Document ID: SEC-2007-0058-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: NASDAQ Stock Market LLC
Posted Date: 2007-01-12T05:00Z

[Federal Register: January 12, 2007 (Volume 72, Number 8)]
[Notices]               
[Page 1569]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr12ja07-117]                         

[[Page 1569]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55052; File No. SR-NASDAQ-2006-047]

 
Self-Regulatory Organization; the NASDAQ Stock Market LLC; Order 
Approving Proposed Rule Change To Modify Its Listing Rules in the Case 
of a Reverse Merger

January 5, 2007.
    On November 13, 2006, The NASDAQ Stock Market LLC (``Nasdaq'') 
filed with the Securities and Exchange Commission (``Commission''), 
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to 
clarify the process an issuer must follow when applying for initial 
listing in connection with a reverse merger. The proposed rule change 
was published for comment in the Federal Register on December 6, 
2006.\3\ The Commission received no comments regarding the proposal.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 54825 (November 28, 
2006), 71 FR 70818.
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    The Commission finds that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder applicable to a national securities exchange.\4\ In 
particular, the Commission finds that the proposed rule change is 
consistent with Section 6(b)(5) of the Act,\5\ which requires that the 
rules of an exchange be 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 securities system, and, in 
general, to protect investors and the public interest.
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    \4\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
    \5\ 5 15 U.S.C. 78f(b)(5).
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    Nasdaq proposes to amend Nasdaq Rule 4340(a) and related 
interpretive material to state that an issuer must apply for initial 
listing prior to consummating a transaction whereby the issuer combines 
with an entity that is not listed on Nasdaq, resulting in a change of 
control of the issuer and potentially allowing the non-Nasdaq entity to 
obtain a ``backdoor listing'' on Nasdaq (``Reverse Merger'').
    Current Nasdaq Rule 4340(a) states that an issuer must apply for 
initial listing ``following'' a Reverse Merger. Nasdaq proposes to 
replace the word ``following'' with the phrase ``in connection with'' 
and require the issuer to ``submit an application for the post-
transaction entity with sufficient time to allow Nasdaq to complete its 
review before the transaction is completed.'' Because the entity 
resulting from the Reverse Merger could be substantially different from 
the one originally approved for Nasdaq listing, it is reasonable and 
consistent with the Act for Nasdaq to conduct a de novo listing review 
of the new entity and, for the new entity to keep the listing, to 
require sufficient time to complete the review before the Reverse 
Merger is completed. The Commission believes that this proposal is 
reasonably designed to enhance the transparency and integrity of the 
listing process.
    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\6\ that the proposed rule change (SR-NASDAQ-2006-047) be, and it 
hereby is, approved.
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    \6\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
 [FR Doc. E7-311 Filed 1-11-07; 8:45 am]

BILLING CODE 8011-01-P