[Federal Register: January 15, 2009 (Volume 74, Number 10)]
[Notices]
[Page 2640-2641]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr15ja09-150]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-59219; File No. SR-NASDAQ-2008-099]
Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Extend the Temporary Suspension of the Continued Listing Requirements
Related to Bid Price and Market Value of Publicly Held Shares for
Listing on the Nasdaq Stock Market Through April 19, 2009
January 8, 2009.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby
given that, on December 18, 2008, 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. 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\ 15 U.S.C. 78a.
\3\ 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 extend the temporary suspension of the
application of the continued inclusion bid price and market value of
publicly held shares requirements for listing on the Nasdaq Stock
Market through April 19, 2009.
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
On October 16, 2008, Nasdaq filed a proposed rule change, which was
immediately effective, to temporarily suspend the bid price \4\ and
market value of publicly held shares \5\ continued listing requirements
otherwise applicable to issuers of common stock, preferred stock,
secondary classes of common stock, shares or certificates of beneficial
interest of trusts, limited partnership interests, American Depositary
Receipts, and their equivalents.\6\ This suspension is currently
scheduled to last until January 16, 2009, to provide temporary relief
to companies from the application of these requirements during a period
in which the financial markets face almost unprecedented turmoil,
resulting in a crisis in investor confidence and concerns about the
proper functioning of the securities markets.\7\
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\4\ Nasdaq's continued listing requirements relating to bid
price are set forth in Rules 4310(c)(4), 4320(e)(2)(E)(ii),
4450(a)(5), 4450(b)(4), and 4450(h)(3) and the related compliance
periods are set forth in Rules 4310(c)(8)(D), 4320(e)(2)(E)(ii), and
4450(e)(2). Under these rules, a security is considered deficient if
it fails to achieve at least a $1 closing bid price for a period of
30 consecutive business days. Once deficient, Capital Market issuers
are provided one automatic 180-day period to regain compliance.
Thereafter, these issuers can receive an additional 180-day
compliance period if they comply with all Capital Market initial
inclusion requirements except bid price. Global Market issuers are
also provided one automatic 180-day period to regain compliance,
after which they can transfer to the Capital Market, if they comply
with all Capital Market initial inclusion requirements except bid
price, to take advantage of the second 180-day compliance period. A
company can regain compliance by achieving a $1 closing bid price
for a minimum of ten consecutive business days.
\5\ Nasdaq's continued listing requirements relating to market
value of publicly held shares are set forth in Rules 4310(c)(7),
4320(e)(5), 4450(a)(2), 4450(b)(3) and 4450(h)(2) and the related
compliance periods are set forth in Rules 4310(c)(8)(B) and
4450(e)(1). Under these rules, a security is considered deficient if
it fails to achieve the minimum market value of publicly held shares
requirement for a period of 30 consecutive business days.
Thereafter, companies have a compliance period of 90 calendar days
to achieve compliance by meeting the applicable standard for a
minimum of ten consecutive business days.
\6\ Securities Exchange Act Release No. 58809 (October 17,
2008), 73 FR 63222 (October 23, 2008) (SR-NASDAQ-2008-082). One
comment was submitted on this proposal by Alan F. Eisenberg,
Executive Vice President, the Biotechnology Industry Organization.
This comment supported the suspension and ``any efforts by the
Commission and NASDAQ to extend [the suspension], as necessary,
beyond the termination date of January 16, 2009.''
\7\ See, e.g., Securities Exchange Act Release No. 58588
(September 18, 2008), 73 FR 55174 (September 24, 2008) (``The
Commission is aware of the continued potential of sudden and
excessive fluctuations of securities prices and disruption in the
functioning of the securities markets that could threaten fair and
orderly markets. Given the importance of confidence in our financial
markets as a whole, we have also become concerned about sudden and
unexplained declines in the prices of securities. Such price
declines can give rise to questions about the underlying financial
condition of an issuer, which in turn can create a crisis of
confidence without a fundamental underlying basis. This crisis of
confidence can impair the liquidity and ultimate viability of an
issuer, with potentially broad market consequences.'').
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Market conditions have not improved since the suspension began and,
in fact, both the number of securities trading below $1 and the number
of securities trading between $1 and $2 on Nasdaq has increased. Nasdaq
continues to believe that there was no fundamental change in the
underlying business model or prospects for many of these companies, and
that a decline in general investor confidence has resulted in depressed
pricing for companies that otherwise remain suitable for continued
listing. These same conditions continue to make it difficult for
companies to successfully implement a plan to regain compliance with
the price or market value of publicly held shares tests.
Given these extraordinary market conditions, Nasdaq has determined
that it is appropriate to continue the temporary suspension of the bid
price and market value of publicly held shares requirements for an
additional three months, until April 19, 2009. Under this proposal,
companies would not be cited for new bid price or market value of
publicly held shares deficiencies during the suspension period, and the
time allowed to companies already in a compliance period or in the
hearings process for bid price or market value of publicly held shares
deficiencies would remain suspended with respect to those
requirements.\8\ Following the temporary suspension, any new
deficiencies with the bid price or market value of publicly held shares
requirements would be determined using data starting on April 20,
2009.\9\ When the suspension expires, companies that were in a
compliance period as of October 16, 2008, when the suspension first
began, would receive the balance of any pending compliance
[[Page 2641]]
periods in effect at the time of the initial suspension.\10\ Similarly,
companies that were in the Hearings process prior to October 16, 2008,
would resume in that process at the same stage they were in when the
suspension first went into effect. Nasdaq will continue to monitor
securities to determine if they regain compliance during the temporary
suspension.
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\8\ Nasdaq would continue to identify on its Web site and in its
daily data feed to vendors those companies in a compliance period or
in the hearings process as not satisfying the continued listing
standards, unless the company regains compliance during the
suspension. A company would continue to be subject to delisting for
failure to comply with other listing requirements.
\9\ Nasdaq would not consider the bid price or market value of
publicly held shares for the period before or during the suspension
with respect to a company that was not yet non-compliant with those
requirements at the start of the suspension.
\10\ For example, if a company was 120 days into its first 180-
day compliance period for a bid price deficiency when the suspension
first started and the company does not regain compliance during the
suspension, the company would have sixty days remaining, starting on
April 20, 2009, to regain compliance. The company may be eligible
for the second 180-day compliance period if it satisfies the
conditions for the second compliance period at the conclusion of the
first compliance period.
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Nasdaq believes that extending the temporary suspension will permit
companies to continue focusing on running their businesses, rather than
satisfying market-based requirements that are largely beyond their
control in the current environment. Moreover, this extension will allow
investors to buy shares of some of these lower-priced securities
without fear that the company will receive a delisting notification or
be delisted in the very near term.\11\ Nasdaq will continue to monitor
market conditions and consider whether it is appropriate to further
extend the suspension.
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\11\ As noted above, following the suspension, companies
presently in the compliance process will remain at that same stage
of the process.
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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,\12\ in general and with
Sections [sic] 6(b)(5) of the Act,\13\ 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 is designed to remove uncertainty regarding the ability of
companies to remain listed on Nasdaq during this especially turbulent
market environment, thereby protecting investors, facilitating
transactions in securities, and removing an impediment to a free and
open market.
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\12\ 15 U.S.C. 78f.
\13\ 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
While written comments were not solicited about the proposed
extension, there was one comment submitted by the Biotechnology
Industry Organization on the original suspension of the bid price and
market value of publicly held shares requirements, which supported the
extension. That comment is described in footnote 6, above.
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 \14\ and
Rule 19b-4(f)(6) thereunder.\15\
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\14\ 15 U.S.C. 78s(b)(3)(A).
\15\ 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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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, 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-2008-099 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-2008-099.
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-2008-099 and should be submitted on or before
February 5, 2009.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
Florence E. Harmon,
Deputy Secretary.
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\16\ 17 CFR 200.30-3(a)(12).
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[FR Doc. E9-778 Filed 1-14-09; 8:45 am]
BILLING CODE 8011-01-P