[Federal Register Volume 66, Number 192 (Wednesday, October 3, 2001)]
[Notices]
[Pages 50485-50487]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-24702]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-44857; File No. SR-NASD-2001-61]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by the National Association of
Securities Dealers, Inc. To Provide Nasdaq Issuers Temporary Relief
From Listing Requirements Relating to the Bid Price for Continued
Inclusion and the Market Value of the Public Float
September 27, 2001.
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 September 26, 2001, the National Association of Securities Dealers,
Inc. (``NASD''), through its subsidiary, The Nasdaq Stock Market, Inc.
(``Nasdaq''), 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 Nasdaq. Nasdaq asserts
that the proposed rule change meets the criteria set forth in Rule 19b-
4(f)(6),\3\ which renders this proposal effective upon receipt of this
filing by the Commission. 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\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of
Substance of the Proposed Rule
Nasdaq has filed with the Commission a proposed rule change to
temporarily suspend, through January 2, 2002, the application of the
continued inclusion bid price and market value of public float
requirements set forth in NASD Rules 4310(c)(4), 4310(c)(7),
4450(a)(2), 4450(a)(5), 4450(b)(3), and 4450(b)(4).
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
[[Page 50486]]
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
The purpose of the proposed rule change is to provide issuers
temporary relief from the continued inclusion bid price and market
value of public float requirements. Nasdaq's continued inclusion bid
price requirements are set forth in NASD Rules 4310(c)(4), 4450(a)(5),
and 4450(b)(4), and its continued inclusion market value of public
float requirements are set forth in NASD Rules 4310(c)(7), 4450(a)(2),
and 4450(b)(3). NASD Rule 4310(c)(8)(B) provides that, if a company
fails to meet the applicable bid price or market value of public float
requirement for 30 consecutive business days, it will be notified and
provided a 90-day grace period to regain compliance. Compliance is
achieved by meeting the applicable standards for ten consecutive
business days during the 90-day compliance period. If the company fails
to comply with the applicable standards, delisting procedures are
initiated under the NASD Rule 4800 series.
Nasdaq has stated that, given the extraordinary market conditions
surrounding the September 11 tragedy, there has been a recent
escalation in the number of companies falling short of the bid price
and market value of public float requirements. Due to the dramatic
increase in the number of companies potentially impacted, Nasdaq has
determined that the bid price and market value of public float
requirements should be suspended through January 2, 2002. Under this
proposal, companies would not be cited for bid price or market value of
public float deficiencies, and companies in the 90-day grace period or
in the review process for bid price or market value of public float
deficiencies would be taken out of the deficiency process with respect
to those requirements. Nasdaq has stated that no deficiencies will
accrue during the suspension period. During this time, Nasdaq staff
will consider whether it is appropriate to recommend further, and more
permanent, action.
2. Statutory Basis
Nasdaq believes that the proposed rule change is consistent with
the provisions of Section 15A(b)(6) of the Act \4\ in that it is
designed to prevent fraudulent and manipulative acts and practices and
to protect investors and the public interest. Nasdaq reiterates that
the proposed rule change is designed to minimize impact on issuers in
the marketplace, while providing greater transparency and consistency.
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\4\ 15 U.S.C. 78o-3(b)(6).
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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
Written comments were neither solicited nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing
for Commission Action
Nasdaq asserts that the proposed rule change is effective upon
filing pursuant to Section 19(b)(3)(A) of the Act \5\ and paragraph
(f)(6) of Rule 19b-4 thereunder,\6\ because the proposed rule change:
(1) Does not significantly affect the protection of investors or the
public interest; (2) does not impose any significant burden on
competition; and (3) 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. Nasdaq has requested that the Commission waive the 30 day
preoperative period in order to provide companies immediate relief,
given the current extraordinary market conditions. In addition, Rule
19b-4(f)(6) requires the self-regulatory organization to give the
Commission written notice of its intent to file 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. Nasdaq also requests that the Commission, for the same
reasons, waive the five-day notice requirement.
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\5\ 15 U.S.C. 78s(b)(3)(A).
\6\ 17 CFR 240.19(b)-4(f)(6).
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The Commission finds that it is consistent with the protection of
investors and the public interest to waive the 30-day pre-operative
period.\7\ The Commission believes that the potential benefits of the
proposed rule change could be lost if the Commission does not
accelerate the operative date of the rule, as Nasdaq might otherwise be
required under NASD rules to commence delisting proceedings against
certain issuers. Moreover, the Commission finds that waiving the 30-day
pre-operative requirement will have no adverse impact on the public
interest. The Commission believes that, notwithstanding the accelerated
operative date, the public will have ample opportunity to learn about
and analyze the consequences of the proposed rule change. The
Commission also notes that the suspension of the Nasdaq listing
requirements relating to the bid price for continued inclusion and the
market value of the public float is temporary; any subsequent action
taken by Nasdaq to suspend or alter its listing standards will also be
subject to the rule filing process under Section 19(b) of the Act.\8\
For these same reasons, the Commission also waives the five-day notice
requirement.
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\7\ For purposes only of accelerating the operative date of this
proposal, the Commission has considered the proposed rule's impact
on efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
\8\ 15 U.S.C. 78s(b).
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At any time within 60 days of this filing, the Commission may
summarily abrogate this proposal if it appears to the Commission that
such action is necessary of 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. 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
[[Page 50487]]
available for inspection and copying at the principal office of the
NASD. All submissions should refer to File No. SR-NASD-2001-61 and
should be submitted by October 24, 2001.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\9\
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\9\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-24702 Filed 10-2-01; 8:45 am]
BILLING CODE 8010-01-M