Document ID: SEC-2007-0791-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: NASDAQ Stock Market LLC
Posted Date: 2007-06-11T04:00Z

[Federal Register: June 11, 2007 (Volume 72, Number 111)]
[Notices]               
[Page 32152-32153]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr11jn07-92]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55832; File No. SR-NASDAQ-2007-040]

 
Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Order 
Granting Approval to a Proposed Rule Change Relating to the Waiver of 
Fees upon Relisting of Companies Removed for Late Filings

 May 31, 2007.
    On April 4, 2007, The NASDAQ Stock Market LLC (``Nasdaq'') filed 
with the Securities and Exchange Commission (``Commission''), pursuant 
to Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act'') 
\1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to waive fees 
upon the relisting of companies removed for late filings. The proposed 
rule change was published for comment in the Federal Register on April 
25, 2007.\3\ The Commission received no comments on the proposal. This 
order approves the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 55645 (April 19, 
2007), 72 FR 20572.
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    In its filing, Nasdaq proposed to allow, in certain circumstances, 
a company to relist without paying a new entry and application fee if 
the company was delisted solely for the failure to file a required 
periodic report with the Commission or other appropriate regulatory 
authority. In addition, Nasdaq proposed to delete separate, duplicative 
provisions in its rules.
    Nasdaq has proposed to waive the entry and application fee for any 
company that was suspended \4\ and/or delisted from the Nasdaq Stock 
Market solely for its failure to file a required periodic report with 
the Commission or other appropriate regulatory authority, if the 
company regains compliance with this requirement and applies to relist 
on Nasdaq within one year of the date it was delisted from Nasdaq.\5\ 
In addition,

[[Page 32153]]

if such a company relists during the same calendar year that it has 
previously paid an annual fee, the company will not be subject to a 
second annual fee in that same year.
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    \4\ Nasdaq Rule 4802(f) requires a security to meet the 
requirements for initial listing (which include the requirement to 
pay the applicable listing fees) if the security has been the 
subject of a decision to delist by a Listing Qualifications Panel, 
the Nasdaq Listing and Hearing Review Council or the Nasdaq Board.
    \5\ The Commission notes that Nasdaq has the authority under its 
rules to waive fees on a case-by-case basis. See Securities Exchange 
Release No. 28731 (January 2, 1991), 56 FR 906 (January 9, 1991) 
(SR-NASD-90-61). The Commission notes that it is not, as a general 
matter, appropriate to allow for the waiver of fees to one class of 
non-members, while excluding other non-members from such class, 
without first providing interested persons an opportunity to comment 
on the proposed rule change pursuant to section 19(b)(2) under the 
Act.
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    Nasdaq believes that this waiver is appropriate given that, on 
average, the review of such an issuer is likely to be simpler than the 
typical application for several reasons. First, because these companies 
were previously listed on Nasdaq and compliant with all requirements 
except the filing requirement, Nasdaq believes it is more likely that 
they will be compliant with all other quantitative and qualitative 
requirements. Further, Nasdaq notes that relevant information about 
these companies is already contained in Nasdaq's compliance systems. 
Finally, in its filing, Nasdaq states that it anticipates there would 
be fewer questions concerning the company's financial statements given 
that these companies will often have undergone extensive review by 
their auditors and, in some cases, by independent investigators and the 
Commission or other regulatory entities, in order to resolve the issues 
that caused the late filings.\6\
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    \6\ The Commission notes that the timely filing of accurate 
financial reports under the Act is critical to investors and out 
national market and assures that investors receive up to date 
financial information about listed companies.
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    Nasdaq is implementing these waivers as an incentive for companies 
to re-list on Nasdaq upon regaining compliance with the periodic filing 
requirement. Nasdaq believes that this waiver is appropriate since 
Nasdaq's rules governing the delisting of companies that are delinquent 
in periodic reports are generally stricter than those of other markets. 
Nasdaq believes that the proposed waivers will promote competition 
between Nasdaq and other exchange markets.
    After careful review, the Commission finds that the proposed rule 
change is consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to a national securities exchange.\7\ 
In particular, the Commission finds that the proposal is consistent 
with Section 6(b)(4) of the Act,\8\ which requires that an exchange 
have rules that provide for the equitable allocation of reasonable 
dues, fees, and other charges among its members and other persons using 
its facilities. The Commission also finds that the proposal is 
consistent with Section 6(b)(5) of the Act,\9\ which requires, inter 
alia, that the rules of a national securities exchange be designed to 
remove impediments to and perfect the mechanism of a free and open 
market and a national market system and not designed to permit unfair 
discrimination between issuers.
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    \7\ 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).
    \8\ 15 U.S.C. 78f(b)(4).
    \9\ 15 U.S.C. 78f(b)(5).
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    The Commission notes that Nasdaq has represented that the waiver of 
listing fees should not have a material financial impact on the 
exchange, or impact Nasdaq's resource commitment to its regulatory 
oversight of the listing process or its regulatory programs.
    In addition, the proposal does not have any impact on whether a 
company is actually eligible to list on Nasdaq. Nasdaq has represented 
that a complete review of compliance with listing standards will be 
conducted for any company seeking to take advantage of the fee waiver, 
just as for any company that applies for listing on Nasdaq. Nasdaq has 
also represented that any fee waiver granted under this rule is 
predicated upon the company successfully completing the review process 
and demonstrating compliance with the initial listing standards.
    Finally, the Commission notes that companies eligible for the fee 
waiver have previously paid entry and annual fees to Nasdaq. Under the 
fee waiver, companies must reapply within one year of delisting and are 
eligible for the wavier of the annual fee only if they relist during 
the same year for which the annual fee had previously been paid. The 
Commission believes it reasonable for Nasdaq to conclude that eligible 
companies should not be charged duplicate fees if they relist within 
such time periods.
    Based on the above, the Commission agrees that the proposed waiver 
does not constitute an inequitable allocation of reasonable dues, fees, 
and other charges, does not permit unfair discrimination between 
issuers, and is generally consistent with the Act.
    It Is Therefore Ordered, pursuant to Section 19(b)(2) of the 
Act,\10\ that the proposed rule change (File No. SR-NASDAQ-2007-040) 
be, and it hereby is, approved.
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    \10\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-11157 Filed 6-8-07; 8:45 am]

BILLING CODE 8010-01-P