Document ID: SEC-2018-0329-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE American, LLC
Posted Date: 2018-02-23T05:00Z

[Federal Register Volume 83, Number 37 (Friday, February 23, 2018)]
[Notices]
[Pages 8132-8134]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-03697]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82737; File No. SR-NYSEAMER-2018-04]

Self-Regulatory Organizations; NYSE American LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Amend Its 
Listing Standard for Warrants in Section 105 of the NYSE American 
Company Guide

February 16, 2018.
    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 February 6, 2018, NYSE American LLC (``NYSE American'' or the 
``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``Commission'') the proposed rule change as described in 
Items I and II below, which Items have been prepared by the Exchange. 
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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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend its listing standard for warrants as 
set forth in Section 105 of the NYSE American Company Guide (the 
``Company Guide'') to provide that any reduction in the exercise price 
of a listed warrant must be widely publicized and must continue in 
effect for at least 20 business days \3\ (or such longer period as may 
be required under the tender offer rules of the Securities and Exchange 
Commission (``SEC'' or ``Commission'')) and otherwise comply with any 
other applicable tender offer regulatory provisions under the federal 
securities laws, including Section 13(e) \4\ of the Act and Rule 13e-4 
\5\ under the Act. The proposed rule change is available on the 
Exchange's website at www.nyse.com, at the principal office of the 
Exchange, and at the Commission's Public Reference Room.
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    \3\ The term ``business day'' is used as defined in Rule 14d-
1(g)(3) under the Act (17 CFR 240.14d-1(g)(3)).
    \4\ 15 U.S.C. 78m(e).
    \5\ 17 CFR 240.13e-4.
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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 self-regulatory organization 
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 those 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 parts of such statements.

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

1. Purpose
    The Exchange proposes to amend its listing standard for warrants as 
set forth in Section 105 of the Company Guide to provide that any 
reduction in the exercise price of a listed warrant must be widely 
publicized and must continue in effect for at least 20 business days 
(or such longer period as may be required under the tender offer rules 
of the Securities and Exchange Commission (``SEC'' or ``Commission'')) 
and otherwise comply with any other applicable tender offer regulatory 
provisions under the federal securities laws, including Section 13(e) 
of the Act and Rule 13e-4 under the Act.
    Section 105 currently provides that the issuer of a listed warrant 
may reduce the exercise price of such warrant provided that in doing so 
it establishes a minimum period of ten business days within which such 
price reduction will be in effect.\6\ The Exchange now proposes to 
amend this provision so that it will be consistent with the tender 
offer regulatory provisions applicable under the federal securities 
laws and SEC rules.\7\
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    \6\ Section 105 in its current form was approved in Securities 
Exchange Act Release No. 22777 (January 8, 1986); 51 FR 2613 
(January 17, 1986).
    \7\ The proposed amendment will conform the rule to changes 
recently adopted by the NYSE in its own warrant listing standard. 
See Securities Exchange Act Release No. 82566 (SR-NYSE-2018-04) 
(January 22, 2018).
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    A reduction in the exercise price of publicly-traded warrants for a 
limited time period is deemed to be a tender offer by the SEC staff and 
is therefore subject to the requirements of the SEC's tender offer 
rules as set forth in Regulation 14E under the Act.\8\ SEC Rule 14e-
1(a) \9\ requires that any tender offer subject to Regulation 14E be 
held

[[Page 8133]]

open for at least 20 business days. SEC Rule 14e-1(b) \10\ provides for 
certain circumstances in which a tender offer period must be extended 
beyond that initial 20 business day period. Rule 14e-1(c) \11\ under 
the Act requires securityholders to be paid promptly after tendering 
their securities into a tender offer. In addition, all tender offers 
for listed warrants will be subject to Section 13(e) of the Act, Rule 
13e-4 under the Act, Section 14(e) \12\ of the Act, and Regulation 14E 
under the Act.
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    \8\ 17 CFR 240.14e-1 et seq.
    \9\ 17 CFR 240.14e-1(a).
    \10\ 17 CFR 240.14e-1(b).
    \11\ 17 CFR 240.14e-1(c).
    \12\ 15 U.S.C. 78n(e).
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    The Exchange proposes to require the issuer of any warrant which 
gives the issuer the right, at its discretion, to reduce the exercise 
price of the warrant for periods of time, or from time to time, to 
undertake to comply with any applicable tender offer regulatory 
provisions under the federal securities laws, including a minimum 
period of 20 business days within which such price reduction will be in 
effect (or such longer period as may be required under the SEC's tender 
offer rules). In addition to ensuring compliance with applicable laws 
and regulations, the Exchange believes that the proposed 20 business 
day minimum notice requirement would ensure that warrant holders have a 
reasonable amount of time to consider the advisability of exercising 
their warrants during the period in which the reduced exercise price is 
in effect and that warrant holders will therefore not be under 
unreasonable pressure to make a hasty, ill-informed investment 
decision.
    The Exchange proposes to require that any listed company that 
reduces the exercise price of listed warrants announce that fact in a 
manner consistent with the Exchange's policies with respect to the 
dissemination of material news as set forth in Sections 401 and 402 of 
the Company Guide. The Exchange believes that this requirement would 
give all warrant holders appropriate notice and the ability to avail 
themselves of the lower exercise price if they so desire.
    The Exchange has interpreted the provision with respect to 
repricings in Section 105 broadly as restricting the taking of any 
other action which has the same economic effect as a reduction in the 
exercise price of the warrant.\13\ For the avoidance of doubt, the 
Exchange now proposes to include a statement to that effect in the 
proposed amended rule text.
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    \13\ For example, the Exchange would view an exchange of common 
stock for outstanding warrants as a transaction restricted by the 
rule if the economic benefit to the warrant holder of participating 
in the exchange was effectively the same as the benefit to the 
holder of exercising the warrants at a reduced exercise price. 
Similarly, an increase in the number of shares for which a warrant 
is exercisable without a related increase in the warrant exercise 
price is economically equivalent to a reduction in the exercise 
price.
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    Section 105 currently provides that the repricing policy set forth 
therein will not preclude the listing of warrant issues for which 
regularly scheduled and specified changes in the exercise price have 
been previously established. The Exchange proposes to clarify this 
provisions by specifying that it relates specifically to regularly 
scheduled and specified changes in the exercise price that have been 
previously established at the time of original issuance of the 
warrants.
    The Exchange also proposes to make revisions to Section 105 to 
update references to the names of the Exchange and the NASDAQ Stock 
Exchange to reflect their current names.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) \14\ of the Act, in general, and furthers the 
objectives of Section 6(b)(5) of the Act,\15\ in particular in that it 
is designed 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.
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    \14\ 15 U.S.C. 78f(b).
    \15\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposed amendment is consistent 
with the investor protection objectives of Section 6(b)(5) because: (i) 
The proposed requirement that the price reduction must stay in effect 
for 20 business days or such longer period as required by the SEC's 
tender offer rules would give the warrant holders a reasonable amount 
of time to consider the advisability of exercising their warrants 
during the period in which the reduced exercise price was in effect and 
warrant holders would therefore not be under unreasonable pressure to 
make a hasty, ill-informed investment decision; and (ii) the proposed 
requirement that any listed company that reduces the exercise price of 
listed warrants must announce that fact in a manner consistent with the 
Exchange's material news dissemination policies would give all warrant 
holders appropriate notice and the ability to avail themselves of the 
lower exercise price if they so desired.
    The requirement that any warrant repricing under the proposed 
amendment must be held open for at least 20 business days (or such 
longer period as is required under the SEC's tender offer rules) and 
that the company must undertake to comply with applicable tender offer 
regulatory provisions would ensure that any warrant repricing under the 
proposed amendment would be in compliance with Section 13(e) of the 
Act, Rule 13e-4 under the Act, Section 14(e) of the Act, and Regulation 
14E under the Act.
    The addition to the rule of language stating that the Exchange will 
apply its requirements with respect to warrant re-pricings to the 
taking of any other action that has the same economic effect as a 
reduction in the exercise price of a listed warrant is consistent with 
the Act as it simply codifies a longstanding interpretation of the rule 
by the Exchange.
    The amendment to the rule to specify that the repricing provision 
is not applicable to regularly scheduled and specified changes in the 
exercise price that have been previously established at the time of 
original issuance of the warrants is a clarification of the rule that 
is consistent with the way it is currently implemented and is therefore 
non-substantive in nature. Similarly, the updating of the names used in 
the rule for NYSE American and the NASDAQ Stock Market is non-
substantive in nature.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purpose of the Act. The purpose of the proposed 
rule change is to impose additional limitations on the circumstances 
under which listed companies may adjust the exercise price of listed 
warrants, including by requiring any such repricing to be conducted in 
a manner that is consistent with the SEC's tender offer rules. As such, 
the Exchange believes the proposed rule change does not impose any 
burden on competition.

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

    No written comments were solicited or received with respect to the 
proposed rule change.

[[Page 8134]]

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

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A) of the Act \16\ and Rule 19b-4(f)(6) thereunder.\17\ 
Because the 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 and Rule 19b-4(f)(6) thereunder.\18\
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    \16\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \17\ 17 CFR 240.19b-4(f)(6).
    \18\ In addition, Rule 19b-4(f)(6)(iii) requires a self-
regulatory organization 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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    At any time within 60 days of the filing of such 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.

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 [email protected]. Please include 
File Number SR-NYSEAMER-2018-04 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NYSEAMER-2018-04. 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 website (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 website 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. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-NYSEAMER-2018-04, and should be 
submitted on or before March 16, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
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    \19\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-03697 Filed 2-22-18; 8:45 am]
 BILLING CODE 8011-01-P