Document ID: SEC-2014-2122-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange LLC
Posted Date: 2014-12-17T05:00Z

[Federal Register Volume 79, Number 242 (Wednesday, December 17, 2014)]
[Notices]
[Pages 75217-75220]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-29498]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-73821; File No. SR-NYSE-2014-65]

Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing of Proposed Rule Change Amending Its Continued Listing 
Requirements in Relation to the Late Filing of a Company's Annual 
Report With the Securities and Exchange Commission as set Forth in 
Section 802.01E of the Exchange's Listed Company Manual

December 11, 2014.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that, on December 4, 2014, New York Stock Exchange LLC (``NYSE'' 
or the ``Exchange'') filed with the Securities and Exchange Commission 
(the ``Commission'') the proposed rule change as described in Items I, 
II, and III below, which Items have been prepared by the self-
regulatory organization. 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\ 15 U.S.C. 78a.
    \3\ 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 continued listing requirements 
in relation to the late filing of a company's annual report with the 
Securities and Exchange Commission (``SEC'' or ``Commission'') as set 
forth in Section 802.01E of the Exchange's Listed Company Manual (the 
``Manual''). The text of the proposed rule change is available on the 
Exchange's Web site at www.nyse.com, at the principal office of the 
Exchange, 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, 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend its continued listing requirements 
in relation to the late filing of a company's annual report with the 
SEC as set forth in Section 802.01E (the ``Late Filer Rule'') of the 
Manual. As amended, the Late Filer Rule will (i) expand the rule to 
impose a maximum period within which a company must file a late 
quarterly report on Form 10-Q in order to maintain its listing and (ii) 
clarify the Exchange's treatment of companies whose annual or quarterly 
reports are defective at the time of filing or become defective at some 
subsequent date.
    In its current form, the Late Filer Rule deems a listed company to 
be delinquent in filing its annual report on Forms 10-K, 20-F, 40-F or 
N-CSR with the SEC if it fails to submit the filing by the date such 
report was required to be filed by the applicable form, or if a Form 
12b-25 was timely filed with the SEC, the extended filing due date for 
the annual report. During the six-month period from the date of such 
delinquency, the Exchange monitors the company and the status of the 
delinquent annual report, including through contact with the company, 
until the filing delinquency is cured. If the company fails to cure 
such delinquency within the initial six-month period, the Exchange may, 
in its sole discretion, allow the company's securities to be traded for 
up to an additional six-month period depending on the company's 
specific circumstances. If the Exchange determines that an additional 
trading period of up to six months is not appropriate, suspension and 
delisting procedures are commenced in accordance with the procedures 
set out in Section 804.00 of the Listed Company Manual.
    A company is not currently subject to the compliance periods set 
forth in the Late Filer Rule in connection with a failure to timely 
file a quarterly report

[[Page 75218]]

on Form 10-Q with the SEC.\4\ The Exchange now proposes to extend the 
application of the rule to the late filing of Form 10-Qs. As proposed, 
a company would be deemed to be a delinquent filer under the amended 
rule as of the due date (or extended due date if a Form 12b-25 is 
timely filed with the SEC) (the ``Filing Due Date'') of the first 10-Q 
or annual report with respect to which a company incurs a delinquency 
(a ``Late Filing Delinquency'').\5\ The Exchange will also deem a 
company to have incurred a Late Filing Delinquency if it submits an 
annual report or Form 10-Q to the SEC by the applicable Filing Due 
Date, but such filing is deficient in some respect in meeting the 
requirements of the applicable SEC form and the Exchange determines in 
its sole discretion that such deficiency is material in nature.\6\
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    \4\ While a company is not currently subject to the compliance 
periods in the Late Filer Rule in connection with the failure to 
timely file a Form 10-Q, such companies are subject to the 
Exchange's late filer (or ``.LF'') indicator process. The .LF 
indicator is appended to the company's trading symbol as 
disseminated on the consolidated tape and to market data vendors and 
the company's name is included on the late filer list on the 
Exchange's Web site. The .LF indicator and web posting commence five 
days after the due date or extended due date (if applicable) of the 
first late annual report or Form 10-Q (unless the company has 
submitted the required report within that five day period) and 
continue until the company becomes current again with respect to all 
required periodic reports.
    \5\ The annual report or quarterly report on Form 10-Q that 
gives rise to a Late Filing Delinquency shall be referred to in the 
Late Filer Rule as amended as the ``Delinquent Report.''
    \6\ The following is a non-exclusive list of elements that, if 
missing from a filing, would cause the Exchange to deem the company 
to have incurred a Late Filing Delinquency: The filing does not 
include required financial statements or a required audit opinion; a 
required financial statement audit opinion includes qualifying or 
disclaiming language or the auditor provides an adverse financial 
statement audit opinion; a required financial statement audit 
opinion is unsigned or undated; there is a discrepancy between the 
period end date for required financial statements and the date cited 
in the related audit report; the company's auditor has not conducted 
a SAS 100 review with respect to the company's Form 10-Q; required 
chief executive officer or chief financial officer certifications 
are missing; missing Sarbanes-Oxley Act Section 404 required 
internal control report or auditor certification; the filing does 
not comply with the applicable SEC XBRL requirements; or the filing 
does not include signatures of officers or directors required by the 
applicable form. In making this determination, the Exchange is 
simply applying its own rules and is not making any judgment as to 
the sufficiency of the filing in question for purposes of compliance 
with any requirement under SEC rules.
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    In addition, the Exchange proposes to clarify its treatment of a 
company:
     That files its annual report without an audit report from 
its independent auditor for any or all of the periods included in such 
annual report (a ``Required Audit Report'' and the absence of a 
Required Audit Report, a ``Required Audit Report Delinquency'');
     whose independent auditor withdraws a Required Audit 
Report or the company files a Form 8-K with the SEC pursuant to Item 
4.02(b) thereof disclosing that it has been notified by its independent 
auditor that a Required Audit Report or completed interim review should 
no longer be relied upon (a ``Required Audit Report Withdrawal 
Delinquency''); or
     that files a Form 8-K with the SEC pursuant to Item 
4.02(a) thereof to disclose that previously issued financial statements 
should no longer be relied upon because of an error in such financial 
statements or, in the case of a foreign private issuer, makes a similar 
disclosure in a Form 6-K filed with the SEC or by other means (a ``Non-
Reliance Disclosure'') and, in either case, the company does not refile 
all required corrected financial statements within 60 days of the 
issuance of the Non-Reliance Disclosure (an ``Extended Non-Reliance 
Disclosure Event'' and, together with a Late Filing Delinquency, a 
Required Audit Report Delinquency and a Required Audit Report 
Withdrawal Delinquency, a ``Filing Delinquency'').\7\
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    \7\ For purposes of the cure periods described herein, an 
Extended Non-Reliance Disclosure Event will be deemed to have 
occurred on the date of original issuance of the Non-Reliance 
Disclosure. If the Exchange believes that a company is unlikely to 
refile all required corrected financial statements within 60 days 
after a Non-Reliance Disclosure or that the errors giving rise to 
such Non-Reliance Disclosure are particularly severe in nature, the 
Exchange may, in its sole discretion, determine earlier than 60 days 
that the applicable company has incurred a Filing Delinquency as a 
result of such Non-Reliance Disclosure.
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    Upon the occurrence of a Filing Delinquency, the Exchange will 
promptly (typically within five business days) send written 
notification to a company of its procedures relating to late filings. 
During the six-month period from the date of the Filing Delinquency 
(the ``Initial Cure Period''), the Exchange will monitor the company 
and the status of the Delinquent Report and any subsequent annual 
report or quarterly report on Form 10-Q the company fails to file by 
the applicable Filing Due Date (a ``Subsequent Report''), through 
contact with the company, until the Filing Delinquency is cured.\8\ If 
the company fails to cure the Filing Delinquency within the Initial 
Cure Period, the Exchange may, in its sole discretion, allow the 
company's securities to be traded for up to an additional six-month 
period (the ``Additional Cure Period'') depending on the company's 
specific circumstances. If the Exchange determines that an Additional 
Cure Period is not appropriate, suspension and delisting procedures 
will commence in accordance with the procedures set out in Section 
804.00 of the Listed Company Manual. A company is not eligible to 
follow the procedures outlined in Sections 802.02 and 802.03 with 
respect to this criterion. Notwithstanding the foregoing, however, the 
Exchange may in its sole discretion decide (i) not to afford a company 
any Initial Cure Period or Additional Cure Period, as the case may be, 
at all or (ii) at any time during the Initial Cure Period or Additional 
Cure Period, as the case may be, to truncate the Initial Cure Period or 
Additional Cure Period, as the case may be, and immediately commence 
suspension and delisting procedures if the company is subject to 
delisting pursuant to any other provision of the Listed Company Manual, 
including if the Exchange believes, in its sole discretion, that 
continued listing and trading of a company's securities on the Exchange 
is inadvisable or unwarranted in accordance with Sections 802.01A, 
802.01B, 802.01C or 802.01D of the Listed Company Manual. The Exchange 
may also commence suspension and delisting procedures if it believes, 
in its sole discretion, that it is advisable to do so on the basis of 
an analysis of all relevant factors, including, but not limited to, the 
following:
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    \8\ Under the Late Filer Rule as amended, a company that has an 
uncured Filing Delinquency will not incur an additional Filing 
Delinquency if it fails to file a Subsequent Report by the 
applicable Filing Due Date. However, in order to cure its initial 
Filing Delinquency, no Subsequent Report may be delinquent or 
deficient on the date by which the initial Filing Delinquency is 
required to be cured.
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     Whether there are allegations of financial fraud or other 
illegality in relation to the company's financial reporting;
     the resignation or termination by the company of the 
company's independent auditor due to a disagreement;
     any extended delay in appointing a new independent auditor 
after a prior auditor's resignation or termination;
     the resignation of members of the company's audit 
committee or other directors;
     the resignation or termination of the company's chief 
executive officer, chief financial officer or other key senior 
executives;
     any evidence that it may be impossible for the company to 
cure its Filing Delinquency within the cure periods otherwise available 
under the Late Filer Rule; and
     any past history of late filings.
    In determining whether an Additional Cure Period after the 
expiration of the Initial Cure Period is appropriate, the

[[Page 75219]]

Exchange will consider the likelihood that the Delinquent Report and 
all Subsequent Reports can be filed or refiled, as applicable, during 
the Additional Cure Period, as well as the company's general financial 
status, based on information provided by a variety of sources, 
including the company, its audit committee, its outside auditors, the 
staff of the SEC and any other regulatory body. The Exchange strongly 
encourages companies to provide ongoing disclosure on the status of the 
Delinquent Report and any Subsequent Reports to the market through 
press releases, and will also take the frequency and detail of such 
information into account in determining whether an additional trading 
period is appropriate.
    If the Exchange determines that an Additional Cure Period is 
appropriate and the company fails to file the Delinquent Report and all 
Subsequent Reports by the end of such additional period, suspension and 
delisting procedures will commence immediately in accordance with the 
procedures set out in Section 804.00. In no event will the Exchange 
continue to trade a company's securities if (i) it has failed to cure 
its Filing Delinquency and (ii) is not current with all Subsequent 
Reports, on the date that is twelve months after its initial Filing 
Delinquency.
    The Exchange proposes that the revised Late Filer Rule will become 
operative on March 1, 2015. Accordingly, the current provisions of 
Section 802.01E of the Manual will be applicable to any listed company 
that fails to timely file an annual report (Forms 10-K, 20-F, 40-F or 
N-CSR) prior to March 1, 2015. On or after March 1, 2015, any listed 
company that fails to timely file an annual report (Forms 10-K, 20-F, 
40-F or N-CSR) or quarterly report on Form 10-Q will be subject to the 
amended provisions of Section 802.01E. Any listed company that is late 
as of March 1, 2015, in filing a Form 10-Q with a due date prior to 
that date will not be subject to the proposed amended rule with respect 
to that filing. However, any such company will be subject to the 
proposed amended rule with respect to any periodic report it does not 
file on a timely basis whose due date is on or after March 1, 2015.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\9\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act,\10\ 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. 
The Exchange believes that the proposed amendment is consistent with 
the investor protection objectives of Section 6(b)(5) because: (i) It 
strengthens the Exchange's continued listing requirements with respect 
to delinquent SEC filings by deeming companies delinquent if they fail 
to file their annual report or Form 10-Q on a timely basis and by 
subjecting companies to the late filer process if there are material 
inadequacies in their required annual or quarterly filings; and (ii) 
the more stringent requirements will encourage listed companies to 
submit timely and compliant periodic reports to the SEC.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 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 that is not necessary or appropriate 
in furtherance of the purpose of the Act. The proposed rule change does 
not affect competition in any way, but rather simply seeks to protect 
investors by insuring that companies cannot remain listed for any 
extended period of time without appropriately filing their required 
periodic financial reports with the SEC.

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.

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 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-NYSE-2014-65 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-NYSE-2014-65. 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 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-NYSE-2014-65 and should be 
submitted on or before January 7, 2015.

[[Page 75220]]

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-29498 Filed 12-16-14; 8:45 am]
BILLING CODE 8011-01-P