Document ID: SEC-2009-1643-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Require That Companies Provide Nasdaq
Posted Date: 2009-11-23T05:00Z

[Federal Register: November 23, 2009 (Volume 74, Number 224)]
[Notices]               
[Page 61186-61189]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr23no09-100]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61000; File No. SR-NASDAQ-2009-094]

 
Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Require That Companies Provide Nasdaq With at Least Ten Minutes Prior 
Notification When Releasing Material Information and Eliminate a 
Potential Inconsistency With Commission Guidance on the Use of Company 
Websites To Satisfy Public Disclosure Requirements

November 16, 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 November 5, 2009, The NASDAQ Stock Market LLC (``Nasdaq'' or 
the ``Exchange'') 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 effecting a change described 
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 require, rather than recommend, that Nasdaq-
listed companies provide Nasdaq with at least ten minutes prior 
notification when releasing material information. In addition, Nasdaq 
proposes to modify rule language that may be inconsistent with 
Commission guidance on the use of company websites to satisfy public 
disclosure requirements. The proposed rule change, which is immediately 
effective, shall become operative on December 7, 2009.
    The text of the proposed rule change is below. Proposed new 
language is in italics; proposed deletions are in brackets.\4\
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    \4\ Changes are marked to the rule text that appears in the 
electronic manual of Nasdaq found at http://
nasdaqomx.cchwallstreet.com.
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* * * * *
5250. Obligations for Companies Listed on The Nasdaq Stock Market
    (a) No change.
    (b) Obligation to Make Public Disclosure.
    (1) Except in unusual circumstances, a Nasdaq-listed Company shall 
make prompt disclosure to the public through any Regulation FD 
compliant method (or combination of methods) of disclosure of any 
material information that would reasonably be expected to affect the 
value of its securities or influence investors' decisions. The Company 
shall, prior to the release of the information, provide notice of such 
disclosure to Nasdaq's MarketWatch Department at least ten minutes 
prior to public announcement if the information involves any of the 
events set forth in IM-5250-1. As described in IM-5250-1, prior notice 
to the MarketWatch Department [should] must be made through the 
electronic disclosure submission system available at www.nasdaq.net, 
except in emergency situations.
    (2)-(3) No change.
    (c)-(f) No change.

[[Page 61187]]

IM-5250-1. Disclosure of Material Information
    Rule 5250(b)(1) requires that, except in unusual circumstances, 
Nasdaq Companies disclose promptly to the public through any Regulation 
FD compliant method (or combination of methods) of disclosure any 
material information that would reasonably be expected to affect the 
value of their securities or influence investors' decisions. Nasdaq 
Companies must notify Nasdaq at least ten minutes prior to [in the 
manner described below of] the release to the public of [such] material 
information that involves any of the events set forth below [prior to 
its release to the public]. [Nasdaq recommends that Nasdaq Companies 
provide such notification at least ten minutes before such release.] 
Under unusual circumstances Companies may not be required to make 
public disclosure of material events; for example, where it is possible 
to maintain confidentiality of those events and immediate public 
disclosure would prejudice the ability of the Company to pursue its 
legitimate corporate objectives. However, Nasdaq Companies remain 
obligated to disclose this information to Nasdaq upon request pursuant 
to Rule 5250(a).
    Paragraph 2. No change.
Notification to Nasdaq MarketWatch Department
    Nasdaq Companies must notify Nasdaq's MarketWatch Department prior 
to the distribution of certain material news at least ten minutes prior 
to public announcement of the news. Except in emergency situations, 
this notification must be made through Nasdaq's electronic disclosure 
submission system available at www.nasdaq.net. In emergency situations, 
Companies [shall] may instead provide notification by telephone or 
facsimile. Examples of an emergency situation include: lack of computer 
or internet access; technical problems on either the Company or Nasdaq 
system or an incompatibility between those systems; and a material 
development such that no draft disclosure document exists, but 
immediate notification to MarketWatch is important based on the 
material event.
    If a Nasdaq Company repeatedly fails to either notify Nasdaq at 
least ten minutes prior to the distribution of material news, or 
repeatedly [fail] fails to use the electronic disclosure submission 
system when Nasdaq finds no emergency situation existed, Nasdaq may 
issue a Public Reprimand Letter (as defined in Rule 5805(j)) or, in 
extreme cases, a Staff Delisting Determination (as defined in Rule 
5805(h)). In determining whether to issue a Public Reprimand Letter, 
Nasdaq will consider whether the Company has demonstrated a pattern of 
failures, whether the Company has been contacted concerning previous 
violations, and whether the Company has taken steps to assure that 
future violations will not occur.
Trading Halts
    Paragraphs 1-3. No change.
    Companies are required to notify the MarketWatch Department of the 
release of material information included in the following list of 
events at least ten minutes prior to the release of such information to 
the public. It should also be noted that every development that might 
be reported to Nasdaq in these areas would not necessarily be deemed to 
warrant a trading halt. In addition to the following list of events, 
Nasdaq encourages Companies to avail themselves of the opportunity for 
advance notification to the MarketWatch Department in situations where 
they believe, based upon their knowledge of the significance of the 
information, that a temporary trading halt may be necessary or 
appropriate.
    (a)-(h) No change.
Use of Regulation FD Compliant Methods in the Disclosure of Material 
Information
    Regardless of the method of disclosure that a Company chooses to 
use, Companies are required to notify the MarketWatch Department of the 
release of material information that involves any of the events set 
forth above at least ten minutes prior to its release to the public. 
[Nasdaq recommends that Companies provide such notification at least 
ten minutes before such release.] When a Company chooses to utilize a 
Regulation FD compliant method for disclosure other than a press 
release or Form 8-K, the Company will be required to provide prior 
notice to the MarketWatch Department of: (1) The press release 
announcing the logistics of the future disclosure event; and (2) a 
descriptive summary of the material information to be announced during 
the disclosure event if the press release does not contain such a 
summary.
    Depending on the materiality of the information and the anticipated 
effect of the information on the price of the Company's securities, the 
MarketWatch Department may advise the Company that a temporary trading 
halt is appropriate to allow for full dissemination of the information 
and to maintain an orderly market. The MarketWatch Department will 
assess with Companies using methods of disclosure other than a press 
release or Form 8-K the timing within the disclosure event when the 
Company will cover the material information so that the halt can be 
commenced accordingly. Companies will be responsible for promptly 
alerting the MarketWatch Department of any significant changes to the 
previously outlined disclosure timeline. Companies are reminded that 
the posting of information on [its own] the company's Web site [is] may 
not by itself be considered a sufficient method of public disclosure 
under Regulation FD and SEC guidance and releases thereunder, and as a 
result, under Nasdaq rules.
* * * * *

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
    Pursuant to Rule 5250(b)(1) and IM-5250-1, a Nasdaq-listed company 
is required, except in unusual circumstances, to make prompt disclosure 
to the public through any Regulation FD compliant method (or 
combination of methods) of disclosure of any material information that 
would reasonably be expected to affect the value of its securities or 
influence investors' decisions. These rules also require the company 
to, prior to the release of the information; provide notice of such 
disclosure to Nasdaq's MarketWatch Department if the information 
involves any of the events set forth in IM-5250-1. This prior notice, 
which must be made through the electronic disclosure submission system 
available at http://www.nasdaq.net, except in emergency situations, 
allows the MarketWatch Department to assess whether it is appropriate 
to implement a trading halt to allow full

[[Page 61188]]

dissemination of the news by the public and to maintain an orderly 
trading market.\5\ IM-5250-1 currently provides that Nasdaq recommends 
companies provide such notification at least ten minutes before 
release.
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    \5\ See Rule 4120 for the Exchange's procedures with respect to 
trading halts pending dissemination of material news.
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    Nasdaq proposes to amend Rule 5250(b)(1) and IM-5250-1 to require 
notification to the Exchange of such announcements at least ten minutes 
prior to public release. Nasdaq believes that mandating pre-
notification ten minutes before public release of news is appropriate 
to enable the Exchange to consider whether trading in the security 
should be temporarily halted.\6\
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    \6\ The proposed ten-minute pre-notification requirement is 
consistent with Section 202.06(B) of the NYSE Listed Company Manual, 
which requires that a company notify the NYSE ten minutes prior to 
announcing material information.
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    The proposed rule change also modifies language in IM-5250-1 that, 
as currently written, may be inconsistent with an interpretive release 
recently published by the Commission providing guidance on the use of 
company websites.\7\ Under that guidance, the posting of information on 
a company website could be considered a sufficient method of public 
disclosure under Regulation FD. The language currently contained in IM-
5250-1 indicates that a website posting alone does not by itself 
satisfy the public disclosure requirements of Regulation FD. Nasdaq 
proposes to modify this language to instead provide that a Web site 
posting alone may not by itself satisfy those requirements. Finally, 
the proposed rule change would make non-substantive changes to Rule 
5250(b)(1) and IM-52501-1 to clarify the language of those rules and 
reinforce the existing requirement for electronic notification to 
Nasdaq.
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    \7\ See Securities Exchange Act Release No. 58288 (August 1, 
2008), 73 FR 45862 (August 7, 2008) (Commission Guidance on the Use 
of Company Web Sites).
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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,\8\ in general and with Section 
6(b)(5) of the Act,\9\ in particular. The proposed change would enhance 
Nasdaq's ability to conduct timely reviews of company disclosures and 
will eliminate an inconsistency between Nasdaq's rules and guidance set 
forth by the Commission, thereby facilitating the operation of a free 
and open market, and protecting investors and the public interest.
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    \8\ 15 U.S.C. 78f.
    \9\ 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 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) 
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; provided that the 
self-regulatory organization has given 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,\10\ it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \11\ and Rule 19b-
4(f)(6) thereunder.\12\
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    \10\ 17 CFR 240.19b-4(f)(6). The Exchange has satisfied this 
requirement.
    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(6).
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    The proposed rule change to require ten minutes prior notification 
of material news is closely modeled after similar rules of another 
national securities exchange \13\ and therefore Nasdaq believes that it 
does not significantly affect the protection of investors or the public 
interest or raise any novel or significant regulatory issues. The 
proposed rule change to modify text discussing the use of a company 
website as a Regulation FD method of disclosure is designed to 
eliminate an inconsistency with guidance published by the Commission 
\14\ and therefore Nasdaq believes that it also does not significantly 
affect the protection of investors or the public interest or raise any 
novel or significant regulatory issues.
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    \13\ Section 202.06(B) of the NYSE Listed Company Manual, supra, 
note 6.
    \14\ Commission Guidance on the Use of Company Web Sites, supra, 
note 7.
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission may summarily abrogate the 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-2009-094 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-2009-094. 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, on official 
business days between the hours of 10 a.m. and 3 p.m. Copies of the 
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

[[Page 61189]]

available publicly. All submissions should refer to File Number SR-
NASDAQ-2009-094 and should be submitted on or before December 14, 2009.

    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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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-27998 Filed 11-20-09; 8:45 am]

BILLING CODE 8011-01-P