[Federal Register: March 13, 2008 (Volume 73, Number 50)]
[Notices]
[Page 13595-13596]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr13mr08-92]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-57447; File No. SR-NASDAQ-2007-096]
Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Order
Approving Proposed Rule Change To Modify the Allocation of the Maximum
Time an Adjudicatory Body May Grant a Company To Regain Compliance with
the Listing Requirements without Modifying the Maximum Time Available
Under Nasdaq Rule 4802
March 6, 2008.
I. Introduction
On December 4, 2007, The NASDAQ Stock Market LLC (``Nasdaq'' or
``Exchange'') 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 modify the allocation of the maximum time an
adjudicatory body may grant an issuer to regain compliance with the
listing requirements. The proposed rule change was published for
comment in the Federal Register on February 1, 2008.\3\ The Commission
received no comments on the proposal. This order approves the proposed
rule change.
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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. 57214 (January 28,
2008), 73 FR 6228.
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II. Description of the Proposal
Nasdaq Rule 4800 Series sets forth the procedures for review of a
Nasdaq listing determination. Rule 4802(b) provides that an issuer may
file a written request for an exception to any of the standards set
forth in the Rule 4000 Series at any time during the pendency of a
proceeding under the Rule 4800 Series and sets forth the time periods
that an adjudicatory body may grant an issuer to regain compliance with
the listing requirements (``Exception Period'') before they are
delisted. Under the current rules, the Listing Qualifications Panel
(``Panel'') can grant a maximum Exception Period that is the lesser of
180 days from the date that Nasdaq staff sends a delisting letter
(``Staff Determination'') or 90 days from the date of the Panel's
decision in the matter. Similarly, the Nasdaq Listing and Hearing
Review Council (``Listing Council''), when reviewing a Panel decision,
can grant a maximum Exception Period that is the lesser of 180 days
from the date of the Panel decision on review or 60 days from the
[[Page 13596]]
date of the Listing Council's decision in the matter. As a result,
while the maximum cumulative exception these bodies can grant under
these provisions is 360 days from the date of the Staff Determination,
Nasdaq notes in its filing that the actual amount of time can vary from
issuer to issuer based on how quickly the issuer is scheduled for a
hearing and the speed with which the Panel and Listing Council
decisions are prepared. The Exchange believes that this variability may
create uncertainty for Nasdaq-listed companies and their investors
regarding the maximum amount of time available under an exception.
Nasdaq therefore proposes to modify the computation of the maximum
Exception Period permitted under Rule 4802(b). The proposed rule change
would not, however, increase the maximum time available under the
process. The Exchange proposes that the maximum Exception Period that a
Panel could provide would be 180 days from the date of the Staff
Determination, and the maximum Exception Period that the Listing
Council could provide would be 360 days from the date of the Staff
Determination. As under the current rules, these adjudicatory bodies
would continue to be able to grant an issuer a shorter Exception
Period, or no Exception Period at all, based on their analysis of the
applicable facts and circumstances.
III. Discussion
After careful review, 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
and, in particular, with Section 6(b)(5) of the Act,\4\ which requires,
among other things, that the rules of a national securities exchange be
designed to prevent fraudulent and manipulative acts and practices, 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
market system and, in general, to protect investors and the public
interest.\5\ The Commission also finds that the proposal is consistent
with Section 6(b)(7) of the Act,\6\ in that it provides a fair
procedure for the prohibition or limitation by the Exchange of any
person with respect to access to services offered by the Exchange.
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\4\ 15 U.S.C. 78f(b)(5).
\5\ 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).
\6\ 15 U.S.C. 78f(b)(7).
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The Commission believes that it is essential for a national
securities exchange to have an efficient and fair delisting process for
issuers that are not in compliance with Exchange rules and/or the Act.
The Commission believes that the proposed rule change has the effect of
providing for a maximum Exception Period that is consistent for all
issuers and not dependent on the timing of the adjudicatory decision,
while at the same time does not extend the overall maximum time
allotted for a non-compliant issuer to go through the Nasdaq's current
delisting process. Specifically, under the proposal, rather than being
dependent on variable events, such as how quickly an issuer is
scheduled for a hearing and how promptly the Panel and Listing Counsel
issue their decisions, the maximum allowable Exception Period will, in
all cases, be based on the date of the Staff Determination.
The Commission recognizes that certain individual issuers that have
already gone through the Exchange delisting process might have been
granted a longer Exception Period had they gone through the process
under the proposed new rules. Nevertheless, the Commission emphasizes
that the proposed rules do not in any way increase the maximum time
that could potentially be available to issuers under Nasdaq's existing
delisting process. Further, the Commission believes the proposed rule
change should help to ensure fair application of the rule to all
issuers, consistent with Section 6(b)(7) of the Act,\7\ and should
eliminate some uncertainty for issuers regarding the maximum time that
may be available under an Exception Period.
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\7\ 15 U.S.C. 78f(b)(7).
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Finally, the Commission notes that the new rules provide that the
Panel and Listing Counsel can allow an Exception Period not to exceed
180 days or 360 days from the Staff Determination, respectively. Thus,
there may still be variation in the Exception Periods that are granted
to issuers, because the Panel and Listing Counsel retain the authority
to grant an issuer a shorter Exception Period than the maximum
allowable period or no Exception Period at all. In this regard, the
Commission expects the Panel and Listing Counsel to only grant an
Exception Period to those issuers who are likely to regain compliance
within the time frame allotted and notes that there is no particular
right under Nasdaq rules for issuers to be allotted any particular
Exception Period. The Commission expects Nasdaq to continue to delist
issuers, who are not meeting Nasdaq continued listing standards, or
complying with Nasdaq rules and/or the Act, in a prompt, efficient and
fair manner in furtherance of Sections 6(b)(5) and 6(b)(7) of the
Act.\8\
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\8\ 15 U.S.C. 78f(b)(5), 78f(b)(7).
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IV. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\9\ that the proposed rule change (SR-NASDAQ-2007-096) be, and
hereby is, approved.
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\9\ 15 U.S.C. 78s(b)(2).
\10\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\10\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E8-4966 Filed 3-12-08; 8:45 am]
BILLING CODE 8011-01-P