Document ID: SEC-2009-0128-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ Stock Market LLC
Posted Date: 2009-01-29T05:00Z

[Federal Register: January 29, 2009 (Volume 74, Number 18)]
[Notices]               
[Page 5197-5199]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr29ja09-105]                         

[[Page 5197]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59291; File No. SR-NASDAQ-2009-002]

 
Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Modify the Compliance Period Applicable to Companies That Fail To Meet 
the Market Value of Listed Securities Requirement

January 23, 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 13, 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 the compliance period applicable to 
listed companies that fail to meet the market value of listed 
securities requirement.
    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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4310. Listing Requirements for Domestic and Canadian Securities.

    To qualify for listing in Nasdaq, a security of a domestic or 
Canadian issuer shall satisfy all applicable requirements contained in 
paragraphs (a), (b), and (c) hereof. Issuers that meet these 
requirements, but that are not listed on the Nasdaq Global Market, are 
listed on the Nasdaq Capital Market.
    (a)-(b) No change
    (c) In addition to the requirements contained in paragraph (a) and 
(b) above, and unless otherwise indicated, a security shall satisfy the 
following criteria for listing on Nasdaq:
    (1)-(7) No change.
    (8) (A)-(B) No change.
    (C) A failure to meet the continued listing requirement for market 
value of listed securities shall be determined to exist only if the 
deficiency continues for a period of 10 consecutive business days. Upon 
such failure, the issuer shall be notified promptly and shall have a 
period of [30] 90 calendar days from such notification to achieve 
compliance. Compliance can be achieved by meeting the applicable 
standard for a minimum of 10 consecutive business days during the [30] 
90 day compliance period.
    (D)-(E) No change.
    (9)-(30) No change.
    (d) No change.

4320. Listing Requirements for Non-Canadian Foreign Securities and 
American Depositary Receipts.

    To qualify for listing on Nasdaq, a security of a non-Canadian 
foreign issuer, an American Depositary Receipt (ADR) or similar 
security issued in respect of a security of a foreign issuer shall 
satisfy the requirements of paragraphs (a), (b), and (e) of this Rule. 
Issuers that meet these requirements, but that are not listed on the 
Nasdaq Global Market, are listed on the Nasdaq Capital Market.
    (a)-(d) No change.
    (e) In addition to the requirements contained in paragraphs (a) and 
(b), the security shall satisfy the criteria set out in this subsection 
for listing on Nasdaq. In the case of ADRs, the underlying security 
will be considered when determining the ADR's qualification for initial 
or continued listing on Nasdaq.
    (1) No change.
    (2) (A)-(C) No change.
    (D) A failure to meet the continued listing requirements for market 
value of listed securities shall be determined to exist only if the 
deficiency continues for a period of 10 consecutive business days. Upon 
such failure, the issuer shall be notified promptly and shall have a 
period of [30] 90 calendar days from such notification to achieve 
compliance with the applicable continued listing standard. Compliance 
can be achieved by meeting the applicable standard for a minimum of 10 
consecutive business days during the [30] 90 day compliance period.
    (E) No change.
    (3)-(26) No change.
    (f) No change.
* * * * *

4450. Quantitative Maintenance Criteria.

    After listing as a Nasdaq Global Market security, a security must 
substantially meet the criteria set forth in paragraphs (a) or (b), and 
(c), (d), (e) (f), (g), (h) or (i) below to continue to remain listed 
on the Nasdaq Global Market. A security maintaining its listing under 
paragraph (b) need not also be in compliance with the quantitative 
maintenance criteria in the Rule 4300 series.
    (a)-(d) No change.
    (e) Compliance Periods
    (1)-(3) No change.
    (4) A failure to meet the continued listing requirements for market 
[capitalization] value of listed securities shall be determined to 
exist only if the deficiency continues for a period of 10 consecutive 
business days. Upon such failure, the issuer shall be notified promptly 
and shall have a period of [30] 90 calendar days from such notification 
to achieve compliance with the applicable continued listing standard. 
Compliance can be achieved by meeting the applicable standard for a 
minimum of 10 consecutive business days during the [30] 90 day 
compliance period.
    (f)-(i) No change.
* * * * *

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 proposes to modify the procedures applicable to listed 
companies that fail to meet the market value of listed securities 
requirement. A company fails to meet the continued listing requirement 
for market value of listed securities if the market value of listed 
securities is below the applicable threshold for a period of 10 
consecutive business days.\5\ Upon such a failure, the company is 
currently provided a ``compliance period'' of 30 calendar days to 
achieve compliance. Compliance is achieved by meeting the requirement 
for a minimum of 10

[[Page 5198]]

consecutive business days during the 30 day compliance period.
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    \5\ See Rules 4310(c)(8)(C), 4320(e)(2)(D) and 4450(e)(4).
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    Nasdaq has come to believe that the 30 day compliance period 
afforded by the existing rules is too short a period, especially during 
periods of market turmoil. Further, while companies are only allowed a 
30 day period to regain compliance with the market value of listed 
securities requirement, they are allowed a 90 day compliance period to 
regain compliance with the requirement for market value of publicly 
held securities,\6\ which is a subset of all listed securities.\7\ As 
such, Nasdaq proposes to modify the compliance period applicable to a 
company that fails to meet the market value of listed securities 
requirement to extend the compliance period from 30 days to 90 days, 
making it the same as the compliance period for the market value of 
publicly held securities requirement.\8\
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    \6\ See Rules 4310(c)(8)(B) and 4450(e)(1).
    \7\ Nasdaq also notes that the market value of listed securities 
requirement operates as an alternative to other listing 
requirements. See Rules 4310(c)(3), 4320(e)(2)(B), 4350(a) and 
4350(b). However, while a company that previously qualified under 
any of the alternative listing requirements is permitted by Rule 
4803(a)(1)(A) to provide Nasdaq staff with a plan to regain 
compliance and could receive a staff exception of up to 105 calendar 
days, a company that qualified under the market value of listed 
securities requirement is only permitted 30 calendar days to regain 
compliance if it becomes deficient.
    \8\ The company could also regain compliance by meeting one of 
the alternative listing requirements. For example, a company that 
fails to meet the market value of listed securities requirement 
could raise enough equity during the 90 day compliance period to 
meet the applicable equity requirement.
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    Nasdaq proposes that any company that previously received a 
delisting notification for failing to meet the market value of listed 
securities requirement would continue to be subject to delisting for 
that reason, unless a Hearings Panel grants the company an exception 
pursuant to Rule 4802(b)(2). A company that has not yet received a 
delisting notification from Nasdaq staff would have its compliance 
period extended to 90 calendar days from the date it was notified of 
the original deficiency. Thus, for example, if 25 days had elapsed 
since the company was notified of its 30-day compliance period under 
the old rule, the company would have an additional 65 days (including 
the five days remaining in the original compliance period), for a total 
compliance period of 90 days from the original notification.\9\
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    \9\ Nasdaq also proposes to correct a reference in Rule 
4450(e)(4) that currently refers to ``market capitalization'' to 
instead refer to ``market value of listed securities.'' Nasdaq 
inadvertently failed to change this reference when it changed the 
description of the underlying initial and continued listing 
requirement. See Securities Exchange Act Release No. 45283 (January 
15, 2002), 67 FR 3520 (January 24, 2002) (approving SR-NASD-2001-
84).
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2. Statutory Basis
    Nasdaq believes that the proposed rule change is consistent with 
the provisions of Section 6 of the Act,\10\ in general and with Section 
6(b)(5) of the Act,\11\ 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 
would modify Nasdaq's treatment of non-compliance with the market value 
of listed securities requirement in order to help allow companies 
sufficient time to cure a deficiency, especially during turbulent 
market environments, thereby protecting investors, facilitating 
transactions in securities, and removing an impediment to a free and 
open market.
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    \10\ 15 U.S.C. 78f.
    \11\ 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 \12\ and 
Rule 19b-4(f)(6) thereunder.\13\
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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 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 requested that the Commission waive the 5-day pre-
filing notice requirement. The Commission has determined to waive 
this requirement.
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    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act \14\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \15\ 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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    \14\ 17 CFR 240.19b-4(f)(6).
    \15\ 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 
because the proposed rule change will conform the length of the 
compliance period for a failure to meet the continued listing 
requirement for market value of listed securities with the current 
compliance period for a failure to meet the continued listing 
requirement for market value of publicly held shares. Because the 
publicly held shares listing requirement is merely a subset of the 
market value of listed securities requirement, the Commission believes 
that allowing companies that are deficient in the market value of 
listed securities requirement the same maximum time of 90 days that is 
currently available to cure a market value of publicly held securities 
deficiency raises no new regulatory issues. In addition, the Commission 
believes that waiving the 30-day operative delay will allow Nasdaq to 
immediately afford companies that may be deficient in the market value 
of listed securities requirement due to recent market volatility and 
conditions an additional 60 days to regain compliance.\16\ For these 
reasons, the Commission designates that the proposed rule change become 
operative immediately upon filing.\17\
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    \16\ See discussion supra regarding companies already in a 
compliance period and companies that have already received a 
delisting notification.
    \17\ 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,

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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-2009-002 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-2009-002. 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-2009-002 and should be submitted on or before 
February 19, 2009.

    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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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-1943 Filed 1-28-09; 8:45 am]

BILLING CODE 8011-01-P