Document ID: SEC-2007-1022-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: NASDAQ Stock Market LLC
Posted Date: 2007-07-30T04:00Z

[Federal Register: July 30, 2007 (Volume 72, Number 145)]
[Notices]               
[Page 41561-41563]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr30jy07-87]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56120; File No. SR-NASDAQ-2007-060]

 
Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
and Amendment No. 1 Thereto To Extend Nasdaq's Authority Under Its 
Cease and Desist Pilot Program

Date: July 24, 2007.
    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 June 19, 2007, 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 
substantially prepared by Nasdaq. Nasdaq has filed the proposal as a 
``non-controversial'' rule change pursuant to section 19(b)(3)(A) of 
the

[[Page 41562]]

Act \3\ and Rule 19b-4(f)(6) thereunder,\4\ which renders the proposal 
effective upon filing with the Commission. On July 20, 2007, Nasdaq 
filed Amendment No. 1 to the proposed rule change. The Commission is 
publishing this notice to solicit comments on the proposed rule change, 
as amended, from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 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 a rule change to extend for a two-year period, to 
June 23, 2009, Nasdaq's authority under its cease and desist pilot 
program. At this time, Nasdaq is not proposing any substantive changes 
to the rules covered by the pilot program. The text of the proposed 
rule change is available at Nasdaq, the Commission's Public Reference 
Room, and http://nasdaq.complinet.com.

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
    In May 2003, the Commission approved, on a pilot basis, a rule 
change that gave the National Association of Securities Dealers, Inc. 
(``NASD'') the authority to issue temporary cease and desist orders and 
made explicit NASD's ability to impose permanent cease and desist 
orders as a remedy in disciplinary cases.\5\ When Nasdaq registered as 
a national securities exchange, it also adopted a cease and desist 
program. Because NASD is Nasdaq's regulatory services provider and 
administers Nasdaq's disciplinary program under contract, Nasdaq 
generally seeks to maintain comparability between its disciplinary 
procedure rules and NASD's. NASD recently extended the above mentioned 
pilot rule through June 23, 2009.\6\ Accordingly, Nasdaq is proposing a 
comparable extension. Although Nasdaq has not had occasion to use the 
authority to date, the pilot extension will ensure that the authority 
remains available for the next two years. The authority under the rule 
will expire after the additional two-year period unless the pilot 
program is further extended or adopted on a permanent basis with 
Commission approval. Nasdaq is also amending Nasdaq Rules 9556 and 9800 
to delete erroneous cross-references.
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    \5\ See Securities Exchange Act Release No. 47925 (May 23, 
2003), 68 FR 33548 (June 4, 2003) (SR-NASD-98-80).
    \6\ See Securities Exchange Act Release No. 55819 (May 25, 
2007), 72 FR 30895 (June 4, 2007) (SR-NASD-2007-033).
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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,\7\ in general, and with 
sections 6(b)(5) and (6) of the Act,\8\ in particular, in that the 
proposal is designed to prevent fraudulent and manipulative acts and 
practices, to promote just and equitable principles of trade, and, in 
general, to protect investors and the public interest, and is further 
designed to provide that Nasdaq members, or persons associated with its 
members, are appropriately disciplined for violations of any provisions 
of the Act or Nasdaq rules. The extension of the pilot program is 
consistent with Nasdaq's obligations under the Act, because cease and 
desist orders are designed to stop violative conduct that is likely to 
cause dissipation or conversion of assets or other significant harm to 
investors.
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    \7\ 15 U.S.C. 78f.
    \8\ 15 U.S.C. 78f(b)(5) and (6).
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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 that is 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

    Written comments on the proposed rule change 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) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to section 19(b)(3)(A) of the Act \9\ and Rule 19b-
4(f)(6) thereunder.\10\ 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.
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6).
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    Nasdaq has requested that the Commission waive the 5-day pre-filing 
notice requirement and the 30-day operative delay of the proposal. 
Nasdaq represents that such waivers will allow Nasdaq to implement the 
proposed rule change prior to the time of the expiration of the current 
pilot. The Commission believes that it is consistent with the 
protection of investors and the public interest to waive the 5-day pre-
filing notice requirement and 30-day operative delay and make this 
proposed rule change immediately effective.\11\ The Commission believes 
that the waiver will allow Nasdaq to continue, without interruption, 
the existing operation of the pilot until June 23, 2009.
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    \11\ For purposes only of waiving the 30-day operative delay of 
this proposal, the Commission has considered the proposed rule's 
impact on efficiency, competition, and capital formation. 15 U.S.C. 
78c(f).
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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 e-mail to rule-comments@sec.gov. Please include 

File Number SR-NASDAQ-2007-060 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, 100 F. Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-NASDAQ-2007-060. This 
file number should be included on the subject line if e-mail is used. 
To help the

[[Page 41563]]

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 Nasdaq. 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-2007-060 and should be submitted 
on or before August 20, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-14605 Filed 7-27-07; 8:45 am]

BILLING CODE 8010-01-P