29592 Federal Register / Vol. 75, No. 101 / Wednesday, May 26, 2010 / Notices 

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

2 17 CFR 240.19b–4. 

3 17 CFR 240.19b–4(f)(6). 

4Changes are marked to the rule text that appears 

in the electronic manual of Nasdaq found at http:// 

nasdaqomx.cchwallstreet.com. 

mandatory. All information is provided 

to the public upon request. The Notice 

takes approximately 0.25 hours per 

response and is filed by 4 respondents 

for a total of one annual burden hour. 

An agency may not conduct or 

sponsor, and a person is not required to 

respond to, a collection of information 

unless it displays a currently valid 

control number. 

Written comments regarding the 

above information should be directed to 

the following persons: (i) Desk Officer 

for the Securities and Exchange 

Commission, Office of Information and 

Regulatory Affairs, Office of 

Management and Budget, Room 10102, 

New Executive Office Building, 

Washington, DC 20503 or send an email to: Shagufta_Ahmed@omb.eop.gov; 

and (ii) Charles Boucher, Director/CIO, 

Securities and Exchange Commission, 

C/O Shirley Martinson, 6432 General 

Green Way, Alexandria, VA 22312; or 

send an e-mail to: 

PRA_Mailbox@sec.gov. Comments must 

be submitted to OMB within 30 days of 

this notice. 

Dated: May 19, 2010. 

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–12554 Filed 5–25–10; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–62135; File No. SR– 

NASDAQ–2010–060] 

Self-Regulatory Organizations; The 

NASDAQ Stock Market LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change To Require 

Companies To Provide Notification to 

Nasdaq of Any Noncompliance With 

the Corporate Governance 

Requirements 

May 19, 2010. 

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 May 14, 

2010, The NASDAQ Stock Market LLC 

(‘‘Nasdaq’’) filed with the Securities and 

Exchange Commission (‘‘Commission’’) 

the proposed rule change as described 

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

have been prepared by Nasdaq. Nasdaq 

has designated the proposed rule change 

as effecting a change described under 

Rule 19b–4(f)(6) under the Act,3 which 

renders the proposal effective upon 

filing with the Commission. 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 the Substance 

of the Proposed Rule Change 

Nasdaq proposes to require 

companies to provide notification to 

Nasdaq of any noncompliance with the 

corporate governance requirements. 

Nasdaq will implement the proposed 

rule change thirty days after the date of 

the filing. The text of the proposed rule 

change is below. Proposed new 

language is in italics; proposed 

deletions are in [brackets].4

* * * * * 

5250. Obligations for Companies Listed 

on The Nasdaq Stock Market 

(a) Obligation to Provide Information 

to Nasdaq 

(1) Nasdaq may request any additional 

information or documentation, public or 

non-public, deemed necessary to make 

a determination regarding a Company’s 

continued listing, including, but not 

limited to, any material provided to or 

received from the Commission or Other 

Regulatory Authority. A Company may 

be denied continued listing if it fails to 

provide such information within a 

reasonable period of time or if any 

communication to Nasdaq contains a 

material misrepresentation or omits 

material information necessary to make 

the communication to Nasdaq not 

misleading. The Company shall provide 

full and prompt responses to requests by 

Nasdaq or by FINRA acting on behalf of 

Nasdaq for information related to 

unusual market activity or to events that 

may have a material impact on trading 

of its securities in Nasdaq. 

[ (1)] (2) As set forth in Rule 5625, a 

Company must provide Nasdaq with 

prompt notification after an Executive 

Officer of the Company becomes aware 

of any [material] noncompliance by the 

Company with the requirements of the 

Rule 5600 Series. 

(b)–(f) No change. 

* * * * * 

5615. Exemptions from Certain 

Corporate Governance Requirements 

This rule provides the exemptions 

from the corporate governance rules 

afforded to certain types of Companies, 

and sets forth the phase-in schedules for 

initial public offerings, Companies 

emerging from bankruptcy and 

Companies transferring from other 

markets. This rule also describes the 

applicability of the corporate 

governance rules to Controlled 

Companies and sets forth the phase-in 

schedule afforded to Companies ceasing 

to be Controlled Companies. 

(a) Exemptions to the Corporate 

Governance Requirements 

(1) No change 

IM–5615–1. No change. 

(2) No change. 

IM–5615–2. No change. 

(3) Foreign Private Issuers 

(A) A Foreign Private Issuer may 

follow its home country practice in lieu 

of the requirements of the Rule 5600 

Series, the requirement to distribute 

annual and interim reports set forth in 

Rule 5250(d), and the Direct 

Registration Program requirement set 

forth in Rules 5210(c) and 5255, 

provided, however, that such a 

Company shall: Comply with the 

Notification of [Material] 

Noncompliance requirement (Rule 

5625), the Voting Rights requirement 

(Rule 5640), have an audit committee 

that satisfies Rule 5605(c)(3), and ensure 

that such audit committee’s members 

meet the independence requirement in 

Rule 5605(c)(2)(A)(ii). Except as 

provided in this paragraph, a Foreign 

Private Issuer must comply with the 

requirements of the Rule 5000 Series. 

(B) No change 

IM–5615–3. Foreign Private Issuers 

A Foreign Private Issuer (as defined in 

Rule 5005) listed on Nasdaq may follow 

the practice in such Company’s home 

country (as defined in General 

Instruction F of Form 20–F) in lieu of 

the provisions of the Rule 5600 Series, 

Rule 5250(d), and Rules 5210(c) and 

5255, subject to several important 

exceptions. First, such an issuer shall 

comply with Rule 5625 (Notification of 

[Material] Noncompliance). Second, 

such a Company shall have an audit 

committee that satisfies Rule 5605(c)(3). 

Third, members of such audit 

committee shall meet the criteria for 

independence referenced in Rule 

5605(c)(2)(A)(ii) (the criteria set forth in 

Rule 10A–3(b)(1) under the Act, subject 

to the exemptions provided in Rule 

10A–3(c) under the Act). Fourth, a 

Foreign Private Issuer must comply with 

Rules 5210(c) and 5255 (Direct 

Registration Program) unless prohibited 

from complying by a law or regulation 

in its home country. Finally, a Foreign 

Private Issuer that elects to follow home 

country practice in lieu of a requirement 

of Rules 5600, 5250(d), 5210(c) or 5255 

shall submit to Nasdaq a written 

statement from an independent counsel 

in such Company’s home country 


wwoods2 on DSK1DXX6B1PROD with NOTICES_PART 1
Federal Register / Vol. 75, No. 101 / Wednesday, May 26, 2010 / Notices 29593 

5Rule 5615(a)(4)(J) imposes this requirement on 

limited partnerships and Rule 5625 imposes this 

requirement on all other listed entities. 6Nasdaq also monitors public filings made by 

listed companies and will review any 

noncompliance it discovers in the same manner. 7 15 U.S.C. 78f. 

8 15 U.S.C. 78f(b)(5). 

9The Commission notes that Nasdaq has satisfied 

the pre-filing requirement. 

certifying that the Company’s practices 

are not prohibited by the home 

country’s laws and, in the case of a 

Company prohibited from complying 

with Rules 5210(c) and 5255, certifying 

that a law or regulation in the home 

country prohibits such compliance. In 

the case of new listings, this 

certification is required at the time of 

listing. For existing Companies, the 

certification is required at the time the 

Company seeks to adopt its first 

noncompliant practice. In the interest of 

transparency, the rule requires a Foreign 

Private Issuer to make appropriate 

disclosures in the Company’s annual 

filings with the Commission (typically 

Form 20–F or 40–F), and at the time of 

the Company’s original listing in the 

United States, if that listing is on 

Nasdaq, in its registration statement 

(typically Form F–1, 20–F, or 40–F); 

alternatively, a Company that is not 

required to file an annual report on 

Form 20–F may provide these 

disclosures in English on its website in 

addition to, or instead of, providing 

these disclosures on its registration 

statement or annual report. The 

Company shall disclose each 

requirement that it does not follow and 

include a brief statement of the home 

country practice the Company follows 

in lieu of these corporate governance 

requirement(s). If the disclosure is only 

available on the website, the annual 

report and registration statement should 

so state and provide the web address at 

which the information may be obtained. 

Companies that must file annual reports 

on Form 20–F are encouraged to provide 

these disclosures on their Web sites, in 

addition to the required Form 20–F 

disclosures, to provide maximum 

transparency about their practices. 

(4) Limited Partnerships 

(A)–(I) No change. 

(J) Notification of [Material] 

Noncompliance. 

Each Company that is a limited 

partnership must provide Nasdaq with 

prompt notification after an Executive 

Officer of the Company, or a person 

performing an equivalent role, becomes 

aware of any [material] noncompliance 

by the Company with the requirements 

of this Rule 5600 Series. 

(5) No change. 

IM–5615–4. No change. 

(b)–(c) No change. 

IM–5615–5. No change. 

* * * * * 

5625. Notification of [Material] 

Noncompliance 

A Company must provide Nasdaq 

with prompt notification after an 

Executive Officer of the Company 

becomes aware of any [material] 

noncompliance by the Company with 

the requirements of this Rule 5600 

Series. 

* * * * * 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, 

Nasdaq 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. Nasdaq 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 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

Nasdaq rules require that a listed 

company notify Nasdaq when an 

executive officer of the company 

becomes aware of any material 

noncompliance with Nasdaq’s corporate 

governance requirements contained in 

the Rule 5600 Series.5 Nasdaq has 

consistently interpreted this 

requirement such that any 

noncompliance with these rules would 

be considered material and now 

proposes to modify the rule to make this 

clear by requiring notification of any 

noncompliance. When Nasdaq receives 

notice of noncompliance, it will review 

the matter in accordance with the Rule 

5800 Series, which provides the 

procedures applicable when a company 

fails to meet a listing standard, and 

provide appropriate notice on 

www.nasdaq.com.6

Nasdaq also proposes to make 

conforming changes to Rule 5615(a)(3) 

and IM–5615–3, which, among other 

things, require a foreign private issuer to 

provide notice of noncompliance, and to 

Rule 5250, which cross references the 

requirement to provide notice of 

noncompliance. 

2. Statutory Basis 

Nasdaq believes the proposed rule 

change is consistent with the provisions 

of Section 6 of the Act,7 in general and 

with Section 6(b)(5) of the Act,8 in 

particular, which requires that the rules 

of an exchange be designed to prevent 

fraudulent and manipulative acts and 

practices, promote just and equitable 

principles of trade, foster cooperation 

and coordination with persons engaged 

in regulating, clearing, settling, 

processing information with respect to, 

and facilitating transactions in 

securities, remove impediments to and 

perfect the mechanism of a free and 

open market and a national market 

system, and, in general, protect 

investors and the public interest. The 

proposed rule change is consistent with 

these requirements in that it will assure 

that Nasdaq receives notice of any 

noncompliance with the corporate 

governance requirements, thereby 

helping to protect investors and the 

public interest. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

Nasdaq does not believe that the 

proposed rule change will result in any 

burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act, as amended. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

Written comments were neither 

solicited nor received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The proposed rule change is effective 

upon filing pursuant to Section 

19(b)(3)(A) of the Act and paragraph 

(f)(6) of Rule 19b–4 thereunder, in that 

the proposed rule change: (i) Does not 

significantly affect the protection of 

investors or the public interest; (ii) does 

not impose any significant burden on 

competition; and (iii) does not become 

operative for 30 days after the date of 

the filing, or such shorter time as the 

Commission may designate if consistent 

with the protection of investors and the 

public interest; provided the selfregulatory organization has given 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.9

The proposed rule change will clarify 

the notice required from listed 

companies regarding noncompliance 


wwoods2 on DSK1DXX6B1PROD with NOTICES_PART 1
29594 Federal Register / Vol. 75, No. 101 / Wednesday, May 26, 2010 / Notices 

10Section 303A.12(b) of the NYSE Listed 

Company Manual requires a listed company’s CEO 

to ‘‘promptly notify the NYSE in writing after any 

executive officer of the listed company becomes 

aware of any non-compliance with any applicable 

provisions of this Section 303A.’’ 

11 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3 In an arbitration between members, the panel 

consists of non-public arbitrators, and so the parties 

receive a list of 16 arbitrators from the FINRA nonpublic roster, and a list of eight non-public 

arbitrators from the FINRA non-public chairperson 

roster. See FINRA Rules 13402 and 13403. Each 

separately represented party may strike up to eight 

of the arbitrators from the non-public list and up 

to four of the arbitrators from the non-public 

chairperson list. See FINRA Rule 13404. 

with the corporate governance 

requirements, consistent with Nasdaq’s 

historical interpretation of that 

requirement, and is closely modeled 

after similar rules of another national 

securities exchange.10 Therefore Nasdaq 

believes it does not significantly affect 

the protection of investors or the public 

interest or raise any novel or significant 

regulatory issues. 

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission may summarily abrogate 

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. 

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 (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an e-mail to rulecomments@sec.gov. Please include File 

Number SR–NASDAQ–2010–060 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Elizabeth M. Murphy, Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–1090. 

All submissions should refer to File 

Number SR–NASDAQ–2010–060. This 

file number should be included on the 

subject line if e-mail 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 Web site (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 Web site 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 such filing 

also will be available for inspection and 

copying at the principal office of the 

Exchange. All comments received will 

be posted without change; the 

Commission does not edit personal 

identifying information from 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File Number SR– 

NASDAQ–2010–060 and should be 

submitted on or before June 16, 2010. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.11

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–12551 Filed 5–25–10; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–62134; File No. SR–FINRA– 

2010–022] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Notice of Filing of 

Proposed Rule Change Relating to 

Amending the Codes of Arbitration 

Procedure to Increase the Number of 

Arbitrators on Lists Generated by the 

Neutral List Selection System 

May 19, 2010. 

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

Securities Exchange Act of 1934 

(‘‘Act’’) 1 and Rule 194 thereunder,2

notice is hereby given that on April 29, 

2010, the Financial Industry Regulatory 

Authority, Inc. (‘‘FINRA’’) 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 

substantially prepared by FINRA. 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 

FINRA is proposing to amend Rules 

12403 and 12404 of the Code of 

Arbitration Procedure for Customer 

Disputes (‘‘Customer Code’’) and Rules 

13403 and 13404 of the Code of 

Arbitration Procedure for Industry 

Disputes (‘‘Industry Code’’) to increase 

the number of arbitrators on each list 

generated by the Neutral List Selection 

System (‘‘NLSS’’). 

The text of the proposed rule change 

is available on FINRA’s Web site at 

http://www.finra.org, at the principal 

office of FINRA 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, 

FINRA 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. FINRA 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 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The NLSS is a computer system that 

generates, on a random basis, lists of 

arbitrators from FINRA’s rosters of 

arbitrators (i.e., public, non-public, and 

chair rosters) for each arbitration case. 

The parties select their panel through a 

process of striking and ranking the 

arbitrators on the lists. 

Currently, parties are sent lists of 

available arbitrators, along with detailed 

biographical information on each 

arbitrator. In a three-arbitrator case, 

other than one involving a dispute 

among members, the parties receive 

three lists of eight arbitrators each—one 

public, one chair-qualified and one nonpublic. Each party is permitted to strike 

up to four of the eight names on each 

list and ranks the remaining names in 

order of preference. FINRA appoints the 

panel from among the names remaining 

on the lists that the parties return.3

When there are no names remaining 

on a list, or when a mutually acceptable 

arbitrator is unable to serve, a random 


wwoods2 on DSK1DXX6B1PROD with NOTICES_PART 1