Document ID: SEC-2007-0595-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: NASDAQ Stock Market LLC
Posted Date: 2007-04-25T04:00Z

[Federal Register: April 25, 2007 (Volume 72, Number 79)]
[Notices]               
[Page 20572-20573]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr25ap07-121]                         

[[Page 20572]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55645; File No. SR-NASDAQ-2007-040]

 
Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing of Proposed Rule Change Relating to the Waiver of Fees 
Upon Relisting of Companies Removed for Late Filings

April 19, 2007.
    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 April 4, 2007, 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 
substantially prepared by Nasdaq. 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

    Nasdaq proposes to allow, in certain circumstances, a company to 
relist without paying a new entry and application fee if the Company 
was delisted solely for the failure to file a required periodic report 
with the Commission or other appropriate regulatory authority. Nasdaq 
also proposes to delete a separate, duplicative provision in the rules. 
The text of the proposed rule change appears below. Proposed new 
language is italicized and proposed deletions are in brackets.\3\
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    \3\ Changes are marked to the rule text that appears in the 
electronic manual of Nasdaq found at http://nasdaq.complinet.com.

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* * * * *
    IM-4500-5. Waiver of Fees Upon Relisting for Companies Removed for 
Late Filings Entry Fees. Pursuant to Nasdaq's authority to waive 
certain fees, Nasdaq has determined to waive the entry fee (including 
the application fee) in the following circumstances:
    (1) the company was suspended and/or delisted from the Nasdaq Stock 
Market solely for its failure to file a required periodic report with 
the Commission or other appropriate regulatory authority, pursuant to 
Rule 4310(c)(14) or 4320(e)(12); and
    (2) the company has regained compliance with this requirement and 
applies to relist on Nasdaq within one year of the date it is delisted 
from Nasdaq.
    Annual Fees. A company that meets the above requirements and 
relists during the same year that it has previously paid an annual fee 
will not be subject to a second annual fee in that same year.
* * * * *
4520. The Nasdaq Capital Market
    (a) No change.
    (b) No change.
    (1)-(5) No change.
    [(6) The issuer of each class of securities that is a non-U.S. 
issue that is listed on the Nasdaq Capital Market shall pay to Nasdaq a 
fee in connection with the issuance of additional shares, or in the 
case of ADRs, the listing of additional shares underlying the ADRs. The 
fee in connection with additional shares shall be $5,000 for any amount 
of additional shares listed on an annual basis. This fee will be 
assessed annually based on the issuer's total shares outstanding as 
reported on its periodic reports filed with the SEC. There shall be no 
fee, however, for issuances of up to 49,999 additional shares per 
year.]
    (c)-(e) 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 III 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
    Existing Nasdaq rules provide the authority to waive entry, 
application and annual fees.\4\ Pursuant to this authority, Nasdaq has 
determined to waive the entry and application fee for any company that 
was suspended \5\ and/or delisted from the Nasdaq Stock Market solely 
for its failure to file a required periodic report with the Commission 
or other appropriate regulatory authority, if the company regains 
compliance with this requirement and applies to relist on Nasdaq within 
one year of the date it is delisted from Nasdaq. In addition, if such a 
company relists during the same calendar year that it has previously 
paid an annual fee, the company will not be subject to a second annual 
fee in that same year.
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    \4\ Nasdaq Rules 4510(a)(5), 4520(a)(4), 4530(a)(4) and 
4540(a)(2) provide authority to waive entry and application fees and 
Nasdaq rules 4510(c)(2), 4510(d)(5), 4520(c)(4), 4530(b)(2) and 
4540(b)(3) provide authority to waive annual fees. Nasdaq notes that 
in several prior instances, the predecessor market operated by The 
Nasdaq Stock Market, Inc. as a facility of the NASD filed listing 
fee waivers of general applicability on an immediately effective 
basis, pursuant to SEC rule 19b-4(f)(1), 17 CFR 240.19b-4(f)(1), as 
a stated policy, practice, or interpretation with respect to the 
meaning, administration, or enforcement of these existing rules. 
See, e.g., Securities Exchange Act Release No. 49133 (January 28, 
2004), 69 FR 5630 (February 5, 2004) (SR-NASD-2003-198); Securities 
Exchange Act Release No. 49286 (February 19, 2004), 69 FR 8999 
(February 26, 2004) (SR-NASD-2004-004). More recently, the New York 
Stock Exchange has submitted a filing to waive listing fees subject 
to Commission approval under section 19(b)(2) of the Act, 15 U.S.C. 
78s(b)(2). See Securities Exchange Release No. 55421 (March 8, 
2007), 72 FR 11925 (March 14, 2007) (SR-NYSE-2007-19). As a result, 
Market Regulation staff has advised Nasdaq that this proposed rule 
change should also be filed under section 19(b)(2). Although Nasdaq 
is following staff's guidance in this case, Nasdaq notes that the 
rules authorizing waivers of listing fees have been in effect for an 
extensive period of time, having first been approved as NASD rules 
in 1991, and then re-approved by the Commission as rules of Nasdaq 
during its registration as a national securities exchange. 
Accordingly, it is Nasdaq's view that nothing in this filing should 
be construed to restrict Nasdaq's approved authority to waive 
listing fees with respect to particular issuers in appropriate 
circumstances, nor should this filing be construed to restrict the 
submission of filings on an immediately effective basis in 
appropriate circumstances.
    The Commission notes that the waiver authority referred to in 
the Nasdaq Rules was specifically intended to grant Nasdaq 
flexibility to waive fees on a case-by-case basis. See Securities 
Exchange Release No. 28731 (January 2, 1991), 56 FR 906 (January 9, 
1991) (SR-NASD-90-61). The Commission does not believe it is, as a 
general matter, appropriate to allow for the waiver of fees to a 
class of non-members without first providing interested persons an 
opportunity to comment on the proposed rule change pursuant to 
section 19(b)(2) under the Act.
    \5\ Nasdaq Rule 4802(f) requires a security to meet the 
requirements for initial listing (which include the requirement to 
pay the applicable listing fees) if the security has been the 
subject of a decision to delist by a Listing Qualifications Panel, 
the Nasdaq Listing and Hearing Review Council or the Nasdaq Board.
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    Nasdaq believes that this waiver is appropriate given that, on 
average, the review of such an issuer is likely to be simpler than the 
typical application for several reasons. First, because these companies 
were previously listed on Nasdaq and compliant with all requirements 
except the filing requirement, it is more likely that they will be 
compliant with all other quantitative and qualitative

[[Page 20573]]

requirements. Further, relevant information about these companies is 
already contained in Nasdaq's compliance systems. Finally, Nasdaq 
anticipates that there would be fewer questions concerning the 
company's financial statements given that these companies will often 
have undergone extensive review by their auditors and, in some cases, 
by independent investigators and the Commission or other regulatory 
entities, in order to resolve the issues that caused the late filings.
    Nasdaq is implementing these waivers to incent companies to re-list 
on Nasdaq once they regain compliance with the periodic filing 
requirement, rather than seek a listing elsewhere. Nasdaq believes that 
this waiver is appropriate, especially because Nasdaq's rules governing 
the delisting of companies that are delinquent in periodic reports are 
generally stricter than those of other markets. As such, the proposed 
waivers will promote competition between Nasdaq and other exchange 
markets.
    The proposed rule change will not affect Nasdaq's commitment of 
resources to its regulatory oversight of the listing process or its 
other regulatory programs. Specifically, Nasdaq will still conduct a 
complete review of these companies for compliance with Nasdaq listing 
standards in the same manner as any other company applying for listing 
on Nasdaq. Any fee waiver under this proposed rule is predicated on the 
Company successfully completing that review process and demonstrating 
compliance with the initial listing requirements.
    Finally, Nasdaq proposes to delete a duplicative provision in Rule 
4520(b). Currently, Rule 4520(b)(6) is identical to Rule 4520(b)(2). As 
such, Nasdaq proposes to delete Rule 4520(b)(6).
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 Section 
6(b)(4) of the Act,\7\ in particular. Nasdaq believes that the proposed 
waivers are equitable and reasonable because these companies previously 
paid entry and annual fees to Nasdaq and to again charge such fees 
would impose duplicative costs.
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    \6\ 15 U.S.C. 78f.
    \7\ 15 U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    Nasdaq does not believe that the proposed rule change will impose 
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. 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-2007-040 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, Station Place, 100 F 
Street, NE., Washington, DC 20549-1090.
    All submissions should refer to File Number SR-NASDAQ-2007-040. 
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. Copies of such 
filing also will be available for inspection and copying at the 
principal office of Nasdaq. 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-2007-040 and should be submitted on or before May 
16, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-7838 Filed 4-24-07; 8:45 am]

BILLING CODE 8010-01-P