Document ID: SEC-2009-1289-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to the Nasdaq Listing Rules To Make Certain Conforming and Technical Changes
Posted Date: 2009-09-08T04:00Z

[Federal Register: September 8, 2009 (Volume 74, Number 172)]
[Notices]               
[Page 46258-46260]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr08se09-136]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60590; File No. SR-NASDAQ-2009-078]

 
Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change 
to the Nasdaq Listing Rules To Make Certain Conforming and Technical 
Changes

August 31, 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 August 18, 2009, 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 constituting a non-controversial rule change 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Nasdaq proposes to revert to the previously approved requirements 
of certain listing standards that were inadvertently changed when 
adopting the new Listing Rules, and to complete certain conforming 
changes to the Listing Rules that were not fully implemented with their 
adoption. The text of the proposed rule change is below. Proposed new 
language is italicized and proposed deletions are in brackets.\4\
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    \4\ Changes are marked to the rules of The NASDAQ Stock Market 
LLC found at http://nasdaqomx.cchwallstreet.com.
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5415. Initial Listing Requirements for Preferred Stock and Secondary 
Classes of Common Stock
    (a) No change.

[[Page 46259]]

    (b) When the Company's Primary Equity Security is not listed on 
[either] the Global Market or is not a Covered Security, the preferred 
stock and/or secondary class of common stock may be listed on the 
Global Market so long as it satisfies the initial listing criteria for 
Primary Equity Securities set forth in Rule 5405.
* * * * *
5460. Continued Listing Requirements for Preferred Stock and Secondary 
Classes of Common Stock
    (a) When the Company's Primary Equity Security of the Company is 
listed on the Global Market or is a Covered Security [another National 
Securities Exchange], the preferred stock or secondary class of common 
stock must meet all of the requirements set forth in (1) through (5) 
below.
    (1) At least 100,000 Publicly Held Shares;
    (2) A Market Value of Publicly Held Shares of at least $1,000,000;
    (3) Minimum bid price of at least $1 per share;
    (4) At least 100 Public Holders; and
    (5) At least two registered and active Market Makers.
    (b) When the Primary Equity Security of the Company is not listed 
on [either] the Global Market or is not a Covered Security [another 
National Securities Exchange], the preferred stock and/or secondary 
class of common stock may continue to be listed on the Global Market so 
long as it satisfies the continued listing criteria for Primary Equity 
Securities set forth in Rule 5450.
* * * * *
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) No change.
    (1) No change.
    IM-5615-1. No change.
    (2) No change.
    IM-5615-2. No change.
    (3) No change.
    IM-5615-3. No change.
    (4) No change.
    (5) Management Investment Companies
    Management investment companies (including business development 
companies) are subject to all the requirements of the Rule 5600 Series, 
except that management investment companies registered under the 
Investment Company Act of 1940 are exempt from the [requirements of] 
Independent Directors requirement, the Independent Director Oversight 
of Executive Officer Compensation and Director Nominations 
requirements, and the Code of Conduct [requirements] requirement, set 
forth in Rules 5605(b), (d) and (e), and 5610, respectively.
IM-5615-4. Management Investment Companies
    Management investment companies registered under the Investment 
Company Act of 1940 are already subject to a pervasive system of 
federal regulation in certain areas of corporate governance covered by 
5600. In light of this, Nasdaq exempts from [Rule] Rules 5605(b), (d), 
(e) and 5610 management investment companies registered under the 
Investment Company Act of 1940. Business development companies, which 
are a type of closed-end management investment company defined in 
Section 2(a)(48) of the Investment Company Act of 1940 that are not 
registered under that Act, are required to comply with all of the 
provisions of the Rule 5600 Series.
    (b)-(c) No change.
    IM-5615-5. No change.
* * * * *

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
    On March 12, 2009, Nasdaq filed a proposed rule change to revise 
the rules relating to the qualification, listing, and delisting of 
companies listed on, or applying to list on, Nasdaq to improve the 
organization of the rules, eliminate redundancies and simplify the rule 
language.\5\ These new listing rules (the ``Listing Rules'') were 
effective April 13, 2009. Nasdaq has observed that the March filing 
introduced inadvertent changes in the Listing Rules related to the 
Global Market listing requirements for preferred stock and secondary 
classes of securities, and to the governance requirements applicable to 
management investment companies registered under the Investment Company 
Act of 1940.\6\ This filing modifies those rules to revert to the 
requirements as they previously existed in the listing rules (the ``Old 
Rules''), and to make certain conforming changes.\7\
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    \5\ Securities Exchange Act Release No. 59663 (March 31, 2009), 
74 FR 15552 (April 6, 2009) (SR-NASDAQ-2009-018).
    \6\ 15 U.S.C. 80-a1 [sic] et seq.
    \7\ The text of Nasdaq's prior rules is included in Exhibit 5B 
of SR-NASDAQ-2009-018, supra note 5, available at: http://
nasdaq.cchwallstreet.com/NASDAQ/pdf/nasdaq-filings/2009/SR-NASDAQ-
2009-018.pdf.
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    Nasdaq is proposing technical changes to conform Listing Rule 
5415(b) and Listing Rules 5460(a) and (b) with the meaning of Old Rules 
4420(k) and 4450(h), respectively, and to make them consistent with 
each other and the analogous Capital Market rules. Old Rules 4420(k) 
and 4450(h) provided quantitative initial and continued listing 
requirements for preferred stock and secondary classes of common stock. 
These rules also allowed the application of the respective initial and 
continued listing requirements applicable to common stock if the 
issuer's common stock or common stock equivalent security was not 
listed on either Nasdaq or another national securities exchange. In 
adopting Listing Rule 5415(a), Nasdaq replaced the term ``national 
securities exchange'' with the newly-defined term ``Covered Security,'' 
\8\ which was also used in the analogous Capital Market Listing Rules 
5510 and 5555. Nasdaq did not, however, make conforming changes to 
Listing Rules 5415(b) and 5460 to replace the old term with the new. 
Further, in the case of Rule 5415(b), rule text inadvertently omits the 
word ``not,'' which is necessary for the rule to retain its meaning. In 
the case of Rules 5460(a) and (b), the term ``Covered Security'' was 
not used at all. Accordingly, Nasdaq is proposing technical changes to 
Listing Rule 5415(b), and Listing Rules 5460(a) and (b) to make them 
consistent with each other and Rules 5610 and 5655, the analogous 
Capital Market rules.
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    \8\ Listing Rule 5005(a)(9) defines a Covered Security as ``a 
security described in Section 18(b) of the Securities Act of 1933.''

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[[Page 46260]]

    Under Old Rule 4350(a)(2) and IM-4350-6, a management investment 
company registered under the Investment Company Act of 1940 \9\ was 
exempt from Old Rule 4350(c), which contained the requirements for a 
company to have a majority independent board, hold executive sessions, 
and for independent directors to make certain compensation and 
nomination decisions, and Old Rule 4350(n), which contained the code of 
conduct requirement. Old Rule 4350(a)(2) was moved to Listing Rule 
5615(a)(5) and exempts a registered management investment company from 
Listing Rule 5605(b), which contains the requirement for a company to 
have a majority independent board and executive sessions, and Listing 
Rule 5610, which contains the code of conduct requirement. However, the 
part of Old Rule 4350(c) which relates to the requirement for 
independent directors to make certain compensation and nomination 
decisions was moved to Listing Rules 5605(d) and (e), both of which are 
not cross-referenced in Listing Rule 5615(a)(5). As a consequence, 
Listing Rule 5615(a)(5) no longer contains the full range of exemptions 
that were previously provided under Old Rule 4350(a)(2). Accordingly, 
Nasdaq is proposing to amend the cross-reference found in Listing Rule 
5615(a)(5) and IM-5615-4 to include Listing Rules 5605(d) and (e), thus 
conforming Listing Rule 5615(a)(5) with Old Rule 4350(a)(2). Nasdaq 
also proposes to expand the explanation of the cross references in the 
rule, consistent with the style of the Listing Rules.
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    \9\ 15 U.S.C. 80-a1 [sic] et seq.
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2. Statutory Basis
    Nasdaq believes that the proposed rule change is consistent with 
the provisions of Section 6 of the Act,\10\ in general and with 
Sections 6(b)(5) of the Act,\11\ in particular in that 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 regulating, clearing, settling, 
processing information with respect to, and facilitating transactions 
in securities, 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. The proposed rule change is 
designed to revert to the previously approved requirements of certain 
listing standards that were inadvertently changed when adopting the new 
Listing Rules, and to complete certain conforming changes to the 
Listing Rules that were not fully implemented with their adoption.
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    \10\ 15 U.S.C. 78f.
    \11\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    Nasdaq does not believe that the proposed rule change will impose 
any burden on competition not necessary or appropriate in furtherance 
of the purposes of the Act.

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

    No written comments were either solicited or received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days after the date of this filing, or such 
shorter time as the Commission may designate if consistent with the 
protection of investors and the public interest, the proposed rule 
change has become effective pursuant to Section 19(b)(3)(A) \12\ of the 
Act and Rule 19b-4(f)(6) thereunder.\13\
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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to provide the Commission 
with 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 Exchange has satisfied this requirement.
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    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-2009-078 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-2009-078. 
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-2009-078 and should be 
submitted on or before September 29, 2009.

For the Commission, by the Division of Trading and Markets, pursuant 
to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-21584 Filed 9-4-09; 8:45 am]

BILLING CODE 8010-01-P