Document ID: SEC-2013-0299-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ Stock Market
Posted Date: 2013-02-12T05:00Z

[Federal Register Volume 78, Number 29 (Tuesday, February 12, 2013)]
[Notices]
[Pages 9969-9971]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-03107]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-68850; File No. SR-NASDAQ-2013-017]

Self-Regulatory Organizations; The NASDAQ Stock Market; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change to Restore 
Certain Requirements That Were Inadvertently Deleted From Rule 5815 
Relating to a Staff Delisting Determination, Public Reprimand Letter, 
or Written Denial of a Listing Application

February 6, 2013.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\, and Rule 19b-4 \2\ thereunder, notice is hereby given 
that on January 25, 2013, The NASDAQ Stock Market LLC (``Nasdaq'' or 
``Exchange'') 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.

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[[Page 9970]]

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Nasdaq proposes to restore certain requirements that were 
inadvertently deleted when Rule 5815 was adopted in March 2009 and 
remove from the rules fees that have expired.
    The text of the proposed rule change is below.\3\ Proposed new 
language is italicized; proposed deletions are in brackets.

    \3\ Changes are marked to the rule text that appears in the 
electronic manual of Nasdaq found at http://nasdaq.cchwallstreet.com.
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* * * * *

5815. Review of Staff Determinations by Hearings Panel

    When a Company receives a Staff Delisting Determination or a 
Public Reprimand Letter issued by the Listing Qualifications 
Department, or when its application for initial listing is denied, 
it may request in writing that the Hearings Panel review the matter 
in a written or an oral hearing. This section sets forth the 
procedures for requesting a hearing before a Hearings Panel, 
describes the Hearings Panel and the possible outcomes of a hearing, 
and sets forth Hearings Panel procedures.

(a) Procedures for Requesting and Preparing for a Hearing

(1) Timely Request Stays Delisting

    (A) A Company may, within seven calendar days of the date of the 
Staff Delisting Determination notification, Public Reprimand Letter, 
or written denial of a listing application, request a written or 
oral hearing before a Hearings Panel to review the Staff Delisting 
Determination, Public Reprimand Letter, or written denial of a 
listing application. Subject to the limitation in paragraph (B) 
below, a timely request for a hearing will stay the suspension and 
delisting action pending the issuance of a written Panel Decision. 
Requests for hearings should be submitted in writing to the Hearings 
Department.
    (B) No changes.

(2) Failure to Request Results in Immediate Delisting

    If a Company fails to request in writing a hearing within seven 
calendar days, it waives its right to request review of a Delisting 
Determination, Public Reprimand Letter, or written denial of an 
initial listing application. In [that event,] the case of a 
Company's failure to timely request a hearing to review a Delisting 
Determination, the Hearings Department will take action to suspend 
trading of the securities and follow procedures to delist the 
securities.

(3) Fees

    Within 15 calendar days of the date of the Staff Delisting 
Determination, Public Reprimand Letter, or written denial of an 
initial listing application, the Company must submit a hearing fee 
of $10,000. [However, if the hearing request relates to a Staff 
Delisting Determination dated before January 2, 2013, the Company 
must submit a hearing fee as follows:
    (A) when the Company has requested a written hearing, $4,000; or
    (B) when the Company has requested an oral hearing, whether in 
person or by telephone, $5,000.]
    (4)-(6) No changes.
    (b)-(d) No changes.

5820. Appeal to the Nasdaq Listing and Hearing Review Council

    A Company may appeal a Panel Decision to the Listing Council. 
The Listing Council may also call for review a Panel Decision on its 
own initiative. This Rule 5820 describes the procedures applicable 
to appeals and calls for review.

(a) Procedure for Requesting Appeal

    A Company may appeal any Panel Decision to the Listing Council 
by submitting a written request for appeal and a fee of $10,000 to 
the Nasdaq Office of Appeals and Review within 15 calendar days of 
the date of the Panel Decision. [However, if the appeal relates to a 
Panel Decision dated before January 2, 2013, the applicable fee is 
$4,000.] An appeal will not operate as a stay of the Panel Decision. 
Upon receipt of the appeal request and the applicable fee, the 
Nasdaq Office of Appeals and Review will acknowledge the Company's 
request and provide deadlines for the Company to provide written 
submissions.
    (b)-(e) No changes.
* * * * *

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

    In its filing with the Commission, the Exchange 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. The Exchange 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
    Pursuant to the Nasdaq Listing Rule Series 5800, companies may seek 
review of a determination by Nasdaq Staff to deny initial listing or 
delist a company's securities or to issue a Public Reprimand Letter, by 
requesting an oral or written hearing before an independent Hearings 
Panel. The proposed rule change restores certain provisions about the 
Hearings process that were inadvertently deleted when Rule 5815 was 
adopted in March 2009 as part of a comprehensive re-write of the 
listing rules, designed to improve the organization of the rules, 
eliminate redundancies and simplify the rule language.\4\ In that rule 
filing, Nasdaq specifically represented that ``it is not making any 
substantive changes to the Listing Rules in this proposal.'' \5\
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    \4\ Exchange Act Release No. 59663 (March 31, 2009), 74 FR 15552 
(April 6, 2009) (SR-NASDAQ-2009-018).
    \5\ Id. at 15553.
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    First, the proposed rule change clarifies that fees for a hearing 
are applicable to any requests for a hearing, whether sought for review 
of a Public Reprimand Letter, Staff denial of an initial listing 
application, or review of a delisting determination. The preamble text 
in Rule 5815 makes clear that a Company may request a hearing for 
review of a Public Reprimand or denial of an initial listing 
application, as well as a Delisting Determination. Similarly, the 
predecessor to Rule 5815, former Rule 4805, allowed a company to 
request review of a ``Staff Determination,'' which was defined in 
former Rule 4801(k)(1) as ``a written determination by the Listing 
Department to limit or prohibit the initial or continued listing of an 
issuer's securities * * * or * * * a public reprimand letter* * *.'' 
\6\ However, while former Rule 4805(d) required a company to pay the 
applicable fee whenever it requested a hearing for review of a Staff 
Determination, Rule 5815(a)(3) does not specifically impose a fee for 
requests for review of a Public Reprimand Letter or denial of an 
initial listing application. The proposed rule change amends Rule 
5815(a)(3) to state that fees for hearings continue to apply to 
requests for review of a Public Reprimand and denial of an initial 
listing application.\7\
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    \6\ The former Listing Rules are available at http://nasdaq.cchwallstreet.com/NASDAQ/pdf/old_listing_rules.pdf.
    \7\ Since the new rulebook was adopted, the practice of applying 
fees to all requests for hearings has continued.
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    Second, the proposed rule change restores the requirement that a 
denial of initial listing must be in writing in order to be eligible 
for review under Rule 5815. This requirement was also inadvertently 
deleted during the same re-write of the listing rules. As noted above, 
the definition in the prior rules of a ``Staff Determination,'' which 
could be appealed to the Panel, was ``a written determination by the 
Listing Department.'' This requirement helped assure that Staff has 
completed its review before a matter could proceed to the Panel, and 
that the Panel has formal documentation of Staff's concerns when it 
considers the matter, thereby allowing

[[Page 9971]]

the Panel to fully fulfill its investor protection mandates and allow 
companies a fair and substantive review process. Nasdaq proposes to 
restore this requirement to add transparency to the rules.
    Finally, the proposed rule change removes language in Rules 
5815(a)(3) and 5820 that describes fees that are no longer applicable. 
Nasdaq adopted new fees effective for companies that request review of 
a Staff Delisting Determination issued on or after January 2, 2013 or a 
Panel Decision issued on or after January 2, 2013. This rule change 
removes from the rule text the fees applicable before that date, 
because no companies are eligible to request review under the old fees.
2. Statutory Basis
    Nasdaq believes that the proposed rule change is consistent with 
the provisions of Section 6 of the Act,\8\ in general and with Sections 
6(b)(5) of the Act,\9\ in particular, in that it is designed to promote 
just and equitable principles of trade, to remove impediments to a free 
and open market and national market systems, and in general to protect 
investors and the public interest. The proposed amendment will provide 
clarity and reflect the legacy rule, which Nasdaq did not intend to 
modify, and the continued practice of applying fees to requests for all 
hearings and allowing appeals only of written decisions to deny initial 
inclusion. The proposed rule change will also conform the various parts 
of Rule 5815, thereby clarifying Nasdaq's rules to the benefit of 
investors and the public interest.
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    \8\ 15 U.S.C. 78f.
    \9\ 15 U.S.C. 78f(b)(4) and (5).
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    Nasdaq also believes that the proposed changes are consistent with 
Section 6(b)(7) of the Act,\10\ in that the proposed changes are 
consistent with the provision by the Exchange of fair procedures for 
the prohibition or limitation by the Exchange of any person with 
respect to access to services offered by the Exchange. In particular, 
Nasdaq believes that the clarifications about the availability and 
requirements for an appeal support a fair process designed to provide 
substantive review of formal determinations of Nasdaq.
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    \10\ 15. U.S.C. 78f(b)(7).
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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. The market for 
listing services is extremely competitive and listed companies may 
freely choose alternative venues. For this reason, Nasdaq does not 
believe that the proposed rule change will result in any burden on 
competition for listings.

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

    Written comments were n either solicited or received.

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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act \11\ and Rule 19b-4(f)(6) \12\ thereunder 
because the proposal does not: (i) Significantly affect the protection 
of investors or the public interest; (ii) impose any significant burden 
on competition; and (iii) by its terms, become operative for 30 days 
from the date on which it was filed, or such shorter time as the 
Commission may designate if consistent with the protection of investors 
and the public interest.\13\
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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(6).
    \13\ In addition, Rule 19b-4(f)(6)(iii) requires the Exchange to 
give the Commission written notice of the Exchange's 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 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.\14\
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    \14\ 15 U.S.C. 78s(b)(3)(C).
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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 email to rule-comments@sec.gov. Please include 
File Number SR-NASDAQ-2013-017 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-2013-017. This 
file number should be included on the subject line if email 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 
10:00 a.m. and 3:00 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-2013-017 and should 
be submitted on or before March 5, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-03107 Filed 2-11-13; 8:45 am]
BILLING CODE 8011-01-P