Document ID: SEC-2009-0169-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ Stock Market LLC
Posted Date: 2009-02-05T05:00Z

[Federal Register: February 5, 2009 (Volume 74, Number 23)]
[Notices]               
[Page 6186-6188]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr05fe09-64]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59318; File No. SR-NASDAQ-2009-003]

 
Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change 
To Modify Nasdaq's Listing Requirements Related to the Distribution of 
Annual Reports

January 29, 2009.
    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 January 15, 2009, The NASDAQ Stock Market LLC (``Nasdaq'') filed 
with the Securities and Exchange Commission (``Commission'') the 
proposed rule change as described in Items I and II 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,\3\ 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\ 17 CFR 240.19b-4.
    \3\ 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 modify Rules 4350(b)(1)(A) and 4360(b)(1), which 
relate to the distribution of a listed issuer's annual report.
    The text of the proposed rule change is below. Proposed new 
language is italicized; proposed deletions are in brackets.\4\
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    \4\ Changes are marked to the rule text that appears in the 
electronic manual of Nasdaq found at http://
nasdaqomx.cchwallstreet.com.
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4350. Qualitative Listing Requirements for Nasdaq Issuers Except for 
Limited Partnerships
    (a) No change.
    (b) Distribution of Annual and Interim Reports
    (1)(A) Each issuer shall make available to shareholders of such 
securities an annual report containing audited financial statements of 
the company and its subsidiaries, which, for example, may be on Form 
10-K, 20-F, 40-F or N-CSR. An issuer may comply with this requirement 
either:
    (i) By mailing the report to shareholders[,]; or
    (ii) By satisfying the requirements for furnishing an annual report 
contained in Exchange Act Rule 14a-16; or
    (iii) by posting the annual report to shareholders on or through 
the company's Web site (or, in the case of an issuer that is an 
investment company that does not maintain its own Web site, on a 
website that the issuer is allowed to use to satisfy the Web site 
posting requirement in Exchange Act Rule 16a-3(k)), along with a 
prominent undertaking in the English language to provide shareholders, 
upon request, a hard copy of the company's annual report free of 
charge. An issuer that chooses to satisfy this requirement [via a Web 
site posting] pursuant to this paragraph (iii) must, simultaneous with 
this posting, issue a press release stating that its annual report has 
been filed with the Commission (or other appropriate regulatory 
authority). This press release must also state that the annual report 
is available on the company's Web site and include the Web site address 
and that shareholders may receive a hard copy free of charge upon 
request. An issuer must provide such hard copies within a reasonable 
period of time following the request.
    (B) No change.
    (2)-(4) No change.
    (c)-(n) No change.
* * * * *
4360. Qualitative Listing Requirements for Nasdaq Issuers That Are 
Limited Partnerships
    (a) No change.
    (b) Distribution of Annual and Interim Reports
    (1) Each issuer that is a limited partnership shall distribute to 
limited partners copies of an annual report containing audited 
financial statements of the limited partnership. The report shall be 
distributed to limited partners within a reasonable period of time 
after the end of the limited partnership's fiscal year end and shall be 
filed with Nasdaq at the time it is distributed to limited partners. A 
limited partnership may comply with this requirement either:
    (A) By mailing the report to the limited partners; or
    (B) By satisfying the requirements for furnishing an annual report 
contained in Exchange Act Rule 14a-16; or
    (C) By posting the annual report on or through the limited 
partnership's Web site, along with a prominent undertaking in the 
English language to provide limited partners, upon request, a hard copy 
of the partnership's annual report free of charge. A limited 
partnership that chooses to satisfy this requirement pursuant to this 
paragraph (C) must, simultaneous with this posting, issue a press 
release stating that its annual report has been filed with the 
Commission (or other appropriate regulatory authority). This press 
release must also state that the annual report is available on the 
limited partnership's Web site and include the Web site address and 
that limited partners may receive a hard copy free of charge upon 
request. A limited partnership must provide such hard copies within a 
reasonable period of time following the request.
    (2) No change.
    (c)-(m) No change.
* * * * *

[[Page 6187]]

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
    Nasdaq is proposing to modify Rule 4350(b)(1)(A), which relates to 
the distribution of a company's annual report. At present, the Rule 
requires that a company either: (i) Distribute a physical copy of its 
annual report to shareholders, or (ii) issue a press release announcing 
the filing of its annual report and the availability of that report on 
the company's Web site or upon request. Nasdaq proposes to maintain 
these two alternatives, but proposes to also allow a company to satisfy 
this requirement by following the requirements related to ``Internet 
Availability of Proxy Materials'' contained in the Commission's Rule 
14a-16.\5\ Nasdaq believes that accepting compliance with the 
comparable Commission requirement to furnish an annual report will ease 
the compliance burden on companies while continuing to assure that this 
information is available to shareholders. In addition, Nasdaq believes 
that maintaining the requirement to issue a press release when relying 
on the existing alternative will allow companies that are not subject 
to the Commission's proxy rules to continue to take advantage of 
technology to satisfy the requirement to distribute their annual 
report.
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    \5\ 17 CFR 240.14a-16.
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    Nasdaq is also proposing to modify Rule 4360(b)(1) to add the 
manner in which a limited partnership may satisfy the requirement to 
deliver an annual report. Presently, this rule is silent as to how the 
requirement can be satisfied, but Nasdaq believes that limited 
partnerships can comply in the same manner as described in Rule 
4350(b)(1)(A). As such, the addition would clarify that a limited 
partnerships [sic] must satisfy the requirement in the same way as 
other listed issuers, although Rule 4360(b)(1) would have non-
substantive differences from Rule 4350(b)(1) to reflect its 
applicability to partnerships (instead of corporations), which are held 
by limited partners (instead of shareholders). Nasdaq notes that 
pursuant to Rule 4360(e), a limited partnership is only required to 
hold annual meetings if required by statute or regulation in the state 
in which the limited partnership is formed or doing business or by the 
terms of the partnership's limited partnership agreement. As such, 
limited partnerships frequently will not hold meetings or solicit 
proxies, and therefore would not be subject to the Commission's proxy 
rules, but could still satisfy the requirement to deliver the annual 
report through the alternatives described in the proposed rule.
2. Statutory Basis
    Nasdaq believes that the proposed rule change is consistent with 
the provisions of Section 6 of the Act,\6\ in general and with Sections 
6(b)(5) of the Act,\7\ 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 facilitate compliance with Nasdaq rules by aligning 
Nasdaq's disclosure requirements with those of the Commission.
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    \6\ 15 U.S.C. 78f.
    \7\ 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

    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 \8\ and 
Rule 19b-4(f)(6) thereunder.\9\
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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 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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    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act \10\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \11\ 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.
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    \10\ 17 CFR 240.19b-4(f)(6).
    \11\ 17 CFR 240.19b-4(f)(6)(iii).
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    The Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest. In 
making this determination, the Commission notes that the NYSE recently 
adopted a substantially similar listing requirement governing the 
distribution of annual reports,\12\ and the Commission believes that 
the Nasdaq's proposed rule change raises no new regulatory issues. The 
Commission also notes that the NYSE's proposal was subject to full 
notice and comment, and the Commission received no comments on the 
NYSE's rule proposal. In addition, the Commission believes that waiving 
the 30-day operative delay will immediately give issuers that have just 
filed, or are about to file, their annual reports with the Commission 
the option to comply with Nasdaq's distribution of annual reports 
requirement by satisfying the requirements for furnishing an annual 
report contained in Rule 14a-16 under the Act. The Commission also 
believes that it is consistent with the

[[Page 6188]]

protection of investors and the public interest to allow limited 
partnerships to distribute annual reports to their limited partners 
under the same terms and conditions as Nasdaq's other listed operating 
companies. The Commission believes that waiving the 30-day operative 
delay for limited partnerships will also allow these partnerships who 
have just filed, or are about to file, their annual reports with the 
Commission, to immediately take advantage of the same means of 
distribution under Nasdaq rules that are available for any other 
operating company. For these reasons, the Commission designates that 
the proposed rule change become operative immediately upon filing.\13\
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    \12\ See Securities Exchange Act Release No. 59123 (December 19, 
2008), 73 FR 7991 (December 30, 2008) (SR-NYSE-2008-128).
    \13\ 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).
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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-2009-003 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.

All submissions should refer to File Number SR-NASDAQ-2009-003. 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-2009-003 and should be submitted on or before 
February 26, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-2427 Filed 2-4-09; 8:45 am]

BILLING CODE 8011-01-P