[Federal Register Volume 79, Number 242 (Wednesday, December 17, 2014)]
[Notices]
[Pages 75217-75220]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-29498]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-73821; File No. SR-NYSE-2014-65]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing of Proposed Rule Change Amending Its Continued Listing
Requirements in Relation to the Late Filing of a Company's Annual
Report With the Securities and Exchange Commission as set Forth in
Section 802.01E of the Exchange's Listed Company Manual
December 11, 2014.
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 4, 2014, New York Stock Exchange LLC (``NYSE''
or the ``Exchange'') filed with the Securities and Exchange Commission
(the ``Commission'') the proposed rule change as described in Items I,
II, and III below, which Items have been prepared by the self-
regulatory organization. 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
The Exchange proposes to amend its continued listing requirements
in relation to the late filing of a company's annual report with the
Securities and Exchange Commission (``SEC'' or ``Commission'') as set
forth in Section 802.01E of the Exchange's Listed Company Manual (the
``Manual''). The text of the proposed rule change is available on the
Exchange's Web site at www.nyse.com, at the principal office of the
Exchange, and at the Commission's Public Reference Room.
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 self-regulatory organization
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 those 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 parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend its continued listing requirements
in relation to the late filing of a company's annual report with the
SEC as set forth in Section 802.01E (the ``Late Filer Rule'') of the
Manual. As amended, the Late Filer Rule will (i) expand the rule to
impose a maximum period within which a company must file a late
quarterly report on Form 10-Q in order to maintain its listing and (ii)
clarify the Exchange's treatment of companies whose annual or quarterly
reports are defective at the time of filing or become defective at some
subsequent date.
In its current form, the Late Filer Rule deems a listed company to
be delinquent in filing its annual report on Forms 10-K, 20-F, 40-F or
N-CSR with the SEC if it fails to submit the filing by the date such
report was required to be filed by the applicable form, or if a Form
12b-25 was timely filed with the SEC, the extended filing due date for
the annual report. During the six-month period from the date of such
delinquency, the Exchange monitors the company and the status of the
delinquent annual report, including through contact with the company,
until the filing delinquency is cured. If the company fails to cure
such delinquency within the initial six-month period, the Exchange may,
in its sole discretion, allow the company's securities to be traded for
up to an additional six-month period depending on the company's
specific circumstances. If the Exchange determines that an additional
trading period of up to six months is not appropriate, suspension and
delisting procedures are commenced in accordance with the procedures
set out in Section 804.00 of the Listed Company Manual.
A company is not currently subject to the compliance periods set
forth in the Late Filer Rule in connection with a failure to timely
file a quarterly report
[[Page 75218]]
on Form 10-Q with the SEC.\4\ The Exchange now proposes to extend the
application of the rule to the late filing of Form 10-Qs. As proposed,
a company would be deemed to be a delinquent filer under the amended
rule as of the due date (or extended due date if a Form 12b-25 is
timely filed with the SEC) (the ``Filing Due Date'') of the first 10-Q
or annual report with respect to which a company incurs a delinquency
(a ``Late Filing Delinquency'').\5\ The Exchange will also deem a
company to have incurred a Late Filing Delinquency if it submits an
annual report or Form 10-Q to the SEC by the applicable Filing Due
Date, but such filing is deficient in some respect in meeting the
requirements of the applicable SEC form and the Exchange determines in
its sole discretion that such deficiency is material in nature.\6\
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\4\ While a company is not currently subject to the compliance
periods in the Late Filer Rule in connection with the failure to
timely file a Form 10-Q, such companies are subject to the
Exchange's late filer (or ``.LF'') indicator process. The .LF
indicator is appended to the company's trading symbol as
disseminated on the consolidated tape and to market data vendors and
the company's name is included on the late filer list on the
Exchange's Web site. The .LF indicator and web posting commence five
days after the due date or extended due date (if applicable) of the
first late annual report or Form 10-Q (unless the company has
submitted the required report within that five day period) and
continue until the company becomes current again with respect to all
required periodic reports.
\5\ The annual report or quarterly report on Form 10-Q that
gives rise to a Late Filing Delinquency shall be referred to in the
Late Filer Rule as amended as the ``Delinquent Report.''
\6\ The following is a non-exclusive list of elements that, if
missing from a filing, would cause the Exchange to deem the company
to have incurred a Late Filing Delinquency: The filing does not
include required financial statements or a required audit opinion; a
required financial statement audit opinion includes qualifying or
disclaiming language or the auditor provides an adverse financial
statement audit opinion; a required financial statement audit
opinion is unsigned or undated; there is a discrepancy between the
period end date for required financial statements and the date cited
in the related audit report; the company's auditor has not conducted
a SAS 100 review with respect to the company's Form 10-Q; required
chief executive officer or chief financial officer certifications
are missing; missing Sarbanes-Oxley Act Section 404 required
internal control report or auditor certification; the filing does
not comply with the applicable SEC XBRL requirements; or the filing
does not include signatures of officers or directors required by the
applicable form. In making this determination, the Exchange is
simply applying its own rules and is not making any judgment as to
the sufficiency of the filing in question for purposes of compliance
with any requirement under SEC rules.
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In addition, the Exchange proposes to clarify its treatment of a
company:
That files its annual report without an audit report from
its independent auditor for any or all of the periods included in such
annual report (a ``Required Audit Report'' and the absence of a
Required Audit Report, a ``Required Audit Report Delinquency'');
whose independent auditor withdraws a Required Audit
Report or the company files a Form 8-K with the SEC pursuant to Item
4.02(b) thereof disclosing that it has been notified by its independent
auditor that a Required Audit Report or completed interim review should
no longer be relied upon (a ``Required Audit Report Withdrawal
Delinquency''); or
that files a Form 8-K with the SEC pursuant to Item
4.02(a) thereof to disclose that previously issued financial statements
should no longer be relied upon because of an error in such financial
statements or, in the case of a foreign private issuer, makes a similar
disclosure in a Form 6-K filed with the SEC or by other means (a ``Non-
Reliance Disclosure'') and, in either case, the company does not refile
all required corrected financial statements within 60 days of the
issuance of the Non-Reliance Disclosure (an ``Extended Non-Reliance
Disclosure Event'' and, together with a Late Filing Delinquency, a
Required Audit Report Delinquency and a Required Audit Report
Withdrawal Delinquency, a ``Filing Delinquency'').\7\
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\7\ For purposes of the cure periods described herein, an
Extended Non-Reliance Disclosure Event will be deemed to have
occurred on the date of original issuance of the Non-Reliance
Disclosure. If the Exchange believes that a company is unlikely to
refile all required corrected financial statements within 60 days
after a Non-Reliance Disclosure or that the errors giving rise to
such Non-Reliance Disclosure are particularly severe in nature, the
Exchange may, in its sole discretion, determine earlier than 60 days
that the applicable company has incurred a Filing Delinquency as a
result of such Non-Reliance Disclosure.
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Upon the occurrence of a Filing Delinquency, the Exchange will
promptly (typically within five business days) send written
notification to a company of its procedures relating to late filings.
During the six-month period from the date of the Filing Delinquency
(the ``Initial Cure Period''), the Exchange will monitor the company
and the status of the Delinquent Report and any subsequent annual
report or quarterly report on Form 10-Q the company fails to file by
the applicable Filing Due Date (a ``Subsequent Report''), through
contact with the company, until the Filing Delinquency is cured.\8\ If
the company fails to cure the Filing Delinquency within the Initial
Cure Period, the Exchange may, in its sole discretion, allow the
company's securities to be traded for up to an additional six-month
period (the ``Additional Cure Period'') depending on the company's
specific circumstances. If the Exchange determines that an Additional
Cure Period is not appropriate, suspension and delisting procedures
will commence in accordance with the procedures set out in Section
804.00 of the Listed Company Manual. A company is not eligible to
follow the procedures outlined in Sections 802.02 and 802.03 with
respect to this criterion. Notwithstanding the foregoing, however, the
Exchange may in its sole discretion decide (i) not to afford a company
any Initial Cure Period or Additional Cure Period, as the case may be,
at all or (ii) at any time during the Initial Cure Period or Additional
Cure Period, as the case may be, to truncate the Initial Cure Period or
Additional Cure Period, as the case may be, and immediately commence
suspension and delisting procedures if the company is subject to
delisting pursuant to any other provision of the Listed Company Manual,
including if the Exchange believes, in its sole discretion, that
continued listing and trading of a company's securities on the Exchange
is inadvisable or unwarranted in accordance with Sections 802.01A,
802.01B, 802.01C or 802.01D of the Listed Company Manual. The Exchange
may also commence suspension and delisting procedures if it believes,
in its sole discretion, that it is advisable to do so on the basis of
an analysis of all relevant factors, including, but not limited to, the
following:
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\8\ Under the Late Filer Rule as amended, a company that has an
uncured Filing Delinquency will not incur an additional Filing
Delinquency if it fails to file a Subsequent Report by the
applicable Filing Due Date. However, in order to cure its initial
Filing Delinquency, no Subsequent Report may be delinquent or
deficient on the date by which the initial Filing Delinquency is
required to be cured.
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Whether there are allegations of financial fraud or other
illegality in relation to the company's financial reporting;
the resignation or termination by the company of the
company's independent auditor due to a disagreement;
any extended delay in appointing a new independent auditor
after a prior auditor's resignation or termination;
the resignation of members of the company's audit
committee or other directors;
the resignation or termination of the company's chief
executive officer, chief financial officer or other key senior
executives;
any evidence that it may be impossible for the company to
cure its Filing Delinquency within the cure periods otherwise available
under the Late Filer Rule; and
any past history of late filings.
In determining whether an Additional Cure Period after the
expiration of the Initial Cure Period is appropriate, the
[[Page 75219]]
Exchange will consider the likelihood that the Delinquent Report and
all Subsequent Reports can be filed or refiled, as applicable, during
the Additional Cure Period, as well as the company's general financial
status, based on information provided by a variety of sources,
including the company, its audit committee, its outside auditors, the
staff of the SEC and any other regulatory body. The Exchange strongly
encourages companies to provide ongoing disclosure on the status of the
Delinquent Report and any Subsequent Reports to the market through
press releases, and will also take the frequency and detail of such
information into account in determining whether an additional trading
period is appropriate.
If the Exchange determines that an Additional Cure Period is
appropriate and the company fails to file the Delinquent Report and all
Subsequent Reports by the end of such additional period, suspension and
delisting procedures will commence immediately in accordance with the
procedures set out in Section 804.00. In no event will the Exchange
continue to trade a company's securities if (i) it has failed to cure
its Filing Delinquency and (ii) is not current with all Subsequent
Reports, on the date that is twelve months after its initial Filing
Delinquency.
The Exchange proposes that the revised Late Filer Rule will become
operative on March 1, 2015. Accordingly, the current provisions of
Section 802.01E of the Manual will be applicable to any listed company
that fails to timely file an annual report (Forms 10-K, 20-F, 40-F or
N-CSR) prior to March 1, 2015. On or after March 1, 2015, any listed
company that fails to timely file an annual report (Forms 10-K, 20-F,
40-F or N-CSR) or quarterly report on Form 10-Q will be subject to the
amended provisions of Section 802.01E. Any listed company that is late
as of March 1, 2015, in filing a Form 10-Q with a due date prior to
that date will not be subject to the proposed amended rule with respect
to that filing. However, any such company will be subject to the
proposed amended rule with respect to any periodic report it does not
file on a timely basis whose due date is on or after March 1, 2015.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\9\ in general, and furthers the
objectives of Section 6(b)(5) of the Act,\10\ in particular in that it
is designed 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 Exchange believes that the proposed amendment is consistent with
the investor protection objectives of Section 6(b)(5) because: (i) It
strengthens the Exchange's continued listing requirements with respect
to delinquent SEC filings by deeming companies delinquent if they fail
to file their annual report or Form 10-Q on a timely basis and by
subjecting companies to the late filer process if there are material
inadequacies in their required annual or quarterly filings; and (ii)
the more stringent requirements will encourage listed companies to
submit timely and compliant periodic reports to the SEC.
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\9\ 15 U.S.C. 78f(b).
\10\ 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 purpose of the Act. The proposed rule change does
not affect competition in any way, but rather simply seeks to protect
investors by insuring that companies cannot remain listed for any
extended period of time without appropriately filing their required
periodic financial reports with the SEC.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of publication of this notice in the
Federal Register or up to 90 days (i) as the Commission may designate
if it finds such longer period to be appropriate and publishes its
reasons for so finding or (ii) as to which the self-regulatory
organization consents, the Commission will:
(A) By order approve or disapprove the 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. 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 email to [email protected]. Please include
File Number SR-NYSE-2014-65 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSE-2014-65. This file
number should be included on the subject line if email 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 Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549, on official business days between the hours of
10:00 a.m. and 3:00 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-NYSE-2014-65 and should be
submitted on or before January 7, 2015.
[[Page 75220]]
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
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\11\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-29498 Filed 12-16-14; 8:45 am]
BILLING CODE 8011-01-P