

10 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

4(f)(6)(iii) requires the Clearing Agency 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 Clearing 

Agency has satisfied this requirement. 

11 17 CFR 240.19b–4(f)(6). 

12 17 CFR 240.19b–4(f)(6)(iii). 

13For purposes only of waiving the 30-day 

operative delay, the Commission also has 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

15 U.S.C. 78c(f). 

14Copies 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 

SRO. 

15 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. 100767 

(Aug. 19, 2024), 89 FR 68228 (‘‘Notice’’). Comments 

received on the Notice are available on the 

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

comments/sr-nasdaq-2024-045/ 

srnasdaq2024045.htm. 

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

5See Securities Exchange Act Release No. 

101238, 89 FR 81956 (Oct. 9, 2024) (designating 

November 21, 2024, as the date by which the 

Commission shall either approve, disapprove, or 

institute proceedings to determine whether to 

disapprove the proposed rule change) (‘‘Notice of 

Extension’’). 

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

7See Securities Exchange Act Release No. 

101662, 89 FR 93369 (Nov. 26, 2024) (‘‘Order 

Instituting Proceedings’’). 

Commission may designate, it has 

become effective pursuant to Section 

19(b)(3)(A) of the Act 9 and Rule 19b– 

4(f)(6) 10 thereunder. 

A proposed rule change filed under 

Rule 19b–4(f)(6) 11 normally does not 

become operative prior to 30 days after 

the date of the filing. However, pursuant 

to Rule 19b–4(f)(6)(iii),12 the 

Commission may designate a shorter 

time if such action is consistent with 

protection of investors and the public 

interest. The Clearing Agency has asked 

the Commission to waive the 30-day 

operative delay so that the proposed 

rule change may become operative 

immediately upon filing. The 

Commission believes that waving the 

30-day operative delay is consistent 

with the protection of investors and the 

public interest. Accordingly, the 

Commission designates the proposed 

rule change to be operative upon 

filing.13

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 will institute proceedings 

to determine whether the proposed rule 

change should be approved or 

disapproved. 

III. 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.14

Comments may be submitted 

electronically by using the 

Commission’s internet comment form 

(https://www.sec.gov/rules-regulations/ 

self-regulatory-organizationrulemaking/national-securitiesexchanges?file_number=SR-DTC-2025- 

001) or by sending an email to rulecomments@sec.gov. Please include file 

number SR–DTC–2025–001 on the 

subject line. Alternatively, paper 

comments may be sent to Secretary, 

Securities and Exchange Commission, 

100 F Street NE, Washington, DC 

20549–1090. All submissions should 

refer to file number SR–DTC–2025–001. 

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-regulations/ 

self-regulatory-organizationrulemaking/national-securitiesexchanges?file_number=SR-DTC-2025- 

001). 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–DTC–2025–001 and should be 

submitted on or before February 13, 

2025. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.15

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2025–01547 Filed 1–22–25; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–102245; File No. SR– 

NASDAQ–2024–045] 

Self-Regulatory Organizations; The 

Nasdaq Stock Market LLC; Order 

Granting Approval of a Proposed Rule 

Change To Modify the Application of 

the Minimum Bid Price Compliance 

Periods and the Delisting Appeals 

Process for Bid Price Non-Compliance 

in Listing Rules 5810 and 5815 Under 

Certain Circumstances 

January 17, 2025. 

I. Introduction 

On August 6, 2024, 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 (‘‘Exchange 

Act’’) 1 and Rule 19b–4 thereunder,2 a 

proposed rule change to modify the 

application of the minimum bid price 

compliance periods and the delisting 

appeals process for bid price noncompliance in Nasdaq Rules 5810 and 

5815 under certain circumstances. The 

proposed rule change was published for 

comment in the Federal Register on 

August 23, 2024.3 On October 3, 2024, 

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

Exchange 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 November 20, 2024, 

the Commission initiated proceedings 

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

Exchange Act 6 to determine whether to 

approve or disapprove the proposed 

rule change.7

This order approves the proposed rule 

change. 


ddrumheller on DSK120RN23PROD with NOTICES1
8082 Federal Register / Vol. 90, No. 14 / Thursday, January 23, 2025 / Notices 

8All capitalized terms not otherwise defined in 

this order shall have the meanings set forth in the 

Nasdaq Listing Rules. 

9See Nasdaq Rules 5550(a)(2) (Primary Equity 

Security listed on the Nasdaq Capital Market), 

5555(a)(1) (Preferred Stock and Secondary Classes 

of Common Stock listed on the Nasdaq Capital 

Market), 5450(a)(1) (Primary Equity Security listed 

on the Nasdaq Global or Global Select Markets), and 

5460(a)(3) (Preferred Stock and Secondary Classes 

of Common Stock listed on the Nasdaq Global or 

Global Select Markets). 

10A failure to meet the Bid Price Requirement 

occurs when a company’s security has a closing bid 

price below $1.00 for a period of 30 consecutive 

business days. See Nasdaq Rule 5810(c)(3)(A). 

Compliance can be achieved by meeting the Bid 

Price Requirement for a minimum of 10 consecutive 

business days during the applicable compliance 

period, unless Staff exercises its discretion to 

extend this 10-day period as discussed in Nasdaq 

Rule 5810(c)(3)(H). See id. 

11 If a company listed on the Nasdaq Capital 

Market is not deemed in compliance before the 

expiration of the 180-day compliance period, it will 

be afforded an additional 180-day compliance 

period, provided that on the 180th day of the first 

compliance period it meets the applicable market 

value of publicly held shares requirement for 

continued listing and all other applicable standards 

for initial listing on the Nasdaq Capital Market 

(except the bid price requirement) based on the 

company’s most recent public filings and market 

information and notifies Nasdaq of its intent to cure 

this deficiency. See Nasdaq Rule 5810(c)(3)(A)(ii). 

If a company does not indicate its intent to cure the 

deficiency, or if it does not appear to Nasdaq that 

it is possible for the company to cure the 

deficiency, the company will not be eligible for the 

second compliance period. See id. If the company 

has publicly announced information (e.g., in an 

earnings release) indicating that it no longer 

satisfies the applicable listing criteria, it will not be 

eligible for the additional compliance period under 

this rule. See id. 

12See id. 

13See Nasdaq Rule 5815 (Review of Staff 

Determinations by Hearings Panel). 

14See Nasdaq Rule 5815(a)(1)(B). 

15See Nasdaq Rule 5815(c)(1)(A). 

16See Notice, supra note 3, at 68229. 

17See proposed Nasdaq Rule 5815(a)(1)(B)(ii)d. 

The Exchange states that a company that is 

suspended under the proposed rule could appeal 

the Delisting Determination to a Hearings Panel, but 

its securities would trade in the over-the-counter 

(‘‘OTC’’) market while that appeal is pending. See 

Notice, supra note 3, at 68229. 

18See Notice, supra note 3, at 68229. The 

Exchange also states that, pursuant to Nasdaq Rule 

5815(c)(1)(E), the Hearings Panel will continue to 

have the authority to find the company in 

compliance with all applicable listing standards 

and reinstate the trading of the company’s securities 

on Nasdaq (e.g., if the company effects a reverse 

stock split and maintains a $1.00 closing bid price 

for at least 10 consecutive days while trading in the 

OTC market). See id. 

19See proposed Nasdaq Rule 5815(a)(1)(B)(ii)d. 

II. Description of the Proposed Rule 

Change 8

A. Background 

Nasdaq Rules require a company’s 

equity securities listed on the Nasdaq 

Global Select Market, Nasdaq Global 

Market, and Nasdaq Capital Market to 

maintain a minimum bid price of at 

least one dollar per share (the ‘‘Bid Price 

Requirement’’).9 Upon failure of a 

company’s security to satisfy the Bid 

Price Requirement, Nasdaq Rule 

5810(c)(3)(A) provides for an automatic 

compliance period of 180 calendar days 

from the date Nasdaq notifies the 

company of the deficiency for the 

company to achieve compliance with 

the Bid Price Requirement.10 Subject to 

certain requirements,11 including 

notifying Nasdaq of the company’s 

intent to cure this deficiency, a 

company listed on, or that transfers to, 

the Nasdaq Capital Market may be 

provided with a second 180-day 

compliance period.12 If a company is 

not eligible for the second compliance 

period, or the company is eligible but 

does not resolve the bid price deficiency 

during the second 180-day compliance 

period, the company is issued a 

Delisting Determination under Nasdaq 

Rule 5810 with respect to that security, 

which can be appealed to a Nasdaq 

Listing Qualifications Hearings Panel 

(‘‘Hearings Panel’’).13 A timely request 

for a hearing ordinarily stays the 

suspension of the security from trading 

pending the issuance of a written 

Hearings Panel decision.14 The Hearings 

Panel may, where it deems appropriate, 

grant an exception to the Bid Price 

Requirement and allow a company up to 

an additional 180 days from the date of 

the Delisting Determination to regain 

compliance.15 As a result, a company 

may be continuously deficient with the 

Bid Price Requirement and continue 

trading on Nasdaq for more than 360 

days but not more than 540 days.16

The Nasdaq Rules set forth the 

circumstances that can curtail or alter 

the bid price compliance periods. First, 

Nasdaq Rule 5810(c)(3)(A)(iii) provides 

that if a company’s security has a 

closing bid price of $0.10 or less for 10 

consecutive trading days during any bid 

price compliance period, Nasdaq must 

issue a Delisting Determination with 

respect to that security. Second, Nasdaq 

Rule 5810(c)(3)(A)(iv) provides that if a 

company’s security fails to meet the Bid 

Price Requirement and the company has 

effected one or more reverse stock splits 

over the prior two-year period with a 

cumulative ratio of 250 shares or more 

to one, then the company is not eligible 

for any compliance periods and Nasdaq 

must issue a Delisting Determination 

with respect to that security. Finally, 

Nasdaq Rule 5810(c)(3)(A) provides that 

if a company takes a corporate action 

(e.g., a reverse stock split) to regain 

compliance with the Bid Price 

Requirement and that action results in 

the company’s security falling below the 

numeric threshold for another Exchange 

listing requirement, the company will 

not be granted any compliance period 

otherwise available for the other listing 

requirement. In such case, the company 

will continue to be considered noncompliant with the Bid Price 

Requirement until the deficiency 

pertaining to the other listing 

requirement is cured and thereafter the 

company meets the Bid Price 

Requirement. If the company does not 

regain compliance with both Exchange 

listing requirements during the 

compliance period applicable to the 

initial Bid Price Requirement 

deficiency, Nasdaq must issue a 

Delisting Determination and no 

additional compliance periods will be 

available. 

Based on the Exchange’s experience 

administering the rules described above, 

it is proposing two modifications to the 

delisting process in Nasdaq Rules 5810 

and 5815. These proposed changes are 

described in more detail below. 

B. Suspension After Second Compliance 

Period 

First, the Exchange proposes to adopt 

Nasdaq Rule 5815(a)(1)(B)(ii)d. 

(‘‘Appeal Process Proposal’’) to provide 

that, notwithstanding the general rule 

that a timely request for a hearing shall 

ordinarily stay the suspension and 

delisting action pending the issuance of 

a written Hearings Panel decision, a 

request for a hearing shall not stay the 

suspension of the securities from 

trading where the matter relates to a 

request made by a company that was 

afforded the second 180-day compliance 

period described in Nasdaq Rule 

5810(c)(3)(A)(ii) and that failed to regain 

compliance with the Bid Price 

Requirement during that period.17 The 

Exchange states that pursuant to Nasdaq 

Rule 5815(c)(1)(A), the Hearings Panel 

will continue to have discretion, where 

it deems appropriate, to provide an 

exception for up to 180 days from the 

Delisting Determination date for the 

company to regain compliance with the 

Bid Price Requirement.18

The Exchange also proposes to clarify 

in proposed Nasdaq Rule 

5815(a)(1)(B)(ii)d. that, pursuant to 

Nasdaq Rule 5810(c)(3)(A), a company 

achieves compliance with the Bid Price 

Requirement by meeting the applicable 

standard for a minimum of 10 

consecutive business days, unless Staff 

exercises its discretion to extend this 

10-day period as set forth in Nasdaq 

Rule 5810(c)(3)(H).19

The Exchange states in its proposal 

that it believes that two consecutive 

compliance periods for a total of 360 

days is a sufficient period of time for a 

company to regain compliance with the 


ddrumheller on DSK120RN23PROD with NOTICES1
Federal Register / Vol. 90, No. 14 / Thursday, January 23, 2025 / Notices 8083 

20See Notice, supra note 3, at 68229. The 

Exchange states that it has observed that some 

companies do not regain compliance during the 

second 180-day compliance period notwithstanding 

the company’s notification to Nasdaq of its intent 

to do so. See id. at 68228. The Exchange states that, 

in these circumstances, Nasdaq issues a Delisting 

Determination; however, as described above, the 

company could continue its listing by appealing 

that decision to a Hearings Panel, which has the 

discretion to provide up to 180 additional days 

from the date of the Delisting Determination. See id. 

at 68228–29. 

21See id. at 68229. 

22The Exchange states that if a company was not 

afforded the second 180-day compliance period, the 

company would not be affected by this proposal 

and its security would not be suspended from 

trading on Nasdaq during an appeal to the Hearings 

Panel, if any. See id. at 68228 n.8. 

23See id. at 68229. 

24See id. at 68229 n.10. 

25See id. at 68229. 

26See id. The Exchange further states that 

companies facing these challenges ‘‘will continue 

oscillating between compliance and noncompliance with the Bid Price Requirement.’’ Id. 

27See id. The Exchange states that a company 

could appeal the Delisting Determination to the 

Hearings Panel, where it could receive up to 180 

days to regain compliance, as described above. See 

id. 

28 In approving this proposed rule change, the 

Commission has considered the proposed rule’s 

impact on efficiency, competition, and capital 

formation. See 15 U.S.C. 78c(f). 

29 15 U.S.C. 78f(b)(5). 

30 15 U.S.C. 78f(b)(7). 

31The Commission notes that this reference to 

‘‘listing standards’’ is referring to both initial and 

continued listing standards. 

32See, e.g., Securities Exchange Act Release Nos. 

101271 (Oct. 7, 2024), 89 FR 82652, 82653 n.23 and 

accompanying text (Oct. 11, 2024) (SR–NASDAQ– 

2024–029) (Order Granting Approval of a Proposed 

Rule Change, as Modified by Amendment No. 2, to 

Modify the Application of Bid Price Compliance 

Periods); 88716 (Apr. 21, 2020), 85 FR 23393 (Apr. 

27, 2020) (SR–NASDAQ–2020–001) (Order 

Approving a Proposed Rule Change To Modify the 

Delisting Process for Securities With a Bid Price at 

or Below $0.10 and for Securities That Have Had 

One or More Reverse Stock Splits With a 

Cumulative Ratio of 250 Shares or More to One 

Over the Prior Two-Year Period); 88389 (Mar. 16, 

2020), 85 FR 16163 (Mar. 20, 2020) (SR–NASDAQ– 

2019–089) (Notice of Filing of Amendment No. 1 

and Order Granting Accelerated Approval of a 

Proposed Rule Change, as Modified by Amendment 

No. 1, To Amend Rule 5815 To Preclude Stay 

During Hearing Panel Review of Staff Delisting 

Determinations in Certain Circumstances). See also 

Securities Exchange Act Release No. 81856 (Oct. 11, 

2017), 82 FR 48296, 48298 (Oct. 17, 2017) (SR– 

NYSE–2017–31) (Notice of Filing of Amendment 

No. 1 and Order Granting Accelerated Approval of 

a Proposed Rule Change, as Modified by 

Amendment No. 1, To Amend the Listed Company 

Manual To Adopt Initial and Continued Listing 

Standards for Subscription Receipts) (stating that 

‘‘[a]dequate standards are especially important 

given the expectations of investors regarding 

exchange trading and the imprimatur of listing on 

a particular market’’ and that ‘‘[o]nce a security has 

been approved for initial listing, maintenance 

criteria allow an exchange to monitor the status and 

trading characteristics of that issue . . . so that fair 

and orderly markets can be maintained.’’). 

33See supra note 14. 

34See proposed Nasdaq Rule 5815(a)(1)(B)(ii)d. 

35See proposed Nasdaq Rule 5810(c)(3)(A)(iv). 

Bid Price Requirement.20 Nasdaq states 

that it provides a company with a 

second bid price compliance period 

only if the company reviewed its 

circumstances and notified Nasdaq that 

it intends to cure the bid price 

deficiency by effecting a reverse stock 

split within the second 180-day 

compliance period.21 As such, the 

Exchange states that it believes it is not 

appropriate for a company in these 

circumstances to continue trading on 

Nasdaq during the pendency of the 

Hearings Panel review process.22

C. Delisting Determination if Failure To 

Meet Bid Price Requirement Occurs 

Within One Year After Reverse Stock 

Split 

Second, the Exchange proposes to 

amend Nasdaq Rule 5810(c)(3)(A)(iv) to 

provide that if a company’s security 

fails to meet the Bid Price Requirement 

and the company has effected a reverse 

stock split over the prior one-year 

period, then the company shall not be 

eligible for any compliance period 

specified in Nasdaq Rule 5810(c)(3)(A) 

and the Listing Qualifications 

Department shall issue a Delisting 

Determination under Rule 5810 with 

respect to that security (‘‘Prior Reverse 

Split Proposal’’).23 The Exchange states 

that this proposed change will apply to 

a company even if the company was in 

compliance with the Bid Price 

Requirement at the time of its prior 

reverse stock split.24

The Exchange states that it 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 to regain 

compliance with the Bid Price 

Requirement.25 The Exchange states that 

it believes that such actions are often 

indicative of serious difficulties within 

such companies and, generally, are not 

temporary such that the company is not 

likely to regain compliance in a manner 

consistent with the Bid Price 

Requirement within the prescribed 

compliance periods described above.26

Accordingly, the Exchange states that it 

believes it is appropriate for investor 

protection reasons that such companies 

be immediately subject to the delisting 

process, rather than being provided a 

180-day compliance period pursuant to 

Nasdaq Rule 5810.27

III. Discussion and Commission 

Findings 

After careful review, the Commission 

finds that the proposed rule change is 

consistent with the requirements of the 

Exchange Act and the rules and 

regulations thereunder applicable to a 

national securities exchange.28 In 

particular, the Commission finds that 

the proposed rule change is consistent 

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

Act,29 which requires, among other 

things, that the rules of an exchange be 

designed to prevent fraudulent and 

manipulative acts and practices, 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, and 

not be designed to permit unfair 

discrimination between customers, 

issuers, brokers, or dealers; and with 

Section 6(b)(7) of the Exchange Act,30

which requires, among other things, that 

the rules of a national securities 

exchange provide a fair procedure for 

the prohibition or limitation by the 

exchange of any person with respect to 

access to services offered by the 

exchange. 

The development and enforcement of 

meaningful listing standards 31 for an 

exchange is of critical importance to 

financial markets and the investing 

public. 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 to promote fair and orderly 

markets. Meaningful listing standards 

also are important given investor 

expectations regarding the nature of 

securities that have achieved an 

exchange listing, and the role of an 

exchange in overseeing its market and 

assuring compliance with its listing 

standards.32

As discussed above, currently, if a 

company whose security has failed to 

meet the Bid Price Requirement for one 

or two compliance periods timely 

appeals its Delisting Determination to 

the Hearings Panel, the trading 

suspension of that security is stayed 

during the pendency of the Hearings 

Panel review.33 The Exchange now 

proposes that those securities that were 

afforded, and that failed to meet the Bid 

Price Requirement during, the second 

compliance period would not receive a 

stay of suspension upon appeal.34 In 

addition, the Exchange proposes that a 

company whose security fails to meet 

the Bid Price Requirement and that has 

effected a reverse stock split of any ratio 

within the prior year will not be eligible 

for any compliance periods.35 This latter 

proposal could lead to the earlier 

delisting of companies that fail to 

comply with the Bid Price Requirement. 

Some comments received on the 

proposal were generally supportive of 


ddrumheller on DSK120RN23PROD with NOTICES1
8084 Federal Register / Vol. 90, No. 14 / Thursday, January 23, 2025 / Notices 

36See Letters from Jennifer Becker, dated Aug. 28, 

2024 (‘‘Becker Letter’’); Christopher A. Iacovella, 

President and Chief Executive Officer, American 

Securities Association, Stephen Hall, Legal 

Director, Better Markets, Tyler Gellasch, President 

and CEO, Healthy Markets Association, John 

Ramsay, Chief Market Policy Officer, Investors 

Exchange LLC, and Joseph Saluzzi, Partner, Themis 

Trading LLC, dated Aug. 23, 2024 (‘‘Joint Industry 

Letter’’); American Consumer & Investor Institute, 

dated Sept. 13, 2024 (‘‘ACII Letter’’); Daniel Zinn, 

General Counsel, and Flavia Vehbiu, Deputy 

General Counsel, OTC Markets Group Inc., dated 

Sept. 17, 2024 (‘‘OTC Letter’’); Anonymous, dated 

Sept. 10, 2024 (‘‘Anonymous Letter’’); Ellen Greene, 

Managing Director, Equities & Options Market 

Structure, and Joseph Corcoran, Managing Director 

and Associate General Counsel, Securities Industry 

and Financial Markets Association, dated Oct. 8, 

2024 (‘‘SIFMA Letter’’); Aleksei Nikolaev, dated 

Nov. 26, 2024. 

37Becker Letter. 

38See Joint Industry Letter; ACII Letter; OTC 

Letter; SIFMA Letter. Some of these commenters 

recommended further changes to Nasdaq’s rules as 

well as supporting recommendations made in the 

Petition for Rulemaking on Exchange Listings of 

Penny Stocks filed with the Commission by Virtu 

Financial, Inc., dated July 15, 2024. These 

additional recommendations are not before the 

Commission in the Nasdaq proposal being 

considered herein. In approving this proposal, the 

Commission is finding the proposal before us is 

consistent with the Exchange Act. 

39See Anonymous Letter. 

40See Letters from Seth Lederman, Tonix 

Pharmaceuticals Holding Corp., dated Nov. 14, 

2024 (‘‘Tonix Letter’’); Faith L. Charles, Thompson 

Hine, dated Nov. 20, 2024 (‘‘Thompson Hine 

Letter’’). One of the commenters stated that the 

Commission should consider providing the market 

additional time to ‘‘absorb the effects’’ of recent 

Nasdaq proposals to enhance transparency and 

compliance with Exchange listing requirements in 

connection with reverse stock splits before 

approving another related rule. See Tonix Letter at 

6 (citing to Securities Exchange Act Release Nos. 

88716 (Apr. 21, 2020), 85 FR 23393 (Apr. 27, 2020) 

(SR–NASDAQ–2020–001) (Order Approving a 

Proposed Rule Change To Modify the Delisting 

Process for Securities With a Bid Price at or Below 

$0.10 and for Securities That Have Had One or 

More Reverse Stock Splits With a Cumulative Ratio 

of 250 Shares or More to One Over the Prior TwoYear Period); 98843 (Nov. 1, 2023), 88 FR 76867 

(Nov. 7, 2023) (SR–NASDAQ–2023–025) (Order 

Approving a Proposed Rule Change Related to 

Notification and Disclosure of Reverse Stock Splits); 

101271 (Oct. 7, 2024), 89 FR 82652 (Oct. 11, 2024) 

(SR–NASDAQ–2024–029) (Order Granting 

Approval of a Proposed Rule Change, as Modified 

by Amendment No. 2, To Modify the Application 

of Bid Price Compliance)). The Commission has 

provided the public with multiple opportunities to 

comment on the current proposed rule change 

through a Notice of Extension and an Order 

Instituting Proceedings and for the reasons 

discussed herein finds the proposal consistent with 

the Exchange Act. 

41See Tonix Letter; Thompson Hine Letter. 

42Thompson Hine Letter at 1. See also Tonix 

Letter at 5 (stating that ‘‘further study is required 

to determine whether’’ factors like ‘‘deep financial 

or operational distress’’ is the reason behind ‘‘all or 

even most reverse splits’’). 

43See Thompson Hine Letter at 2–3 (stating that 

the Prior Reverse Split Proposal could cause 

affected companies to ‘‘select large reverse split 

ratios that may cause issues to their capitalization’’ 

and ‘‘continually approve reverse stock split ratios 

at annual shareholder meetings’’ to preemptively 

avoid a Delisting Determination due to 

noncompliance with the Bid Price Requirement). 

This commenter also proposed that the Exchange 

adopt a single 180-day compliance period to 

companies that violate the Bid Price Requirement 

within a year of a reverse stock split. See id. at 3. 

While this commenter suggests an alternative that 

is different from Nasdaq’s proposal, for the reasons 

discussed herein, the Commission finds that 

Nasdaq’s proposal is consistent with these 

Exchange Act standards and, therefore, should be 

approved. 

44See Letter from Taft Stettinius & Hollister LLP, 

dated Dec. 31, 2024 (‘‘Taft Letter’’); Thompson Hine 

Letter at 2. These commenters also incorrectly 

stated that a company fails to meet the continued 

listing standard for the Bid Price Requirement if 

‘‘the stock has closed at less than $1.00 for ten 

consecutive trading days.’’ Taft Letter at 1; 

Thompson Hine Letter at 1. Pursuant to Nasdaq 

Rule 5810(c)(3)(A), a failure to meet the Bid Price 

Requirement occurs when a company’s security has 

a closing bid price below $1.00 for a period of 30 

consecutive business days. See supra note 10. See 

also Nasdaq Rule 5810(c)(3)(A)(iii) (stating that if 

during any compliance period specified in Nasdaq 

Rule 5810(c)(3)(A) a company’s security has a 

closing bid price of $0.10 or less for 10 consecutive 

trading days, the Listings Qualifications Department 

will issue a Delisting Determination with respect to 

that security). 

45See Taft Letter at 3–6; Thompson Hine Letter 

at 2 (stating that ‘‘[o]nce a company has conducted 

a reverse stock split, short-sellers will be 

encouraged to cause a company to fall out of 

compliance with the Nasdaq bid price 

requirements’’ and ‘‘[t]he certainty of a delisting 

gives a clear indicator to these short sellers that a 

delisting will occur, as opposed to now, when a 

company can plead a its case to Nasdaq and Nasdaq 

can still make a facts and circumstance 

determination as to the timing of a company’s 

potential delisting.’’). 

46See Nasdaq Rule 5815. See also infra notes 70– 

71 and accompanying text (describing Commission 

and the Financial Industry Regulatory Authority, 

Inc. (‘‘FINRA’’) rules to regulate short selling). 

47See supra note 22. 

48See In re Tassaway, Securities Exchange Act 

Release No. 11291, 45 SEC. 706, 709, 1975 SEC 

the goals behind Nasdaq’s proposal.36

One of the commenters stated that the 

proposal is a ‘‘carefully crafted crucial 

step in safeguarding the interests of 

retail investors and maintaining the 

integrity of our capital markets.’’ 37

Some other of these commenters 

supported the proposal as a ‘‘step in the 

right direction,’’ though they stated the 

proposal does not go far enough to 

address concerns with exchanges’ 

listing standards related to minimum 

bid price requirements and the process 

for enforcing such standards.38 Another 

commenter, while generally supporting 

the proposal, expressed concern that the 

Prior Reverse Split Proposal would not 

take into consideration the ratio of the 

prior reverse stock split or whether the 

security was in compliance with the Bid 

Price Requirement at the time of the 

reverse split.39

Some commenters opposed the Prior 

Reverse Split Proposal but also stated 

that they did not object to the Appeal 

Process Proposal.40 These commenters 

stated that the Prior Reverse Split 

Proposal could negatively impact access 

to capital for a segment of Nasdaq-listed 

small companies, particularly 

biotechnology companies, and 

incentivize trading strategies by short 

sellers, including ‘‘naked’’ short sellers, 

to manipulate downward such 

company’s stock price.41 One of these 

commenters stated that other factors 

beyond ‘‘deep financial or operational 

distress’’ contribute to the need for 

reverse stock splits by these issuers, 

stating that certain biotechnology 

companies often depend on ‘‘frequent 

capital raises’’ and ‘‘are subject to 

volatile stock prices’’ that have a 

‘‘negative impact on an issuer’s trading 

price not often reflective of the issuer’s 

value or suitability as an investment.’’ 42

This commenter also stated that the 

Prior Reverse Split Proposal could have 

a detrimental effect on how companies 

administer and plan for reverse stock 

splits, particularly as a company’s stock 

price approaches noncompliance with 

the Bid Price Requirement.43

Finally, some commenters opposed 

the proposed rule change based on an 

incorrect understanding of the proposed 

rule change.44 In particular, these 

commenters raised concerns that the 

‘‘certainty’’ of delisting brought about by 

the proposed rule change would 

incentivize manipulative short-selling 

activities, undermine the interest of 

Exchange-listed companies, and 

encourage issuer misconduct to avoid 

delisting.45 To the contrary, the 

proposal would not affect companies’ 

right to appeal a Delisting 

Determination to the Hearings Panel and 

therefore whether companies’ securities 

would ultimately be delisted is not a 

certainty.46

The Exchange’s proposal is 

reasonably designed to enhance its 

continued listing standards, thereby 

protecting investors and the public 

interest. The Appeal Process Proposal 

prohibits continued trading of a 

company’s securities on the Exchange 

during the pendency of a delisting 

appeal when a company has not 

maintained the Exchange’s Bid Price 

Requirement for 360 days. It applies 

only to companies that have notified the 

Exchange of their intent to cure the bid 

price deficiency during the second 180- 

day compliance period and that 

therefore receive a second compliance 

period (for a total of 360 days) and yet 

still fail to meet the Bid Price 

Requirement.47 In such cases, it is 

consistent with investor protection to 

prohibit such companies from 

continuing to trade on the Exchange 

during any appeal of delisting when 

they have already failed to cure a bid 

price deficiency for 360 days.48


ddrumheller on DSK120RN23PROD with NOTICES1
Federal Register / Vol. 90, No. 14 / Thursday, January 23, 2025 / Notices 8085 

LEXIS 2057, at 6 (Mar. 13, 1975) (‘‘[P]rimary 

emphasis must be placed on the interests of 

prospective future investors . . . [who are] entitled 

to assume that the securities in [Nasdaq] meet 

[Nasdaq’s] standards. Hence the presence in 

[Nasdaq] of non-complying securities could have a 

serious deceptive effect.’’). 

49Taft Letter at 5. 

50See supra note 22. See also Nasdaq Rule 5815. 

51See Anonymous Letter. 

52See Letter from Arnold Golub, Vice President, 

Deputy General Counsel, Nasdaq, dated Oct. 5, 2024 

(‘‘Nasdaq Response Letter’’). 

53As described above, Nasdaq Rule 

5810(c)(3)(A)(iv) provides that if a company’s 

security fails to meet the Bid Price Requirement and 

the company has effected one or more reverse stock 

splits over the prior two-year period with a 

cumulative ratio of 250 shares or more to one, then 

the company is not eligible for any compliance 

periods and Nasdaq must issue a Delisting 

Determination with respect to that security. 

54See Notice, supra note 3, at 68229; Nasdaq 

Response Letter at 2–3. 

55See Anonymous Letter. 

56See Nasdaq Response Letter at 3. In some cases, 

the share reduction caused by the reverse stock split 

results in a proportional reduction in the number 

of Publicly Held Shares and, depending on how 

fractional shares are treated, may also reduce the 

number of holders of the company’s securities. As 

such, a reverse stock split used to regain 

compliance with the Bid Price Requirement may 

result in the company’s non-compliance with other 

Exchange listing rules that require a certain number 

of holders and Publicly Held Shares. See Securities 

Exchange Act Release No. 101271 (Oct. 7, 2024), 89 

FR 82652, 82652 (Oct. 11, 2024) (SR–NASDAQ– 

2024–029) (Order Granting Approval of a Proposed 

Rule Change, as Modified by Amendment No. 2, to 

Modify the Application of Bid Price Compliance 

Periods). 

57See Nasdaq Response Letter at 3. 

58See id. 

59Nasdaq stated that companies may also reverse 

split their stock for reasons such as ‘‘to attract 

institutional investors and lower transaction costs 

for investors, however these companies are less 

likely to conduct multiple reverse stock splits such 

that they would be impacted by the [p]roposal.’’ 

Nasdaq Response Letter at 3, n.8. 60See supra note 15 and accompanying text. With 

respect to the Reverse Stock Split Proposal, if a 

company’s security fails to meet the Bid Price 

Requirement and the company has conducted a 

reverse stock split over the prior one-year period, 

a timely request for a hearing will ordinarily stay 

the suspension of trading and the Hearings Panel 

may, where it deems appropriate, grant an 

additional compliance period. See Nasdaq Rule 

5815(a)(1)(B) and (c)(1)(A). 

61See Notice, supra note 3, at 68230. 

62See 17 CFR 240.3a51–1(a)(1); 17 CFR 240.15g– 

1 to –9. In particular, the Penny Stock Rules 

provide protections to investors in low-priced 

stocks requiring, among other things, that brokerdealers provide a disclosure document to their 

customers describing the risk of investing in penny 

stocks and approve customer accounts for 

transactions in penny stocks. 

63See Notice, supra note 3, at 68230. Nasdaq also 

stated that FINRA has alerted investors that ‘‘lowpriced stocks may be more susceptible to fraud, 

including in cases where the company has no 

involvement in that fraud.’’ Letter from Arnold 

Golub, Vice President, Deputy General Counsel, 

Nasdaq, dated Jan. 8, 2025 (‘‘Nasdaq Response 

Letter II’’), at 5 (citing to FINRA Investor Insights, 

‘‘Low-Priced Stocks Can Spell Big Problems,’’ dated 

Jan. 19, 2024, available at https://www.finra.org/ 

investors/insights/low-priced-stocks-big-problems). 

Commenters generally did not express 

opposition to this aspect of the 

proposal. One commenter opposed the 

Appeal Process Proposal stating the 

proposal ‘‘eliminates the ability for 

registrants to appeal delisting decisions 

while still operating on the exchange’’ 

and that ‘‘many of these registrants may 

only need a brief period to regain 

compliance with the Minimum Bid 

Price Requirement.’’ 49 However, as 

stated above, the Appeal Process 

Proposal only applies to companies that 

have failed to cure a bid price 

deficiency after the first two 180-day 

compliance periods, totaling 360 days 

provided to a company to comply. In 

addition, affected companies, while 

their securities will not trade on the 

Exchange during the pendency of an 

appeal, will still be able to seek review 

of their Delisting Determinations from 

the Hearings Panel in accordance with 

Nasdaq Rule 5815.50

The Prior Reverse Split Proposal is 

reasonably designed to curtail the use of 

reverse stock splits to inappropriately 

delay delisting when a security fails to 

meet the Bid Price Requirement. A 

commenter expressed concern that the 

Prior Reverse Split Proposal does not 

take into consideration the ratio of the 

prior reverse stock split.51 However, as 

the Exchange discussed in the Notice 

and in a response to the commenter,52

the Exchange already has a rule that 

takes into account the cumulative ratio 

of prior reverse stock splits.53 Yet since 

that rule’s adoption, the Exchange has 

continued to observe some companies 

engaging in a pattern of effecting 

consecutive reverse stock splits, which 

are often accompanied by dilutive 

issuances of securities and which 

potentially cause investor confusion and 

operational difficulties for market 

participants.54

The commenter also expressed 

concern that the Prior Reverse Split 

Proposal does not take into 

consideration whether a security was in 

compliance with the Bid Price 

Requirement at the time of the reverse 

split.55 In response, Nasdaq stated that, 

regardless of the reason for the reverse 

split, a company can control the ratio of 

the split and choose a sufficiently high 

ratio to remain in compliance with the 

Bid Price Requirement for at least one 

year post-reverse split.56 Where the 

company does not choose a sufficiently 

high ratio, and therefore becomes noncompliant within one year, Nasdaq 

stated that the resulting pattern of 

repeated reverse splits is often 

indicative of deep financial or 

operational distress that renders the 

company inappropriate for trading on 

Nasdaq for investor protection 

reasons.57 Nasdaq further stated that 

this pattern creates the same investor 

confusion and operational difficulties 

regardless of whether the company was 

previously non-compliant, and thus that 

the rationale for the Prior Reverse Split 

Proposal remains the same regardless of 

whether the company was in 

compliance with the Bid Price 

Requirement at the time of the reverse 

split.58

The Commission finds that it is 

reasonable that the Prior Reverse Split 

Proposal is not based on the security’s 

compliance with the Bid Price 

Requirement at the time of the reverse 

split. The Exchange can reasonably 

conclude from its experience that a 

company’s inability to maintain 

compliance with the Bid Price 

Requirement for at least one year postreverse split—regardless of its security’s 

compliance at the time of the reverse 

split—is indicative of serious 

difficulties within such company that 

are likely to put continued downward 

pressure on the stock price, such that 

the company is less likely to regain 

compliance within any compliance 

periods. In this respect, the Prior 

Reverse Split Proposal is appropriately 

targeted to those securities that are more 

likely to have serious recurrent issues in 

regaining and maintaining compliance 

with the Bid Price Requirement.59

Moreover, as with the Appeal Process 

Proposal, any affected companies would 

be able to seek review of their Delisting 

Determinations from the Hearings 

Panel.60

The Exchange’s proposal is 

reasonably designed to further investor 

protection by limiting the ability of 

listed companies to engage in a pattern 

of repeated reverse stock splits to 

remain qualified for listing. The 

Exchange states that it is appropriate to 

subject such securities to heightened 

scrutiny because, as the Exchange stated 

in its proposal,61 such securities may 

have similar characteristics to penny 

stocks and yet, because they are listed 

on the Exchange, are exempt from the 

Penny Stock Rules, which provide 

enhanced investor protections, among 

other things, to prevent fraud and 

safeguard against potential market 

manipulation.62 In addition, the 

Exchange states that it has observed that 

the challenges facing such companies 

generally are not temporary and may be 

so severe that the companies are not 

likely to regain compliance within the 

prescribed compliance period.63 The 

Exchange also states that the price 

concerns with such companies can be a 

leading indicator of other listing 


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8086 Federal Register / Vol. 90, No. 14 / Thursday, January 23, 2025 / Notices 

64See id. 65See supra notes 41 and 42. 

66 In response to the commenters, Nasdaq stated 

that ‘‘the Prior Reverse Split Proposal appropriately 

balances the goals of capital formation and investor 

protection by discouraging listed companies from 

engaging in a pattern of repeated reverse stock 

splits’’ and that ‘‘any incidental burden on affected 

companies is necessary to better protect prospective 

investors, in furtherance of a central purpose of the 

Exchange Act.’’ Nasdaq Response Letter II at 4. 67See supra note 41. 68See Securities Exchange Act Release No. 98738 

(Oct. 23, 2023), 88 FR 75100, 75101 (Nov. 1, 2023) 

(Final Rule: Short Position and Short Activity 

Reporting by Institutional Investment Managers). 69See id. Nasdaq also stated that ‘‘[l]egitimate 

short selling contributes to efficient price formation, 

enhances liquidity, and facilitates risk management, 

and short sellers may benefit the market and 

investors in other important ways, including by 

identifying and ferreting out instances of fraud and 

other misconduct at public companies.’’ Nasdaq 

Response Letter II at 2. 

70See, e.g., Securities Exchange Act Release No. 

50103 (July 28, 2004), 69 FR 48008 (Aug. 6, 2004) 

(Final Rule: Short Sales); FINRA Rules 4210 

(Margin Requirements), 4320 (Short Sale Delivery 

Requirements), and 4560 (Short-Interest Reporting). 

See also, e.g., Nasdaq Rules, Equity 9, Section 9 

(Short-Interest Reporting). 

71See, e.g., Securities Exchange Act Release No. 

58774 (Oct. 14, 2008), 73 FR 61666, 61667 (Oct. 17, 

2008) (Final Rule: ‘‘Naked’’ Short Selling Antifraud 

Rule) (‘‘Although abusive ‘naked’ short selling as 

part of a manipulative scheme is always illegal 

under the general antifraud provisions of the federal 

securities laws, including Rule 10b–5 of the 

Exchange Act,[*] Rule 10b–21 will further evidence 

the liability of persons that deceive others about 

their intention or ability to deliver securities in time 

for settlement, including persons that deceive their 

broker-dealer about their locate source or 

ownership of shares.’’). 

72Nasdaq Response Letter II at 4. 

73See supra note 43. 

74See supra note 63 and accompanying text. 

75Nasdaq Response Letter II at 5. 

76 Id. See also supra note 56. 

77 15 U.S.C. 78f(b)(5). 

78 15 U.S.C. 78f(b)(7). 

79 15 U.S.C. 78s(b)(2). 

compliance concerns, and that these 

companies often become subject to 

delisting for other reasons during the 

compliance periods.64 Further, the 

continued listing of low-priced 

securities raises concerns that these 

securities may not have sufficient public 

float, investor base, and trading interest 

to promote fair and orderly markets and 

relatedly may have heightened 

susceptibility to manipulation. Given 

these concerns, the Exchange’s proposal 

to commence delisting proceedings for 

those companies that have conducted a 

prior reverse split within a year of being 

in violation of the Bid Price 

Requirement is appropriate and 

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

Exchange Act. 

Some commenters raised concerns 

relating to the impact of the Prior 

Reverse Split Proposal on access to 

capital for a segment of Nasdaq-listed 

small companies, particularly 

biotechnology companies, and stated 

that other factors beyond financial 

distress also contribute to the need for 

reverse stock splits by these issuers.65

As discussed above, the Prior Reverse 

Split Proposal is reasonably designed to 

address the investor protection and 

market manipulation concerns that the 

Exchange has observed in circumstances 

involving companies that have utilized 

reverse stock splits. Importantly, the 

proposal does not single out any 

specific type of Exchange-listed 

company based on whether a company 

is small or on a sector of the market. The 

proposal reasonably addresses a gap in 

the Exchange’s current continued listing 

standards that potentially allows an 

issuer to inappropriately delay delisting, 

thereby protecting investors and the 

public interest. While the Commission 

recognizes that the Exchange delisting 

process is in part designed to allow 

companies experiencing temporary 

financial and/or business issues to 

regain compliance with continued 

listing standards, the proposal 

reasonably balances the intent of the 

delisting process with the need to 

prevent companies from taking 

advantage of the delisting process for an 

extended period of time despite 

indications of serious difficulties within 

such companies that are likely to put 

continued downward pressure on the 

stock price, contrary to the goal of 

protecting investors and the public 

interest under the Exchange Act.66

The commenters’ concern that the 

Prior Reverse Split Proposal will 

encourage short-selling activities due to 

non-compliance with continued listing 

standards is not unique to the 

Exchange’s proposal and, indeed, exists 

today.67 Short selling provides the 

market with important benefits, such as 

providing market liquidity and pricing 

efficiency.68 While short selling can 

serve useful market purposes, such as 

facilitating price discovery, there are 

concerns that it could be used to drive 

down the price of a security, to 

accelerate a declining market in a 

security, or to manipulate stock 

prices.69 The Commission and FINRA 

have established rules to regulate short 

selling in order to maintain market 

integrity and protect investors from 

abusive short selling practices.70

Further, market manipulation activity 

conducted through short selling is 

illegal under the general anti-fraud and 

anti-manipulation provisions of the 

federal securities laws.71 In response to 

the commenters, Nasdaq stated that, ‘‘to 

the extent that companies effect larger 

reverse stock splits such that they may 

maintain compliance and thereby avoid 

the delisting process for a longer period 

of time, the Prior Reverse Split Proposal 

may, in fact, reduce the attractiveness of 

a legitimate short position.’’ 72

One commenter raised concerns 

regarding the Prior Reverse Split 

Proposal’s potential impact on how 

companies administer reverse stock 

splits and its potential to cause issues 

for companies’ capitalization; however, 

the commenter did not specify any harm 

that would result from this specific 

proposal, particularly to a company’s 

capitalization.73 Today, companies 

often conduct reverse stock splits as 

their stock price approaches 

noncompliance with the Bid Price 

Requirement and, as discussed above, 

the continued listing of the low-priced 

securities of companies that engage in a 

pattern of repeated reverse stock splits 

raises concerns.74 In response to the 

commenter, Nasdaq stated that a reverse 

stock split, ‘‘by design, has no impact on 

the company’s capitalization’’ because 

such action has ‘‘the effect of increasing 

a company’s stock price by 

consolidating the outstanding 

shares.’’ 75 Nasdaq further stated that it 

‘‘believes that a company facing 

temporary business issues, a temporary 

decrease in the market value of its 

securities, or temporary market 

conditions, generally, can choose the 

ratio of a reverse stock split that is high 

enough to help ensure that subsequent 

price fluctuations will not cause the 

company’s securities to fall below the 

$1.00 minimum bid price requirement 

within the following year.’’ 76

In sum, the Exchange’s proposal 

appropriately identifies securities listed 

on its market that are more likely to 

have serious recurrent issues in 

regaining and maintaining compliance 

with the Bid Price Requirement and 

proposes reasonable changes to shorten 

the time that such non-compliant 

securities can remain trading on the 

Exchange, thereby protecting investors 

and the public interest in accordance 

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

Act,77 while at the same time 

maintaining a fair procedure for affected 

companies to appeal their Delisting 

Determinations to the Hearings Panel in 

accordance with Section 6(b)(7) of the 

Exchange Act.78 For these reasons, the 

Commission finds that the proposed 

rule change is consistent with the 

requirements of the Exchange Act. 

IV. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Exchange Act,79

that the proposed rule change (SR– 

NASDAQ–2024–045) be, and it hereby 

is, approved. 


ddrumheller on DSK120RN23PROD with NOTICES1
Federal Register / Vol. 90, No. 14 / Thursday, January 23, 2025 / Notices 8087 

80 17 CFR 200.30–3(a)(12). 

1See 15 U.S.C. 7201 et seq. 

2See Commission Statement of Policy 

Reaffirming the Status of the FASB as a Designated 

Private-Sector Standard Setter, Release No. 33–8221 

(Apr. 25, 2003) [68 FR 23333 (May 1, 2003)]. 

3The Financial Accounting Foundation’s Board 

of Trustees approved the FASB’s budget on Nov. 19, 

2024. The FAF submitted the approved budget to 

the Commission on Nov. 22, 2024. 

4See OMB Report to the Congress on the 

BBEDCA 251A Sequestration for Fiscal Year 2025 

(Mar. 11, 2024), available at https://

www.whitehouse.gov/wp-content/uploads/2024/03/ 

BBEDCA_251A_Sequestration_Report_FY2025.pdf. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.80

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2025–01621 Filed 1–22–25; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Securities Act of 1933 Release No. 11360/ 

January 17, 2025; Securities Exchange Act 

of 1934 Release No. 102235/January 17, 

2025] 

Order Regarding Review of Financial 

Accounting Standards Board (‘‘FASB’’) 

Accounting Support Fee for 2025 

Under Section 109 of the SarbanesOxley Act of 2002 

The Sarbanes-Oxley Act of 2002 

(‘‘SOX’’ or the ‘‘Act’’) provides that the 

Securities and Exchange Commission 

(the ‘‘Commission’’) may recognize, as 

generally accepted for purposes of the 

securities laws, any accounting 

principles established by a standardsetting body that meets certain criteria.1

Section 109 of SOX provides that all of 

the budget of such a standard-setting 

body shall be payable from an annual 

accounting support fee assessed and 

collected against each issuer, as may be 

necessary or appropriate to pay for the 

budget and provide for the expenses of 

the standard-setting body, and to 

provide for an independent, stable 

source of funding, subject to review by 

the Commission. Under Section 109(f) 

of the Act, the amount of fees collected 

for a fiscal year shall not exceed the 

‘‘recoverable budget expenses’’ of the 

standard-setting body. Section 109(i) of 

SOX amends Section 13(b)(2) of the 

Securities Exchange Act of 1934 to 

require issuers to pay the allocable share 

of a reasonable annual accounting 

support fee or fees, determined in 

accordance with Section 109 of the Act. 

On April 25, 2003, the Commission 

issued a policy statement concluding 

that the Financial Accounting Standards 

Board and its parent organization, the 

Financial Accounting Foundation 

(‘‘FAF’’), satisfied the criteria for an 

accounting standard-setting body under 

the Act, and recognizing the FASB’s 

financial accounting and reporting 

standards as ‘‘generally accepted’’ under 

Section 108 of the Act.2 Accordingly, 

the Commission undertook a review of 

the FASB’s accounting support fee for 

calendar year 2025.3 In connection with 

its review, the Commission also 

reviewed the budget for the FAF and the 

FASB for calendar year 2025. 

Section 109 of SOX provides that, in 

addition to the accounting support fee, 

the standard-setting body can have 

additional sources of revenue for its 

activities, such as earnings from sales of 

publications, provided that each 

additional source of revenue shall not 

jeopardize, in the judgment of the 

Commission, the actual or perceived 

independence of the standard setter. In 

this regard, the Commission also 

considered the interrelation of the 

operating budgets of the FAF, the FASB, 

and the Governmental Accounting 

Standards Board (‘‘GASB’’), the FASB’s 

sister organization, which sets 

accounting standards used by state and 

local government entities. The 

Commission has been advised by the 

FAF that neither the FAF, the FASB, nor 

the GASB accept contributions from the 

accounting profession. 

The Commission understands that the 

Office of Management and Budget 

(‘‘OMB’’) has determined the FASB’s 

spending of the 2025 accounting 

support fee is sequestrable under the 

Budget Control Act of 2011.4 So long as 

sequestration is applicable, we 

anticipate that the FAF will work with 

the Commission and Commission staff 

as appropriate regarding its 

implementation of sequestration. 

After its review, the Commission 

determined that the 2025 annual 

accounting support fee for the FASB is 

consistent with Section 109 of the Act. 

Accordingly, 

It is ordered, pursuant to Section 109 

of SOX, that the FASB may act in 

accordance with this determination of 

the Commission. 

By the Commission. 

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2025–01614 Filed 1–22–25; 8:45 am] 

BILLING CODE 8011–01–P 

SMALL BUSINESS ADMINISTRATION 

[Disaster Declaration #20960 and #20961; 

TEXAS Disaster Number TX–20043] 

Administrative Declaration of a 

Disaster for the State of Texas 

AGENCY: U.S. Small Business 

Administration. 

ACTION: Notice. 

SUMMARY: This is a notice of an 

Administrative declaration of a disaster 

for the State of Texas dated January 16, 

2025. 

Incident: Severe Storm, Tornadoes, 

and Straight-line Winds. 

DATES: Issued on January 16, 2025. 

Incident Period: December 28, 2024. 

Physical Loan Application Deadline 

Date: March 17, 2025. 

Economic Injury (EIDL) Loan 

Application Deadline Date: October 16, 

2025. 

ADDRESSES: Visit the MySBA Loan 

Portal at https://lending.sba.gov to 

apply for a disaster assistance loan. 

FOR FURTHER INFORMATION CONTACT: 

Alan Escobar, Office of Disaster 

Recovery & Resilience, U.S. Small 

Business Administration, 409 3rd Street 

SW, Suite 6050, Washington, DC 20416, 

(202) 205–6734. 

SUPPLEMENTARY INFORMATION: Notice is 

hereby given that as a result of the 

Administrator’s disaster declaration, 

applications for disaster loans may be 

submitted online using the MySBA 

Loan Portal https://lending.sba.gov or 

other locally announced locations. 

Please contact the SBA disaster 

assistance customer service center by 

email at disastercustomerservice@

sba.gov or by phone at 1–800–659–2955 

for further assistance. 

The following areas have been 

determined to be adversely affected by 

the disaster: 

Primary Counties: Brazoria, 

Montgomery. 

Contiguous Counties: 

Texas: Fort Bend, Galveston, Grimes, 

Harris, Liberty, Matagorda, San 

Jacinto, Walker, Waller, Wharton. 

The Interest Rates are: 

Percent 

For Physical Damage: 

Homeowners with Credit Available Elsewhere ...................... 5.125 

Homeowners without Credit 

Available Elsewhere .............. 2.563 

Businesses with Credit Available Elsewhere ...................... 8.000 

Businesses without Credit 

Available Elsewhere .............. 4.000 

Non-Profit Organizations with 

Credit Available Elsewhere ... 3.625 


ddrumheller on DSK120RN23PROD with NOTICES1