Document ID: SEC-2023-0308-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Long-Term Stock Exchange, Inc.
Posted Date: 2023-03-17T04:00Z

[Federal Register Volume 88, Number 52 (Friday, March 17, 2023)]
[Notices]
[Pages 16487-16491]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-05442]

[[Page 16487]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-97123; File No. SR-LTSE-2023-01]

Self-Regulatory Organizations; Long-Term Stock Exchange, Inc.; 
Notice of Filing of Proposed Rule Change, as Modified by Amendment No. 
1, To Establish Listing Standards Related To Recovery of Erroneously 
Awarded Incentive-Based Executive Compensation

March 13, 2023.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on February 27, 2023, Long-Term Stock Exchange, Inc. (``LTSE'' or 
the ``Exchange'') filed with the Securities and Exchange Commission 
(the ``Commission'') the proposed rule change. On March 9, 2023, the 
Exchange filed Amendment No. 1 to the proposed rule change, which 
superseded and replaced the proposed rule change in its entirety. The 
proposed rule change, as modified by Amendment No. 1, is 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, as modified by Amendment No. 1, 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

    LTSE is filing with the Commission a proposed rule change as 
modified by Amendment No. 1 \3\ to adopt Listing Standards for the 
Recovery of Erroneously Awarded Compensation, as required by Rule 10D-1 
of the Act.\4\ The text of the proposed rule change is available at the 
Exchange's website, at https://longtermstockexchange.com, at the 
principal office of the Exchange, and at the Commission's public 
reference room.
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    \3\ This Amendment No. 1 to the rule filing SR-LTSE-2023-01 
replaces SR-LTSE-2023-01 as originally filed on February 27, 2023 
and supersedes that filing in its entirety.
    \4\ 17 CFR 240-10D-1.
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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 Exchange 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. The Exchange 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 on the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange is filing this amendment to SR-LTSE-2023-01 
(``Amendment 1'') in order to (i) clarify the purpose and rationale of 
the proposed rule change; and (ii) make technical changes to improve 
the structure and clarity of the proposed rules. This Amendment 1 
supersedes and replaces the initial rule proposal in its entirety (the 
``Initial Proposal'').
    LTSE filed the Initial Proposal with the Commission on February 27, 
2023 pursuant to the provisions of Section 19(b)(1) under the 
Securities Exchange Act of 1934 (``Act''),\5\ and Rule 19b-4 \6\ 
thereunder, proposing rule changes to establish listing standards for 
the recovery of erroneously awarded executive compensation as required 
by Rule 10D-1 of the Act.\7\
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    \5\ 15 U.S.C. 78s(b)(1).
    \6\ 17 CFR 240-19b-4.
    \7\ 17 CFR 240-10D-1.
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    The Exchange is proposing amendments to Chapter 14 of its rules 
(LTSE Listing Rules) to establish listing standards for the recovery of 
erroneously awarded executive compensation as required by Rule 10D-1 
and to address situations where a listed company has not complied with 
Rule 10D-1 and the Exchange's listing standards established pursuant 
thereto.
    The Exchange proposes to amend Rule 14.203, Prerequisites for 
Applying to List on the Exchange, by adding new paragraph (j), which 
will require that all Companies listing on LTSE must, as required by 
Rule 10D-1, comply with the requirements of proposed Rule 14.207(f), 
Recovery of Erroneously Awarded Compensation to Executive Officers.
    The Exchange is further proposing to amend LTSE Rules 14.207, 
Obligations for Companies Listed on the Exchange, paragraph (f), to 
establish ``Listing Standards for the Recovery of Erroneously Awarded 
Compensation.'' The current text of paragraph (f) of Rule 14.207 will 
be repositioned into a new paragraph (g).
    On October 26, 2022, the Commission adopted a new rule and rule 
amendments \8\ to implement Section 954 of the Dodd-Frank Wall Street 
Reform and Consumer Protection Act of 2010 (the ``Dodd Frank Act''),\9\ 
which added Section 10D to the Act. This final Rule 10D-1 adopted by 
the Commission directs national securities exchanges and associations 
that list securities to establish listing standards that require each 
issuer to adopt, comply with, and disclose a written policy providing 
for the reasonably prompt recovery, in the event of required accounting 
restatement, of incentive-based compensation received by current or 
former executive officers during the three fiscal years preceding the 
date on which the issuer is required to prepare an accounting 
restatement to correct a material error. As required by Rule 10D-1 and 
proposed Rule 14.207(f) titled ``Recovery of Erroneously Awarded 
Compensation to Executive Officers,'' any Company listed on LTSE must 
adopt a compensation recovery policy, comply with that policy, and 
provide the required disclosures.
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    \8\ See, Release Nos. 33-11126; 34-96159; IC-34732; File No. S-
7-12-15; 87 FR 73076 (November 28, 2022).
    \9\ 2 Public Law No. 111-203, 124 Stat. 1900 (2010).
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    Additionally, as explained in the Rule 10D-1 adopting release \10\ 
(the ``Adopting Release''), each listed issuer is required to file its 
written recovery policies as exhibits to its annual report; indicate, 
by check boxes on the annual reports, whether the financial statements 
included in the filing contain a correction of an error in previously-
issued financial statements and whether any of the reported error 
corrections constitute restatements that required a recovery analysis 
under the issuer's recovery policies; and finally, to disclose any 
actions taken through the application of the recovery policies.
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    \10\ Securities Exchange Act Release No. 96159 (October 26, 
2022), 87 FR 73076 (November 28, 2022).
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    Rule 10D-1 requires that issuers recover reasonably promptly the 
amount of erroneously-awarded executive compensation. Compliance by an 
issuer with this obligation will be reviewed in the context of each 
accounting restatement prepared by the issuer, and will include the 
means used to seek recovery and whether such means are appropriate 
based on the discrete circumstances of each executive officer who is 
determined to be subject to recovery of erroneously awarded 
compensation.
    Rule 10D-1 became effective on January 27, 2023; national 
securities exchanges and national securities associations that list 
securities were

[[Page 16488]]

required to file proposed listing standards no later than February 27, 
2023 and such listing standards must be effective no later than 
November 28, 2023. Issuers subject to the Exchange's listing standards 
will have 60 days following the effective date of such standards to 
adopt a recovery policy.
    As required by Rule 10D-1 and proposed Rule 14.207(f), any Company 
listed on LTSE must adopt a compensation recovery policy, comply with 
that policy, and provide the required compensation recovery policy 
disclosures.
    The Exchange is proposing amendments to Chapter 14 of its rules 
(LTSE Listing Rules) to establish listing standards for the recovery of 
erroneously awarded executive compensation as required by Rule 10D-1.
    The Exchange proposes to amend Rule 14.203, Prerequisites for 
Applying to List on the Exchange, by adding new paragraph (j), which 
will require that all Companies listing on LTSE must, as required by 
Exchange Act Rule 10D-1, comply with the requirements of Rule 14.207(f) 
(Recovery of Erroneously Awarded Compensation to Executive Officers).
New Definitions
    The Exchange is proposing to adopt the specific definitions of 
certain terms as contained in Rule 10D-1. These new definitions are 
being proposed solely for purposes of Rule 14.207(f). In new 
subparagraph (A) of Rule 14.207(f)(1), the Exchange defines ``Executive 
Officer'' as the Company's \11\ president, principal financial officer, 
principal accounting officer (or the controller in the event there is 
no principal accounting officer), and vice-president in charge of a 
principal business unit, division, or function (such as sales, 
administration, or finance), any other officer who performs a policy-
making function, or any other person who performs similar policy-making 
functions for the Company. Executive officers of the Company's 
parent(s) or subsidiaries are deemed executive officers of the Company 
if they perform such policy making functions for the Company. In 
addition, when the Company is a limited partnership, officers or 
employees of the general partner(s) who perform policy-making functions 
for the limited partnership are deemed officers of the limited 
partnership. When the Company is a trust, officers, or employees of the 
trustee(s) who perform policy-making functions for the trust are deemed 
officers of the trust. Policy-making function is not intended to 
include policy-making functions that are not significant. 
Identification of an executive officer for purposes of this Rule would 
include at a minimum executive officers identified pursuant to 17 CFR 
229.401(b).
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    \11\ The Exchange notes that, throughout the proposed rule text, 
it uses the term ``Company'' rather than ``issuer'' to apply 
consistent terminology that is used throughout the Exchange's 
Listing Rules. Rule 14.002(a)(5) defines ``Company'' to mean the 
issuer of a security listed or applying to list on the Exchange. For 
purposes of the Exchange's listing rules, the term ``Company'' 
includes an issuer that is not incorporated, such as, for example, a 
limited partnership.
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    Proposed subparagraph (B) of Rule 14.207(f)(1) defines ``Financial 
Reporting Measures'' as those that are determined and presented in 
accordance with the accounting principles used in preparing the 
Company's financial statements, and any measures that are derived 
wholly or in part from such measures. Stock price and total shareholder 
return are also financial reporting measures. A financial reporting 
measure need not be presented within the financial statements or 
included in a filing with the Commission.
    In proposed subparagraph (C) of Rule 14.207(f)(1), the Exchange 
defines ``Incentive-based Compensation'' as any compensation that is 
granted, earned, or vested based wholly or in part upon the attainment 
of a financial reporting measure. Finally, proposed subparagraph (D) of 
Rule 14.207(f)(1) provides that the term ``Received'' with respect to 
incentive-based compensation as meaning that such compensation is 
deemed received in the Company's fiscal period during which the 
financial reporting measure specified in the incentive-based 
compensation award is attained, even if the payment or grant of the 
incentive-based compensation occurs after the end of that period. The 
provision is intended to provide clarification and avoid doubt when 
determining when incentive based compensation that is subject to the 
rule was received.
Requirement To Adopt, Implement and Disclose a Recovery Policy for 
Incentive-Based Executive Compensation
    Proposed Rule 14.207(f)(2) requires that every Company that lists 
its securities on the Exchange must, no later than 60 days of the 
effective date of this rule, which is the date that the Commission 
approves this rule filing SR-LTSE-2023-01, adopt and comply with a 
written policy requiring such issuer to recover reasonably promptly the 
amount of erroneously awarded incentive-based compensation to any 
executive officer in the event that the Company is required to prepare 
an accounting restatement due to material non-compliance of the Company 
with any financial reporting requirement under the securities laws, 
including any required accounting restatement to correct a material 
error in previously issued financial statements that is material to the 
previously issued financial statements, or that would result in a 
material misstatement if the error were corrected in the current period 
or left uncorrected in the current period.
    This provision is intended to align with the requirements of Rule 
10D-1 and embed in the Exchange's listing rules the requirement to 
establish and enforce a written recovery policy as a requirement for 
listing on LTSE.
    In proposed Rule 14.207(f)(2)(B), the Exchange requires that every 
Company listed on the Exchange disclose its written recovery policy as 
part of its reporting obligations to the Commission, as an exhibit to 
its Annual Report, and to the Exchange. Companies applying for initial 
listing must include its written recovery policy as part of its listing 
application. The Exchange will not act on any new listing application 
unless the recovery policy is included with the initial listing 
application. Proposed Rule 14.203(j), as discussed above, also notes as 
part of the prerequisites for applying to list on the Exchange, as 
required by Rule 10D-1, any Company listing on the Exchange must comply 
with proposed rule 14.207(f).
    In proposed Rule 14.207(f)(3), Application of the Recovery Policy 
to Executive Officers, the Exchange states that the recovery policy 
shall apply to all incentive-based compensation received by a person: 
(A) after beginning service as an executive officer of the Company; (B) 
who served as an executive officer at any time during the performance 
period for that incentive-based compensation; (C) while the Company had 
a class of securities listed on a national securities exchange or a 
national securities association; and (D), during the three completed 
fiscal years immediately preceding the date that the Company is 
required to prepare an accounting restatement as described in proposed 
Rule 14.207(f). In addition to the last three completed fiscal years, 
the recovery policy must apply to any transition period (that results 
from a change in the Company's fiscal year) within or immediately 
following those three completed fiscal years. However, a transition 
period between the last day of the Company's previous fiscal year end 
and the first day of its new fiscal year

[[Page 16489]]

that comprises a period of nine to 12 months would be deemed a 
completed fiscal year. A Company's obligation to recover erroneously 
awarded compensation is not dependent on if or when the restated 
financial statements are filed.
    For purposes of determining the relevant recovery period, the 
Exchange proposes in Rule 14.207(f)(4) that the date that a Company is 
required to prepare an accounting restatement as described in paragraph 
(f) of the Rule is the earlier to occur of: (A) the date the Company's 
board of directors, a committee of the board of directors, or the 
officer or officers of the Company authorized to take such action if 
board action is not required, concludes, or reasonably should have 
concluded, that the Company is required to prepare an accounting 
restatement as described in paragraph (f) of this Rule; or (B) the date 
a court, regulator, or other legally authorized body directs the 
Company to prepare an accounting restatement as described in paragraph 
(f) of this Rule.
Determining Amount of Incentive-Based Compensation Subject to the 
Company's Recovery Policy
    Proposed Rule 14.207(f)(5)(A) states that the amount of incentive-
based compensation that must be subject to the Company's recovery 
policy (``erroneously awarded compensation'') is the amount of 
incentive-based compensation received that exceeds the amount of 
incentive-based compensation that otherwise would have been received 
had it been determined based on the restated amounts, and must be 
computed without regard to any taxes paid. Proposed subparagraph (B) 
states that, for incentive-based compensation based on stock price or 
total shareholder return, where the amount of erroneously awarded 
compensation is not subject to mathematical recalculation directly from 
the information in an accounting restatement: (i) the amount must be 
based on a reasonable estimate of the effect of the accounting 
restatement on the stock price or total shareholder return upon which 
the incentive-based compensation was received; and (ii) the Company 
must maintain documentation of the determination of that reasonable 
estimate and provide such documentation to the Exchange. These 
provisions are intended to address and clarify how erroneously awarded 
compensation calculations will be treated when it involves factors not 
readily obtained through an analysis of the accounting restatement.
    Rule 10D-1 requires that a listed Company recover the amount of 
erroneously-awarded incentive-based compensation reasonably promptly 
\12\ but does not specify the time by which the Company must complete 
the recovery of excess incentive-based compensation. LTSE will 
determine whether the steps that a Company is taking constitutes 
compliance with its compensation recovery policy. The Company's 
obligation to recover erroneously-awarded incentive based compensation 
reasonably promptly will be assessed on a holistic basis with respect 
to each such accounting restatement prepared by the Company. In 
evaluating whether the Company is recovering erroneously-awarded 
executive compensation reasonably promptly, the Exchange will consider 
whether the Company is pursuing the appropriate balance of cost and 
speed in determining the appropriate means to seek recovery, and 
whether the Company is securing recovery through means that are 
appropriate based on the particular facts and circumstances of each 
executive officer that owes a recoverable amount.
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    \12\ The Commission stated that it: ``recognize(s) that what is 
reasonable may depend on the additional cost incident to the 
recovery efforts. [The Commission] expects[s] that issuers and their 
directors and officers, in the exercise of their fiduciary duty to 
safeguard the assets of the issuer (including the time value of any 
potentially recoverable compensation), will pursue the most 
appropriate balance of cost and speed in determining the appropriate 
means to seek recovery.'' See, Adopting Release at 73104.
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Exceptions to Requirement To Recover Erroneously Awarded Compensation
    Proposed Rule 14.207(f)(6), Exceptions to Requirement to Recover 
Erroneously Awarded Compensation, allows for certain exceptions to the 
application of the recovery policy. Specifically, Companies must 
recover erroneously awarded compensation in compliance with its 
recovery policy except to the extent that the conditions described 
subparagraphs (A), (B), or (C) of proposed Rule 14.207(f)(6) are met 
and the Company's Compensation Committee, or in the absence of such a 
committee, a majority of the independent directors serving on the 
board, has made a determination that recovery would be impracticable in 
consideration of those conditions.
    Under subparagraph (A) of proposed Rule 14.207(f)(6), the direct 
expense paid to a third party to assist in enforcing the policy would 
exceed the amount to be recovered. Before concluding that it would be 
impracticable to recover any amount of erroneously awarded compensation 
based on expense of enforcement, the Company must make a reasonable 
attempt to recover such erroneously awarded compensation, document such 
reasonable attempt(s) to recover, and provide that documentation to the 
exchange or association. Under subparagraph (B), recovery would violate 
home country law where that law was adopted prior to November 28, 2022. 
Before concluding that it would be impracticable to recover any amount 
of erroneously awarded compensation based on violation of home country 
law, the Company must obtain an opinion of home country counsel, 
acceptable to the Exchange, that recovery would result in such a 
violation, and must provide such opinion to the Exchange. Under 
subparagraph (C), recovery would likely cause an otherwise tax-
qualified retirement plan, under which benefits are broadly available 
to employees of the registrant, to fail to meet the requirements of 26 
U.S.C. 401(a)(13) or 26 U.S.C. 411(a) and regulations thereunder.
    In proposed Rule 14.207(f)(7), Indemnification Of Executive 
Officers by the Company Prohibited, the Exchange makes clear that a 
Company is prohibited from indemnifying any executive officer or former 
executive officer against the loss of erroneously awarded compensation. 
This provision is intended to assure that executive officers who 
otherwise would be subject to the recovery rule do not avoid a 
financial consequence by having the Company indemnify them. Absent this 
provision, the recovery rule would lose substantial impact and would 
not be as effective in influencing executive management actions.
    Proposed Rule 14.207(f)(8) reinforces the disclosure requirements 
and provides that Companies are required to file all disclosures with 
respect to its Recovery Policy in accordance with the requirements of 
the Federal securities laws, applicable Commission filings, and the 
Rules of the Exchange.
    The Exchange further proposes certain general exemptions in Rule 
14.207(f)(9): that the requirements of Rule 14.207(f) shall not apply 
to the listing of any security issued by a unit investment trust, as 
defined in 15 U.S.C. 80a-4(2) and any security issued by a management 
company as defined in 15 U.S.C. 80(a)-4(3) that is registered under 
Section 8 of the Investment Company Act of 1940 (15 U.S.C. 80a-8, if 
such management company has not awarded incentive-based compensation to 
any executive officer of the Company in any of the last three fiscal 
years, or in the case of a Company that has been listed less than three 
fiscal years, since the listing of the Company. These exemptions are 
proposed to align with

[[Page 16490]]

the exemptions provided in Rule 10D-1.
    As provided in Rule 10D-1, LTSE proposes to require under Rule 
14.207(f)(10) that each Company is required to (i) adopt a policy 
governing the recovery of erroneously awarded compensation as required 
by this rule no later 60 days following the effective date of this rule 
(the date of the Commission's approval of SR-LTSE-2023-01); and (ii) 
provide the disclosures required by this rule and in the applicable 
Commission filings on or after such effective date of this rule (the 
date of the Commission's approval of SR-LTSE-2023-01). Notwithstanding 
the look-back requirements in Rule 14.207(f), a Company is only 
required to apply the recovery policy to incentive-based executive 
compensation received after the effective date of this rule (the date 
of the Commission's approval of SR-LTSE-2023-01).
    As proposed, a Company will be subject to delisting by the Exchange 
if it does not adopt, comply with, and disclose its policy on recovery 
of erroneously awarded executive compensation. Any Company that has 
failed to meet the requirements of the Rule will not be allowed to list 
on LTSE or, if listed, will be subject to provisions of LTSE Rule 
14.500 (Failure to Meet Listing Standards) and the procedures set forth 
in Rules 14.501, 14.502 and 14.503. The Exchange is proposing to amend 
Rule 14.501(d)(2)(A)(iii) to provide that a Company that has failed to 
comply with the requirements of Rule 14.207(f) is required to submit to 
LTSE a plan to regain compliance. The Exchange proposes to utilize its 
existing administrative process for addressing corporate governance 
deficiencies for violations of Rule 10D-1, subject to certain 
amendments described below. The Exchange believes that using the 
existing process is appropriate in that it applies a consistent process 
for rectifying corporate governance deficiencies to which listed 
Companies are already subject.
    However, the Exchange is proposing amendments to Rule 14.500(b)(5), 
which defines a Public Reprimand Letter, and Rule 14.501, Notification 
of Deficiency by LTSE Regulation, to exclude a violation of Rule 10D-1 
from the deficiencies in listing standards for which a Public Reprimand 
Letter is appropriate under Rule 14.500 and state that Public Reprimand 
Letters may not be issued for violations of the listing standards 
required by Rule 10D-1 and proposed LTSE Rule 14.207(f). A conforming 
amendment is proposed for Rule 14.502, Review of Staff Determination by 
the Listings Review Committee. Currently, the rule text in Rule 
14.502(1)(C), states that the Exchange's Listing Review Committee may, 
where it deems appropriate: ``issue a decision that serves as a Public 
Reprimand letter in cases where the Company has violated an Exchange 
corporate governance or notification Listing standard (other than one 
required by Rule 10A-3 of the Act) and the Listing Review Committee 
determines that delisting is an inappropriate sanction. . . .'' The 
Exchange proposes to include Rule 10D-1 as a governance and 
notification listing standard that is ineligible for the disposition by 
a Public Reprimand Letter upon a review or a delisting proceeding by 
the Listings Review Committee.
    The Exchange is proposing these amendments because it does not 
believe that issuance of a Public Reprimand Letter in situations where 
a listed Company has failed to meet its obligations regarding the 
recovery of erroneously awarded executive compensation is consistent 
with the provisions of Rule 10D-1.
2. Statutory Basis
    The Exchange believe that the proposed rule change is consistent 
with the provisions of Section 6 of the Act,\13\ in general, and 
furthers the objectives of Section 6(b)(5) of the Act,\14\ in 
particular, because 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 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. Further, the Exchange believes that the proposal is 
not designed to permit unfair discrimination between issuers or to 
regulate by virtue of any authority conferred by the Act matters not 
related to the purposes of the Act or the administration of the 
Exchange, for the reasons set forth below.
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    \13\ Id.
    \14\ 15 U.S.C. 78f(b)(5).
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    First, and importantly, the Exchange is proposing to adopt these 
rules as required under Section 10D of the Act and Rule 10D-1. The 
requirement that national securities exchanges that list equity 
securities, such as LTSE, embed the requirements of the statute and the 
regulation into its listing rules is intended to effectuate compliance 
and ensure consistency across the rules of every exchange. The Exchange 
believes that these proposals protect investors and the public interest 
by requiring Companies, with certain exemptions, that in the event the 
Company is required to prepare an accounting restatement, to recover 
reasonably promptly erroneously awarded incentive-based compensation 
paid to current or former executive officers based on any misstated 
financial measure. These proposed amendments will also help to foster 
effective oversight of executive compensation and provide increased 
accountability and transparency to investors by not allowing executive 
officers to retain compensation that they were awarded erroneously. The 
Exchange believes that the recovery requirement will operate to provide 
executive officers with an increased incentive to take steps to reduce 
the likelihood of inadvertent misreporting and will reduce the 
financial benefits to executive officers who pursue impermissible 
accounting methods, which the Commission expects will further reduce 
such behavior.\15\
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    \15\ See, Rule 10D-1 Adopting Release at 87 FR 73077.
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    LTSE further believes that the proposal to provide that a Company 
that had failed to comply with the requirements of Rule 14.207(f) is 
required to submit to the Exchange a plan to regain compliance is 
consistent with the investor protection objectives of Section 6(b)(5) 
of the Act \16\ because the Exchange's process for addressing such 
deficiencies will follow the established pattern used for similar 
corporate governance deficiencies, to which listed Companies are 
already subject and are familiar with.
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    \16\ 15 U.S.C. 78(b)(5).
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    The Exchange believes that its proposed rule change is fair and not 
unfairly discriminatory. As stated in the Adopting Release, ``[t]o 
assure that issuers listed on different exchanges are subject to the 
same disclosure requirements regarding erroneously awarded compensation 
recovery, amendments to the Commission's disclosure rules require all 
issuers listed on any exchange to file their written compensation 
policies as an exhibit to their annual reports. . . .'' \17\ 
Additionally, because issuers listed on different exchanges will be 
subject to the same disclosure requirements regarding erroneously 
awarded compensation it alleviates any additional compliance burdens 
that could result, absent uniform treatment across all exchanges. The 
Exchange

[[Page 16491]]

further believes that the proposed amendments are consistent with the 
protection of investors and the public interest by imparting uniformity 
of the exchanges' rules on erroneously awarded executive compensation, 
as required by Rule 10D-1.
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    \17\ See, 87 FR 73078.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange 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. In fact, as 
discussed in the Statutory Basis section, LTSE believes that the 
proposed amendments will impose no burden on competition in that every 
publicly traded company will be required to comply with the Rule 10D-1, 
and every national securities exchange that lists securities will be 
required to adopt essentially the same rules regarding erroneously 
awarded compensation as part of their original and continued listing 
requirements. Given these factors, the Exchange does not believe that 
there will be any burden on competition.

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

    Within 45 days of the date of publication of this notice in the 
Federal Register or up to 90 days (i) as the Commission may designate 
if it finds such longer period to be appropriate and publishes its 
reasons for so finding or (ii) as to which the self-regulatory 
organization consents, the Commission will:
    (A) by order approve or disapprove the proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change, as modified by Amendment No. 1, 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-LTSE-2023-01 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-LTSE-2023-01. 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 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. 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-LTSE-2023-01 and should be submitted on 
or before April 7, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-05442 Filed 3-16-23; 8:45 am]
BILLING CODE 8011-01-P