[Federal Register: December 4, 2002 (Volume 67, Number 233)]
[Notices]
[Page 72239-72241]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr04de02-94]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-46887; File No. SR-Amex-2002-97]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change by the American Stock Exchange LLC Relating to Initial and
Continued Listing Standards
November 22, 2002.
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 November 20, 2002, the American Stock Exchange LLC (``Amex'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the Exchange. 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
The Amex proposes to amend Sections 101, 102, and 1003 of the Amex
Company Guide to modify initial and continued listing standards. The
text of the proposed rule change is below. Proposed new language is in
italics; proposed deletions are in brackets.
* * * * *
American Stock Exchange LLC Company Guide
Section 101
(a) through (c)--No Change.
[[Page 72240]]
(d) Initial Listing Standard 4
(1) Total Value of Market Capitalization--$75,000,000; or
Total assets and total revenue--$75,000,000 each in its last fiscal
year, or in two of its last three fiscal years.
(2) Aggregate Market Value of Publicly Held Shares--$20,000,000.
(3) Distribution `` See Section 102(a).
([d]e) Alternative Listing Standards
The securities of certain issuers which do not satisfy any of the
Initial Listing Standards set forth in paragraphs (a)-([c]d) of this
Section may be eligible for initial listing pursuant to the appeal
procedures and the Alternative Listing Standards specified in Section
1203(c).
Additional criteria applicable to various classes of securities and
issuers are set forth below. Applicants should also consider the
policies regarding conflicts of interest, independent directors and
voting rights described in Sec. Sec. 120-125.
Commentary .01--No Change.
Section 102
(a)--No Change.
(b) Stock Price/Market Value of Shares Publicly Held--The Exchange
requires a minimum market price of $3 per share for applicants seeking
to qualify for listing pursuant to Section 101 (a), [or] (b) or (d),
and $3,000,000 aggregate market value of publicly held shares for
applicants seeking to qualify for listing pursuant to Section 101(a).
In certain instances, however, the Exchange may favorably consider
listing an issue selling for less than $3 per share after considering
all pertinent factors, including market conditions in general, whether
historically the issue has sold above $3 per share, the applicant's
capitalization and the number of outstanding and publicly-held shares
of the issue.
(c)--No change.
* The terms ``public distribution'' and ``public
shareholders'' as used in the Company Guide include both shareholders
of record and beneficial holders, but are exclusive of the holdings of
officers, directors, controlling shareholders and other concentrated
(i.e. 10% or greater), affiliated or family holdings.
* * * * *
Section 1003
* * * * *
(a) Financial Condition and/or Operating Results--The Exchange will
normally consider suspending dealings in, or removing from the list,
securities of a company which:
(i) has stockholders' equity of less than $2,000,000 if such
company has sustained losses from continuing operations and/or net
losses in two of its three most recent fiscal years; or
(ii) has stockholders' equity of less than $4,000,000 if such
company has sustained losses from continuing operations and/or net
losses in three of its four most recent fiscal years; or
(iii) has stockholders' equity of less than $6,000,000 if such
company has sustained losses from continuing operations and/or net
losses in its five most recent fiscal years; or
(iv) has sustained losses which are so substantial in relation to
its overall operations or its existing financial resources, or its
financial condition has become so impaired that it appears
questionable, in the opinion of the Exchange, as to whether such
company will be able to continue operations and/or meet its obligations
as they mature.
However, the Exchange will not normally consider suspending
dealings in, or removing from the list, the securities of a company
which is below any of standards (i) through (iii) above if the company
is in compliance with the following:
(1) Total value of market capitalization* of at least $50,000,000;
or total assets and revenue of $50,000,000 each in its last fiscal
year, or in two of its last three fiscal years; and
(2) The company has at least 1,100,000 shares publicly held, a
market value of publicly held shares of at least $15,000,000 and 400
round lot shareholders.
Companies falling below one of the above standards and considering
a combination with an unlisted company should see Section 341 for the
discussion of the Exchange's listing policies contained therein.
* Market capitalization for purposes of Section 1003
includes the total common stock outstanding (excluding treasury shares)
as well as any common stock that would be issued upon conversion of
another outstanding equity security, if such other security is a
``substantial equivalent'' of common stock. Generally, the security
must be (1) publicly traded or quoted, or (2) convertible into a
publicly traded or quoted security. A convertible security will be
considered the ``substantial equivalent'' of common stock if the
convertible security is presently convertible, and the conversion price
is equal to or less than the current market price of the common stock.
For partnerships, the current capital structure will be analyzed to
determine whether it is appropriate to include other publicly traded or
quoted securities in the calculation.
* * * * *
(b) Not applicable.
(c) Not applicable.
* * * * *
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 Exchange 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. The Exchange 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
Based upon an evaluation of trends and developments within the Amex
listed company community, as well as public issuers generally, the
Exchange is proposing to modify initial and continued listing standards
to enable it to evaluate listing eligibility against broader and more
in-depth measures of financial condition. Specifically, some
financially sound issuers may be unable to satisfy the shareholders'
equity requirement contained in existing listing standards as a result
of certain accounting conventions. An issuer may be forced to write-off
goodwill associated with merger and acquisition activity or take
significant depreciation charges which are customary in a particular
industry (e.g., telecommunications) which could have the effect of
reducing the issuer's shareholders' equity and income.\3\
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\3\ A number of large telecommunications issuers report
significant deficit equity. For example, Cablevisions Systems
Corporation (NYSE:CVC) reported a deficit of $1.8 billion; Nextel
Communications, Inc. (Nasdaq NMS: NXTL) reported a deficit of $479
million; and Level 3 Communications Inc. (Nasdaq NMS: LVLT) reported
a deficit of $78 million as of each issuer's most recent periodic
SEC filing. Similarly, Amazon.com, Inc. (Nasdaq NMS: AMZN) reported
a deficit of $1.5 billion.
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Accordingly, the Exchange is proposing to adopt a new initial
listing standard (in addition to existing standards) which is designed
to permit an assessment of an issuer's suitability for listing on the
basis of compliance with total market capitalization or total
[[Page 72241]]
assets and revenues in substitution of shareholders' equity. As
accounting requirements become increasingly complex, it is important to
provide such alternative criteria so that financially sound issuers are
not precluded from listing on the Exchange solely on the basis of
particular accounting conventions. Specifically, the new initial
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listing standard would require the following:
Total value of market capitalization: $75 million, or
Total assets and total revenue: $75 million each (in most recent fiscal
year or two of last three most recently completed fiscal years)
Price: $3
Market value of public float: $20 million
Public float shares/public stockholders: 500,000/800 or 1 million/400
or 500,000/400 (plus average daily volume of 2,000 shares)
The Exchange states that the proposed new standard is not
materially different from standards in place at other marketplaces and
is consistent with existing Amex listing standards. In this regard it
should be noted that both the New York Stock Exchange (``NYSE'') and
Nasdaq listing standards contain a variety of alternative
qualifications standards, including standards based on measures of
market capitalization, revenue and assets.
It is also proposed that corresponding revisions be adopted to the
continued listing standards to provide that a listed company will not
be subject to delisting (assuming compliance with other applicable
standards) even if it has experienced net losses or losses from
continuing operations, and does not satisfy existing equity
requirements \4\ if it is in compliance with the following
requirements:
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\4\ Section 1003(a) of the Amex Company Guide provides that a
listed company which has sustained losses in two of its three, three
of its four, or five of its most recent fiscal years will be subject
to delisting if its stockholders' equity is less than $2 million, $4
million or $6 million, respectively.
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[sbull] Total value of market capitalization: $50 million, or
[sbull] Total assets and revenue: $50 million each (in most recent
fiscal year or two of last three most recently completed fiscal years),
and
[sbull] At least 1,100,000 shares publicly held, a market value of
publicly held shares of at least $15,000,000 and 400 round lot
shareholders.
The Exchange believes that an issuer with significant market
capitalization or assets and revenue should be able to continue its
listing despite several years of losses (and assuming compliance with
other applicable continued listing standards), in that these financial
measures are generally an indication of a company's strength.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the provisions of Section 6(b) of the Act \5\ in general, and
furthers the objectives of Section 6(b)(5) \6\ 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 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, and is not
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers. Specifically, the Exchange believes that the
proposed rule change will allow for the evaluation of an issuer's
listing eligibility against more meaningful and comprehensive criteria.
The Exchange also believes that the proposed rule change will provide
investors and potential investors in the securities that would be
eligible for listing with the benefits inherent in an Amex listing.
According to the Exchange, these benefits include: comprehensive
regulation; transparent price discovery and trade reporting to
facilitate best execution; and increased depth and liquidity resulting
from the confluence of order flow found in an auction market
environment.
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\5\ 15 U.S.C. 78f(b).
\6\ 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 purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others
The Exchange has neither solicited nor received written comments on
the proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 35 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the Exchange consents, the Commission will:
(A) By order approve such 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. Persons making written submissions
should file six copies thereof with the Secretary, Securities and
Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609.
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 will also be
available for inspection and copying at the principal office of the
Exchange. All submissions should refer to File No. SR-Amex-2002-97 and
should be submitted by December 26, 2002.
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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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-30667 Filed 12-3-02; 8:45 am]
BILLING CODE 8010-01-P