Document ID: SEC-2009-0812-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: The NASDAQ Stock Market LLC
Posted Date: 2009-06-17T04:00Z

[Federal Register Volume 74, Number 115 (Wednesday, June 17, 2009)]
[Notices]
[Pages 28750-28752]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-14173]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60094; File No. SR-NASDAQ-2009-049]

Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change to 
the NASDAQ Listing Rules To Reflect Changes to the Rules of the 
Commission

June 10, 2009.
    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 20, 2009, The NASDAQ Stock Market LLC (``Nasdaq'') filed with 
the Securities and Exchange Commission (``Commission'') the proposed 
rule change as described in Items I and II below, which Items have been 
prepared by Nasdaq. 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

    Nasdaq proposes a rule change to modify Nasdaq's Listing Rules to 
reflect recent changes to Commission rules. The text of the proposed 
rule change is available from Nasdaq's Web site at http://nasdaq.cchwallstreet.com, at Nasdaq's principal office, and at the 
Commission's Public Reference Room.

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

    In its filing with the Commission, Nasdaq included statements 
concerning the purpose of, and basis for, the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below, and is set forth in Sections A, B, and C below.

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

1. Purpose
    Nasdaq proposes to conform its rules to reflect two recent changes 
to the rules of the Commission. On September 23, 2008, the Commission 
adopted changes to Form 20-F \3\ that, beginning with the report filed 
for the first fiscal year ended on or after December 15, 2008, requires 
companies that file an annual report on Form 20-F to discuss 
significant differences in their corporate governance practices 
compared to the corporate governance practices applicable to domestic 
companies under the relevant exchange's listing standards.\4\ In 
contrast, Nasdaq Rule 5615(a)(3) allows foreign private issuers to 
disclose their non-conforming corporate governance practices in their 
annual reports or registration statements filed with the Commission or 
on their Web sites. As a consequence, Nasdaq's requirements regarding 
annual report

[[Page 28751]]

disclosure by foreign private issuers who file Form 20-F are 
inconsistent with those of the Commission. Accordingly, Nasdaq is 
proposing to eliminate from Rule 5615(a)(3) and IM-5615-3 the option 
available to foreign private issuers that file a Form 20-F to disclose 
non-conforming corporate practices solely on their Web sites.\5\ These 
changes will ensure that Nasdaq's rules are consistent with the 
Commission's requirements, and will remove a potential trap for the 
unwary presented by complying with a more permissive self-regulatory 
organization rule and unknowingly failing to satisfy the rules of the 
Commission.\6\ Nasdaq also proposes to reorganize Rule 5615(a)(3) to 
simplify its structure.
---------------------------------------------------------------------------

    \3\ 17 CFR 249.220f.
    \4\ Securities Exchange Act Release No. 58620 (September 23, 
2008), 73 FR 58300 (October 6, 2008). This disclosure is required in 
Item 16G of the Form 20-F.
    \5\ Companies will continue to be encouraged to make such 
disclosures on their Web sites, in addition to providing the 
disclosures in their Forms 20-F, so that the non-conforming 
practices will be as readily transparent to investors and potential 
investors as possible.
    \6\ Nasdaq notes that the Commission's rules do not apply to a 
foreign private issuer that files reports on a form other than Form 
20-F, such as Form 40-F, 17 CFR 249.240f. Such companies will 
continue to be allowed to make the required disclosure solely on 
their Web site.
---------------------------------------------------------------------------

    In a similar regard, Nasdaq is proposing changes to account for the 
Commission's amendments to the disclosure and reporting requirements 
designed to simplify and provide regulatory relief to smaller companies 
(the ``Smaller Reporting Company Amendments'').\7\ The Smaller 
Reporting Company Amendments, which became fully effective March 15, 
2009, replaced Item 401(e) of Regulation S-B \8\ and Item 401(h) of 
Regulation S-K,\9\ which previously defined an ``audit committee 
financial expert'' with new Items 407(d)(5)(ii) and (iii) of Regulation 
S-K.\10\ Nasdaq proposes to update references in IM-5605-4 relating to 
the definition of an audit committee financial expert by deleting 
citations to old Item 401(e) of Regulation S-B and old Item 401(h) of 
Regulation S-K, and replacing them with citations to new Items 
407(d)(5)(ii) and (iii) of Regulation S-K, which now define audit 
committee financial expert.
---------------------------------------------------------------------------

    \7\ Securities Exchange Act Release No. 56994 (December 19, 
2007), 73 FR 934 (January 4, 2008). These amendments, among other 
things, integrated the Regulation S-B scaled disclosure requirements 
into Regulation S-K, and eliminated Forms 10-QSB and 10-KSB, 
effective October 31, 2008 and March 15, 2009, respectively.
    \8\ Formerly, 17 CFR 228.401(e).
    \9\ Formerly, 17 CFR 229.401(h).
    \10\ 17 CFR 229.407(d)(5)(ii) and (iii).
---------------------------------------------------------------------------

    The Smaller Reporting Company Amendments also eliminated the term 
``small business issuer'' \11\ and integrated Item 404 of Regulation S-
B,\12\ which previously set forth the requirements for a small business 
issuer to disclose transactions with related persons, into Item 404 of 
Regulation S-K.\13\ Under revised Item 404 of Regulation S-K, the new 
term ``smaller reporting company'' \14\ replaced the term small 
business issuer formerly found in Item 404 of Regulation S-B. 
Currently, Nasdaq Rule 5630, which relates to the review and oversight 
of related party transactions, references both Item 404 of Regulation 
S-B and Item 404 of Regulation S-K. As such, Nasdaq is proposing to 
eliminate reference to Item 404 of Regulation S-B and the term ``small 
business issuer'' from Rule 5630.
---------------------------------------------------------------------------

    \11\ Formerly, 17 CFR 228.10.
    \12\ Formerly, 17 CFR 228.404.
    \13\ 17 CFR 229.404.
    \14\ The new term ``smaller reporting company'' is defined by 
Item 10(f)(1). See 17 CFR 229.10(f)(1).
---------------------------------------------------------------------------

2. Statutory Basis
    Nasdaq believes that the proposed rule change is consistent with 
the provisions of Section 6 of the Act,\15\ in general, and with 
Section 6(b)(5) of the Act,\16\ in particular, because it is designed 
to prevent fraudulent and manipulative acts and practices, to promote 
just and equitable principles of trade, to foster cooperation and 
coordination with persons engaged in facilitating transactions in 
securities, and to remove impediments to and perfect the mechanism of a 
free and open market and a national market system. The proposed rule 
change is designed to facilitate companies' compliance with the rules 
of the Commission by aligning Nasdaq's disclosure requirements with the 
newly-adopted and more proscriptive rules of the Commission and to 
update references to deleted Commission rules. Nasdaq notes that the 
proposed changes to Rule 5615(a)(3) and IM 5615-3 will not eliminate or 
reduce information now available to investors, but rather will 
consolidate the location of such information and may increase the 
availability of such information to the extent foreign private issuers 
determine to continue to disclose the non-conforming practices on their 
Web sites in addition to the required Form 20-F disclosure. Nasdaq also 
believes that the proposed changes will assist foreign private issuers 
in avoiding a trap for the unwary presented by complying with a more 
permissive self-regulatory organization rule and unknowingly failing to 
satisfy the rules of the Commission. Similarly, Nasdaq believes that 
the elimination of references to Regulation S-B and amendments to rule 
citations to Regulation S-K found in IM-5605-4 and Rule 5630 will serve 
to avoid confusion with respect to disclosure requirements and 
definitions applicable to certain Nasdaq companies.
---------------------------------------------------------------------------

    \15\ 15 U.S.C. 78f.
    \16\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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

    Because the foregoing proposed rule change does not: (i) Does not 
significantly affect the protection of investors or the public 
interest; (ii) does not impose any significant burden on competition; 
and (iii) by its terms, does not become operative for thirty days after 
the date of the filing, or such shorter time as the Commission may 
designate, it has become effective pursuant to Section 19(b)(3)(A) of 
the Act \17\ and Rule 19b-4(f)(6) thereunder.\18\
---------------------------------------------------------------------------

    \17\ 15 U.S.C. 78s(b)(3)(A).
    \18\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

    A proposed rule change filed under 19b-4(f)(6) normally does not 
become operative prior to thirty days after the date of the filing.\19\ 
However, pursuant to Rule 19b-4(f)(6)(iii),\20\ the Commission may 
designate a shorter time if such action is consistent with the 
protection of investors and public interest. Nasdaq has requested that 
the Commission waive the 30-day pre-operative delay and designate the 
proposed rule change to become operative upon filing.
---------------------------------------------------------------------------

    \19\ 17 CFR 240.19b-4(f)(6)(iii). Pursuant to Rule 19b-
4(f)(6)(iii) under the Act, Nasdaq is required 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. Nasdaq has complied with this requirement.
    \20\ 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------

    The Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest 
because the filing corrects inaccuracies in Nasdaq's rules and conforms 
Nasdaq rules that are currently inconsistent with those of the 
Commission. The Commission believes that the proposed

[[Page 28752]]

changes will help certain companies avoid violating the Commission's 
disclosure rules as they prepare their annual reports, by conforming 
Nasdaq's disclosure requirements with those of the Commission. In 
addition, the proposed changes will correct inaccurate rule citations 
to the rules and regulations of the Commission, thereby reducing 
confusion. Thus, the Commission designates the proposal to become 
operative upon filing.\21\
---------------------------------------------------------------------------

    \21\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the impact of the proposed rule on 
efficiency, competition, and capital formation. 15 U.S.C. 78c(f).
---------------------------------------------------------------------------

    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 rule-comments@sec.gov. Please include 
File Number SR-NASDAQ-2009-049 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-2009-049. 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 inspection 
and copying 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 No. SR-NASDAQ-2009-049 and should be 
submitted on or before July 8, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\22\
---------------------------------------------------------------------------

    \22\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-14173 Filed 6-16-09; 8:45 am]
BILLING CODE 8010-01-P