Document ID: SEC-2007-1216-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: NASDAQ Stock Market LLC
Posted Date: 2007-08-30T04:00Z

[Federal Register: August 30, 2007 (Volume 72, Number 168)]
[Notices]               
[Page 50151-50152]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr30au07-67]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56313; File No. SR--NASDAQ-2007-074]

 
Self-Regulatory Organizations; The NASDAQ Stock Market, LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change to 
Require Certain Companies to Notify Nasdaq About Any Quarterly Change 
in the Number of Outstanding Shares

August 23, 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 August 23, 2007, 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, which items have been substantially prepared by Nasdaq. Nasdaq has 
designated the proposed rule change as constituting a ``non-
controversial'' rule change under paragraph (f)(6) of Rule 19b-4,\3\ 
which renders the proposal effective upon receipt of this filing by the 
Commission.\4\ 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\ CFR 240.19b-4(f)(6).
    \4\ 17 CFR 240.19b-4(f)(6)(iii).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Nasdaq proposes to clarify that when a company is delinquent in a 
periodic report, Nasdaq will assess the listing of additional shares 
fee based on the number of shares the company tells Nasdaq it has 
issued during the period.
    The text of the proposed rule change is available on the Exchange's 
Web site (http://www.nasdaq.com), at the Exchange's Office of the 

Secretary, and at the Commission's Public Reference Room.

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
    The Commission has previously approved fees for the listing of 
additional shares by domestic Nasdaq-listed companies. Pursuant to 
Nasdaq rules, these fees are calculated and assessed quarterly based on 
the company's total shares outstanding as reported on its periodic 
reports filed with the Commission.
    Some Nasdaq companies have recently become delinquent in filing 
their periodic reports with the Commission, primarily due to 
investigations into their accounting for stock option grants. 
Nonetheless, these companies may continue to issue additional shares. 
Because the existing rule uses a company's public filings to determine 
the quarterly change in shares outstanding, Nasdaq has been unable to 
assess additional share fees on these issuers that have not filed 
periodic reports with the Commission. In order to timely assess and 
collect the applicable fee in this situation, Nasdaq proposes to modify 
its rules such that a delinquent company must self-report the change in 
shares outstanding while it is delinquent. Nasdaq will assess fees 
based on this reported change in shares outstanding and will reconcile 
the fee charged with the actual fee due, once the filings are made with 
the Commission. Nasdaq notes that the proposed rule change has no 
impact on Nasdaq's substantive requirement that companies timely file 
required periodic

[[Page 50152]]

reports with the Commission,\5\ and only concerns Nasdaq's ability to 
timely and accurately compute fees. Nasdaq's acceptance of the change 
in number of shares outstanding pursuant to the proposed rule change 
shall not be construed as a finding by Nasdaq that the issuer is 
compliant with the timely filing requirement. Any company that fails to 
timely file such a report would be reviewed pursuant to the procedures 
described in the Rule 4800 Series.
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    \5\ See, e.g., Nasdaq Rules 4310(c)(14) and 4320(e)(12).
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2. Statutory Basis
    Nasdaq believes that the proposed rule change is consistent with 
the provisions of Section 6(b)(5) of the Act \6\ in that the proposal 
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 change would allow Nasdaq to timely and accurately bill 
companies for their issuances of additional shares.
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    \6\ 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 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, the proposed rule change has 
become effective pursuant to Section 19(b)(3)(A) of the Act \7 \and 
Rule 19b-4(f)(6) thereunder.\8\
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    \7\ 15 U.S.C. 78s(b)(3)(A).
    \8\ 17 CFR 240.19b-4(f)(6). Pursuant to Rule 19b-4(f)(6)(iii) 
under the Exchange 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 the five-day pre-filing 
requirement.
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    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act \9\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \10\ permits the 
Commission to designate a shorter time if such action is consistent 
with the protection of investors and the public interest. The Exchange 
has requested that the Commission waive the 30-day operative delay. The 
Commission hereby grants the request.\11\ The proposed rule change will 
allow Nasdaq to assess additional share fees on companies that have are 
late in filing a periodic report with the Commission by requiring those 
filers to self-report the number of shares outstanding.\12\
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    \9\ 17 CFR 240.19b-4(f)(6).
    \10\ 17 CFR 240.19b-4(f)(6)(iii).
    \11\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. 15 U.S.C. 78c(f).
    \12\ The Commission notes that, as Nasdaq has stated, Nasdaq's 
acceptance of such updated share figures should not be construed as 
a finding by Nasdaq that the issuer is compliant with the timely 
filing requirement and only concerns Nasdaq's ability to timely and 
accurately compute fees. Any company that fails to timely file such 
a report would continue to be reviewed pursuant to the procedures 
described in the Nasdaq's 4800 Series Rules.
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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-2007-074 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, Station Place, 100 F 
Street, NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-NASDAQ-2007-074. 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 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-2007-074 and 
should be submitted on or before September 20, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
[FR Doc. E7-17175 Filed 8-29-07; 8:45 am]

BILLING CODE 8010-01-P