Document ID: SEC-2014-2198-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ Stock Market LLC
Posted Date: 2014-12-30T05:00Z

[Federal Register Volume 79, Number 249 (Tuesday, December 30, 2014)]
[Notices]
[Pages 78540-78541]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-30438]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-73912; File No. SR-NASDAQ-2014-102]

Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing of Proposed Rule Change to Require That a Company 
Publicly Disclose the Denial of a Listing Application

December 22, 2014.
    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 December 11, 2014, The NASDAQ Stock Market LLC (``Nasdaq'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``Commission'') the proposed rule change as described in 
Items I, II, and III, 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 require that companies publicly disclose 
the denial of a listing application.
    The text of the proposed rule change is below; proposed new 
language is in italics. There are no proposed deletions.
* * * * *

5205. The Applications and Qualifications Process

    (a)--(h) No change.
    (i) (1) A Company may withdraw its application for initial listing 
at any time.
    (2) A Company that receives a written determination denying its 
application for listing must, within four business days, make a public 
announcement in a press release or other Regulation FD compliant manner 
about the receipt of the determination and the Rule(s) upon which the 
determination is based, describing each specific basis and concern 
identified by Nasdaq in reaching its determination. If the public 
announcement is not made by the Company within the time allotted or 
does not include all of the required information, Nasdaq will make a 
public announcement with the required information and, if the Company 
appeals the determination as set forth in Rule 5815, the Hearings Panel 
will consider the Company's failure to make the public announcement in 
considering whether to list the Company.
* * * * *

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 of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    Nasdaq processes between 200 and 300 applications each year from 
companies seeking to list securities on Nasdaq. While most applicants 
meet the listing requirements, or are prepared to take action to meet 
those requirements before listing, in some cases a company does not 
meet the requirements and is not willing, or able, to comply. In other, 
rare instances, Nasdaq may determine to deny an application based on 
public interest concerns even though the company meets all initial 
listing requirements.\3\ In either of these cases, the company is 
informed of the outcome and can withdraw its application before the 
application is formally denied.\4\ If the company does not withdraw the 
application, the Nasdaq Listing Qualifications Department will issue a 
written denial, which the company can appeal to a Listing 
Qualifications Hearings Panel.\5\
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    \3\ See Listing Rule 5101 and IM-5101-1.
    \4\ While Nasdaq has always allowed a company to withdraw its 
application at any time, the proposed rule change will add this to 
the rules.
    \5\ Listing Rule 5815(a)(1). A Company that has appealed a 
written denial may also withdraw its application (and appeal) while 
the appeal is pending.
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    The procedures for such an appeal are similar to an appeal from a 
delisting determination. However, while the rules provide transparency 
to a delisting event by requiring the company to disclose a delisting 
determination, there is no comparable requirement for disclosure of an 
initial listing denial.
    Just as a delisting determination may be considered a material 
event to the investing public, Nasdaq believes that a denial of initial 
listing is equally so, particularly in the context of a company that 
previously publicly announced its intention to seek a listing, which is 
often the case. Investors view such an announcement to list as a 
positive development and such announcements often attract investor 
interest. Nasdaq believes that the public is therefore equally 
interested in the outcome of such an application and proposes to adopt 
a rule that would require a listing applicant that has been denied 
listing to publicly disclose the receipt of the determination and the 
circumstances on

[[Page 78541]]

which the decision was based.\6\ Just as is the case with a delisting 
determination, the proposed rule would require that the disclosure be 
made within four business days of receipt of Nasdaq's determination. In 
cases where the company fails to make the required disclosure, Nasdaq 
would make the disclosure and a Listing Qualifications Hearings Panel 
would consider the company's failure to make the required disclosure 
when it considers any subsequent appeal of the denial.
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    \6\ The rule would not require disclosure if a company withdraws 
its listing application before receiving a written determination 
from Nasdaq. Companies withdraw listing applications for many 
reasons, including instances where the company is acquired, 
determines not to list on an exchange, or lists on another venue. In 
addition, Nasdaq does not believe it can enforce a disclosure 
requirement after a company has withdrawn from its process. 
Nonetheless, Nasdaq believes that such disclosure may be appropriate 
and encourages companies to make such disclosure.
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act\7\ in general, and furthers the objectives of Section 
6(b)(5) of the Act\8\ in particular, in that it is designed to promote 
just and equitable principles of trade, 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 will impose a disclosure requirement on 
companies that are denied initial listing on Nasdaq, which will help 
protect investors and the public interest by providing transparency to 
investors about the status of a company's application. The proposed 
rule change will not affect a company's ability to withdraw its listing 
application at any time and will add a statement about that ability to 
Nasdaq's rules, which will promote just and equitable principles of 
trade by enhancing transparency and allowing companies to maintain 
control over the consideration of their applications.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
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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 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act. The proposed rule change will 
impose an additional disclosure requirement on a small universe of 
companies and is not expected to affect the number of companies 
applying to list on Nasdaq or any other exchange, or any company's 
ability to list.

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

    No written comments were either solicited or 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 within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the Exchange consents, the Commission shall: (a) By order approve 
or disapprove such 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 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 rule-comments@sec.gov. Please include 
File Number SR-NASDAQ-2014-102 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NASDAQ-2014-102. 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 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 Web site 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; 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-2014-102 and should 
be submitted on or before January 20, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2014-30438 Filed 12-29-14; 8:45 am]
BILLING CODE 8011-01-P