Document ID: SEC-2009-0465-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ Stock Market LLC
Posted Date: 2009-04-06T04:00Z

[Federal Register: April 6, 2009 (Volume 74, Number 64)]
[Notices]               
[Page 15561-15563]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr06ap09-139]                         

[[Page 15561]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59661; File No. SR-NASDAQ-2009-026]

 
Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Extend the Temporary Suspension of the Continued Listing Requirements 
Related to Bid Price and Market Value of Publicly Held Shares for 
Listing on the Nasdaq Stock Market Through July 19, 2009

March 31, 2009.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given 
that, on March 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 effecting a change described under Rule 19b-4(f)(6) 
under the Act,\4\ 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\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
    \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 to extend the temporary suspension of the 
application of the continued inclusion bid price and market value of 
publicly held shares requirements for listing on the Nasdaq Stock 
Market through July 19, 2009.

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 October 16, 2008, Nasdaq filed a proposed rule change, which was 
immediately effective, to temporarily suspend the bid price \5\ and 
market value of publicly held shares \6\ continued listing requirements 
otherwise applicable to issuers of common stock, preferred stock, 
secondary classes of common stock, shares or certificates of beneficial 
interest of trusts, limited partnership interests, American Depositary 
Receipts, and their equivalents.\7\ This suspension was designed to 
provide temporary relief to companies from the application of these 
requirements during a period in which the financial markets face almost 
unprecedented turmoil, resulting in a crisis in investor confidence and 
concerns about the proper functioning of the securities markets.\8\ On 
December 18, 2008, Nasdaq filed a proposed rule change to extend this 
suspension until April 19, 2009.\9\
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    \5\ Nasdaq's continued listing requirements relating to bid 
price are set forth in Rules 4310(c)(4), 4320(e)(2)(E)(ii), 
4450(a)(5), 4450(b)(4), and 4450(h)(3) and the related compliance 
periods are set forth in Rules 4310(c)(8)(D), 4320(e)(2)(E)(ii), and 
4450(e)(2). Nasdaq has proposed to reorganize and renumber these 
rules, effective April 13, 2009. See SR-NASDAQ-2009-018 (pending). 
Under these rules, a security is considered deficient if it fails to 
achieve at least a $1 closing bid price for a period of 30 
consecutive business days. Once deficient, Capital Market issuers 
are provided one automatic 180-day period to regain compliance. 
Thereafter, these issuers can receive an additional 180-day 
compliance period if they comply with all Capital Market initial 
inclusion requirements except bid price. Global Market issuers are 
also provided one automatic 180-day period to regain compliance, 
after which they can transfer to the Capital Market, if they comply 
with all Capital Market initial inclusion requirements except bid 
price, to take advantage of the second 180-day compliance period. A 
company can regain compliance by achieving a $1 closing bid price 
for a minimum of ten consecutive business days.
    \6\ Nasdaq's continued listing requirements relating to market 
value of publicly held shares are set forth in Rules 4310(c)(7), 
4320(e)(5), 4450(a)(2), 4450(b)(3) and 4450(h)(2) and the related 
compliance periods are set forth in Rules 4310(c)(8)(B) and 
4450(e)(1). Nasdaq has proposed to reorganize and renumber these 
rules, effective April 13, 2009. See SR-NASDAQ-2009-018 (pending). 
Under these rules, a security is considered deficient if it fails to 
achieve the minimum market value of publicly held shares requirement 
for a period of 30 consecutive business days. Thereafter, companies 
have a compliance period of 90 calendar days to achieve compliance 
by meeting the applicable standard for a minimum of ten consecutive 
business days.
    \7\ Securities Exchange Act Release No. 58809 (October 17, 
2008), 73 FR 63222 (October 23, 2008) (SR-NASDAQ-2008-082). One 
comment was submitted on this proposal by Alan F. Eisenberg, 
Executive Vice President, the Biotechnology Industry Organization. 
This comment supported the suspension and ``any efforts by the 
Commission and NASDAQ to extend [the suspension], as necessary, 
beyond the termination date of January 16, 2009.''
    \8\ See, e.g., Securities Exchange Act Release No. 58588 
(September 18, 2008), 73 FR 55174 (September 24, 2008) (``The 
Commission is aware of the continued potential of sudden and 
excessive fluctuations of securities prices and disruption in the 
functioning of the securities markets that could threaten fair and 
orderly markets. Given the importance of confidence in our financial 
markets as a whole, we have also become concerned about sudden and 
unexplained declines in the prices of securities. Such price 
declines can give rise to questions about the underlying financial 
condition of an issuer, which in turn can create a crisis of 
confidence without a fundamental underlying basis. This crisis of 
confidence can impair the liquidity and ultimate viability of an 
issuer, with potentially broad market consequences.'')
    \9\ Securities Exchange Act Release No. 59219 (January 8, 2009), 
74 FR 2640 (January 15, 2009) (SR-NASDAQ-2008-099).
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    Market conditions have not improved since the suspension began and, 
in fact, both the number of securities trading below $1 and the number 
of securities trading between $1 and $2 on Nasdaq has increased since 
the initial suspension. Nasdaq continues to believe that there was no 
fundamental change in the underlying business model or prospects for 
many of these companies, and that a decline in general investor 
confidence has resulted in depressed pricing for companies that 
otherwise remain suitable for continued listing. These same conditions 
continue to make it difficult for companies to successfully implement a 
plan to regain compliance with the price or market value of publicly 
held shares tests.\10\
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    \10\ In this regard, Nasdaq notes that the New York Stock 
Exchange recently filed, on an immediately effective basis, a 
proposed rule change to adopt a similar suspension for its $1 price 
requirement, lasting until June 30, 2009. Securities Exchange Act 
Release No. 59510 (March 4, 2009), 74 FR 10636 (March 11, 2009) (SR-
NYSE-2009-21).
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    Given these extraordinary market conditions, Nasdaq has determined 
that it is appropriate to continue the temporary suspension of the bid 
price and market value of publicly held shares requirements for an 
additional three months, until July 19, 2009. Under this proposal, 
companies would not be cited for new bid price or market value of 
publicly held shares deficiencies during the suspension period, and the 
time allowed to companies already in a compliance period or in the 
hearings process for bid price or market value of publicly held shares 
deficiencies would remain suspended with respect to those 
requirements.\11\ Following the

[[Page 15562]]

temporary suspension, any new deficiencies with the bid price or market 
value of publicly held shares requirements would be determined using 
data starting on July 20, 2009.\12\ When the suspension expires, 
companies that were in a compliance period as of October 16, 2008, when 
the suspension first began, would receive the balance of any pending 
compliance periods in effect at the time of the initial suspension.\13\ 
Similarly, companies that were in the Hearings process prior to October 
16, 2008, would resume in that process at the same stage they were in 
when the suspension first went into effect. Nasdaq will continue to 
monitor securities to determine if they regain compliance during the 
temporary suspension.
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    \11\ Nasdaq would continue to identify on its Web site and in 
its daily data feed to vendors those companies in a compliance 
period or in the hearings process as not satisfying the continued 
listing standards, unless the company regains compliance during the 
suspension. A company would continue to be subject to delisting for 
failure to comply with other listing requirements.
    \12\ Nasdaq would not consider the bid price or market value of 
publicly held shares for the period before or during the suspension 
with respect to a company that was not yet non-compliant with those 
requirements at the start of the suspension.
    \13\ For example, if a company was 120 days into its first 180-
day compliance period for a bid price deficiency when the suspension 
first started and the company does not regain compliance during the 
suspension, the company would have sixty days remaining, starting on 
July 20, 2009, to regain compliance. The company may be eligible for 
the second 180-day compliance period if it satisfies the conditions 
for the second compliance period at the conclusion of the first 
compliance period.
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    Nasdaq believes that extending the temporary suspension will permit 
companies to continue focusing on running their businesses, rather than 
satisfying market-based requirements that are largely beyond their 
control in the current environment. Moreover, this extension will allow 
investors to buy shares of some of these lower-priced securities 
without fear that the company will receive a delisting notification or 
be delisted in the very near term.\14\ Nasdaq will continue to monitor 
market conditions and consider whether it is appropriate to further 
extend the suspension.
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    \14\ As noted above, following the suspension, companies 
presently in the compliance process will remain at that same stage 
of the process.
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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,\15\ in general and with Section 
6(b)(5) of the Act,\16\ 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 remove uncertainty regarding the ability of companies to 
remain listed on Nasdaq during this especially turbulent market 
environment, thereby protecting investors, facilitating transactions in 
securities, and removing an impediment to a free and open market.
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    \15\ 15 U.S.C. 78f.
    \16\ 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.

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

    While written comments were not solicited about the proposed 
extension, there was one comment submitted by the Biotechnology 
Industry Organization on the original suspension of the bid price and 
market value of publicly held shares requirements, which supported the 
extension. That comment is described in footnote 6, above.

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

    The proposed rule change is effective upon filing pursuant to 
Section 19(b)(3)(A) of the Act and paragraph (f)(6) of Rule 19b-4 
thereunder, in that the proposed rule change: (i) Does not 
significantly affect the protection of investors or the public 
interest; (ii) does not impose any significant burden on competition; 
and (iii) does not become operative for 30 days after the date of the 
filing, or such shorter time as the Commission may designate if 
consistent with the protection of investors and the public interest; 
provided 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.\17\
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    \17\ 17 CFR 240.19b-4(f)(6). Pursuant to Rule 19b-4(f)(6)(iii) 
under the Act, the Exchange 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. 
The Exchange has satisfied this requirement.
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    Nasdaq believes that the proposed extension of the temporary 
suspension does not significantly affect the protection of investors or 
the public interest as it is a temporary measure designed to respond to 
extraordinary market conditions. Nasdaq also believes that the proposed 
extension of the temporary suspension will help protect investors and 
the public interest by allowing the management of listed companies to 
focus more on the successful operation of their businesses than on 
responding to market conditions that are entirely unpredictable at the 
present time and often completely out of the control of the company's 
management. Further, Nasdaq has previously imposed a similar temporary 
suspension following the events of September 11, 2001, when there were 
also extraordinary market conditions.\18\ As such, Nasdaq believes that 
it is appropriate to file this proposal for immediate effectiveness 
pursuant to Section 19(b)(3)(A) \19\ and Rule 19b-4(f)(6).\20\
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    \18\ Securities Exchange Act Release No. 44857 (September 27, 
2001), 66 FR 50485 (October 3, 2001) (SR-NASD-2001-61).
    \19\ 15 U.S.C. 78s(b)(3)(A).
    \20\ 17 CFR 240.19b-4(f)(6).
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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-2009-026 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.

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    All submissions should refer to File Number SR-NASDAQ-2009-026. 
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 available publicly. All submissions should refer to 
File Number SR-NASDAQ-2009-026 and should be submitted on or before 
April 27, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\21\
Florence E. Harmon,
Deputy Secretary.
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    \21\ 17 CFR 200.30-3(a)(12).
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 [FR Doc. E9-7631 Filed 4-3-09; 8:45 am]

BILLING CODE 8010-01-P