[Federal Register Volume 63, Number 242 (Thursday, December 17, 1998)]
[Notices]
[Pages 69701-69703]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-33363]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-40771; File No. SR-NASD-98-79]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change by the National Association of Securities Dealers, Inc. Relating
to Issuer Responsibilities When Using the Internet; Updating
MarketWatch Contact Information and Other Matters
December 10, 1998.
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 October 21, 1998, the National Association of Securities Dealers,
Inc. (``NASD'' or ``Association''), through its wholly-owned
subsidiary, the Nasdaq Stock Market, Inc. (``Nasdaq'') filed with the
Securities Exchange Commission (``SEC'' or ``Commission'') the proposed
rule change as described in Items I, II, and III below, which Items
have been prepared by Nasdaq.\3\ 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.
\3\ Amendment No. 1 was received by the Commission on December
3, 1998, the substance of which is incorporated into this notice.
Letter from Andrew S. Margolin, Assistant General Counsel, Nasdaq,
to Katherine A. England, Division of Market Regulation
(``Division''), Commission, dated December 2, 1998 (``Amendment No.
1''). Amendment No. 2 was received by the Commission on December 10,
1998, the substance of which is incorporated into this notice.
Letter from Andrew S. Margolin, Assistant General Counsel, Nasdaq,
to Katherine A. England, Division, Commission, dated December 9,
1998 (``Amendment No. 2'').
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I. Self-Regulatory Organization's Statement of the Terms of
Substance of the Proposed Rule Change
Nasdaq is proposing to amend NASD Rule IM-4120-1 with respect to
the use of the Internet for dissemination of issuer disclosures. below
is the text of the proposed rule change. Proposed new language is in
italics; proposed deletions are in [brackets].
4120. Trading Halts
(a) No Change
(b) Procedure for Initiating a Trading Halt
(1) Nasdaq issuers are required to notify Nasdaq of the release of
any material news prior to the release of such information to
appropriate news services[the press] as required by Rule 4310(c)(16)
and 4320[(d)(15)](e)(14).
(b)(2) through (5) No Change
Footnote to 4120(b)(2):
[The current telephone number is 1-800-537-3929, (301) 590-6411, or
from 6 p.m. to 8 a.m. Eastern Time, (301) 590-6413. The Stock Watch fax
number is (301) 590-6482.] Notification may be provided to the
MarketWatch Department by telephone 1-800-537-3929 and (301) 590-6411.
Between 6 p.m. and 8 a.m. Eastern Time, voice mail messages may be left
on either number. The fax number is (301) 590-6482.
* * * * *
IM-4120-1. Disclosure of Material Information
Rules 4310(c)(16) and 4320[(d)(15)](e)(14) require that, except in
unusual circumstances, Nasdaq issuers disclose promptly to the public
through appropriate[the] news [media]services any material information
which would reasonably be expected to affect the value of their
securities or influence investors' decisions and that Nasdaq issuers
notify Nasdaq of the release of any such information prior to its
release to the public through the news [media]services. Nasdaq
recommends that Nasdaq issuers provide such notification at least ten
minutes before such release.* Under unusual circumstances issuers may
not be required to make public disclosure of material events; for
example, where it is possible to maintain confidentiality of those
events and immediate public disclosure would prejudice the ability of
the company to pursue its legitimate corporate objectives. However,
Nasdaq issuers remain obligated to disclose this information to Nasdaq
upon request pursuant to Rules 4310(c)15) or 4320[(d)(14)](e)(13).
Whenever unusual market activity takes place in a Nasdaq issuer's
securities, the issuer normally should determine whether there is
material information or news which should be disclosed. If rumors or
unusual market activity indicate that information on impending
developments has become known to the investing public, or if
information from a source other than the issuer becomes known to the
investing public, a clear announcement may be required as to the state
of negotiations or development of issuer plans. Such an announcement
may be required, even though the issuer may not have previously been
advised of such information or the matter has not yet been presented to
the issuer's Board of Directors for consideration. It may also be
appropriate, in certain circumstances, to publicly deny false or
inaccurate rumors which are likely to
[[Page 69702]]
have, or have had, as effect on the trading in its securities or would
likely have an influence on investment decisions.
* * * * *
Use of the Internet In the Disclosure of Material Information
While Nasdaq requires that its listed issuers disseminate material
press releases to one of the traditional news services, such as a major
news wire, Nasdaq recognizes the increased utilization of the Internet
as a vehicle for additional news dissemination. The Internet is a
valuable disclosure resource that can enhance the orderly dissemination
of material information for all shareholders and market participants.
Issuers can and should provide shareholders direct access to
corporate disclosures via their Internet home pages and web sites.
To ensure a level playing field for all investors in Nasdaq
companies, however, this policy on disclosure of corporate information
requires that the use of the Internet to disseminate material press
releases is appropriate provided the information is not made available
over the Internet before the same information is transmitted to, and
received by, traditional news services and such news services are free
from any restrictions as to its release at that time (i.e., the
information is for ``immediate release'' or is no longer subject to
embargo). Issuers must still notify Nasdaq at least ten minutes prior
to the release of any information that would reasonably be expected to
affect the value of securities or influence investors' decisions, as
indicated in this policy.
Footnote to IM-4120-1:
[Notification may be provided to the MarketWatch
Department by telephone 1-800-537-3929, (301) 590-6411, or from 6 p.m.
to 8 a.m. Eastern Time, (301) 590-6413. Information communicated orally
should be confirmed promptly in writing. The StockWatch fax number is
(301) 590-6482.]
Notification may be provided to the MarketWatch Department by
telephone 1-800-537-3929 and (301) 590-6411. Between 6 p.m. and 8 a.m.
Eastern Time, voice mail messages may be left on either number.
Information communicated orally should be confirmed promptly in
writing. The fax number is (301) 590-6482.
The MarketWatch Department will provide a list of suggested news
services or confirm use of a particular service, by telephone at 1-800-
537-3929 or (301) 590-6411. Between 6 p.m. and 8 a.m. Eastern Time,
voice mail messages may be left on either number.
* * * * *
4310. Qualifications Requirements for Domestic and Canadian
Securities
Footnote to 4310(c)(16):
This notice shall be made to Nasdaq's MarketWatch Department at
9513 Key West Avenue, Rockville, Maryland 20850-3389. The telephone
numbers [is] are 1-800-537-3929[,] and (301) 590-6511.[, or from]
Between 6 p.m. [to] and 8 a.m. Eastern Time, [(301) 590-6413] voice
mail messages may be left on either number. The fax number is (301)
590-6482.
4320. Qualification Requirements for Non-Canadian Foreign
Securities and American Depositary Receipts
Footnote to 4320(e)(14):
This notice shall be made to Nasdaq's MarketWatch Department at
9513 Key West Avenue, Rockville, Maryland 20850-3389. The telephone
numbers [is] are 1-800-537-3929[,] and (301) 590-6511.[, or from]
Between 6 p.m. [to] and 8 a.m. Eastern Time, [(301) 590-6413] voice
mail messages may be left on either number. The fax number is (301)
590-6482.
* * * * *
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
Increased use of the Internet to provide access to corporate
information for shareholders has resulted in questions regarding the
timing of news releases over the Internet and the use of issuers'
Internet sites as replacements for traditional dissemination of news to
the media. While Nasdaq believes that it is generally in the public
interest to encourage widespread dissemination of information to
investors through the Internet, Nasdaq also believes that it is
important to maintain a level playing field for all investors,
including those who do not have Internet access or who may not
generally rely on the Internet as their primary source of material
corporate news. Consequently, Nasdaq is not proposing to alter its
traditional requirement that news be disseminated through traditional
news services. These include Dow Jones News Service, Reuters, Bloomberg
Business News, Business Wire, PR Newswire, The Wall Street Journal, and
The New York Times.\4\
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\4\ For a complete list of appropriate news services, contact
the MarketWatch Department by telephone 1-800-537-3929 or (301) 590-
6411. Between 6 p.m. and 8 p.m. Eastern Time, voice mail messages
may be left on either number.
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Accordingly, Nasdaq is proposing to amend NASD Interpretation IM-
4120-1 to state that Nasdaq fully supports companies' use of Internet
home pages to disseminate information to shareholders, but that the
Internet must not be a substitution for the dissemination of news
through traditional news services. In the interests of maintaining a
level playing field for all investors and to avoid situations of
potential selective disclosure, the Nasdaq policy will be amended to
indicate that dissemination of news over the Internet is appropriate
provided it is not made available over the Internet before the same
information is transmitted to, and received by, the traditional news
services. Furthermore, the amended policy will reiterate that issuers
must still notify Nasdaq at least ten minutes prior to any release of
material information, consistent with the existing policy.
In addition, Nasdaq is making technical corrections to several
cross references contained in NASD Rule, 4120 and IM-4120-1, as well as
eliminating several footnote references to an outdated phone number
used to contact Market Watch, which are contained in NASD Rules 4120,
4310, and 4320.
2. Statutory Basis
Nasdaq believes that the proposed rule change is consistent with
the provisions of Section 15A(b)(6) of the Act \5\ in that it is
designed to prevent fraudulent and manipulative acts and practices, to
promote just and equitable principals of trade, and in general, to
protect investors and the public interest. The amended policy on
corporate disclosure facilitates widespread public availability of
issuers information while ensuring a level playing field regarding its
dissemination.
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\5\ 15 U.S.C. 78o-3(b)(6).
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[[Page 69703]]
B. Self-Regulatory Organization's Statement on Burden on Competition
Nasdaq does not believe that the proposed rule change will impose
any inappropriate burden on competition.
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. Date of Effectiveness of the Proposed Rule Change and Timing
for Commission Action
Within 35 days of the 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 self-regulatory organization consents, the Commission will:
(A) by order approve 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 proposal is
consistent with the Act. Persons making written submissions should file
six copies thereof with the Secretary, Securities and Exchange
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. 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 at the Commission's
Public Reference Room. Copies of such filing will also be available for
inspection and copying at the principal office of the NASD. All
submissions should refer to File No. SR-NASD-98-79 and should be
submitted by January 7, 1999.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\6\
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\6\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-33363 Filed 12-16-98; 8:45 am]
BILLING CODE 8010-01-M