[Federal Register Volume 65, Number 194 (Thursday, October 5, 2000)]
[Notices]
[Pages 59480-59482]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-25595]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-43383; File No. SR-NASD-00-48]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the National Association of Securities Dealers, Inc. To 
Require an Issuer To Publicly Disclose the Receipt of a Delisting 
Notice for Failure To Comply With the Continued Listing Standards of 
The Nasdaq Stock Market

September 28, 2000.
    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 August 10, 2000, the National Association of Securities Dealers, 
Inc. (``NASD''), through its wholly owned 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. 
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

    Nasdaq proposes to require issuers to publicly disclose the receipt 
of a delisting notice for failure to comply with Nasdaq's continued 
listing requirements. Below is the text of the proposed rule change. 
Proposed new language is in italics. Proposed deletions are in 
brackets.
Rule 4120. Trading Halts
    (a) Authority to Initiate Trading Halts.
    In circumstances in which Nasdaq deems it necessary to protect 
investors and the public interest, Nasdaq may, pursuant to the 
procedures set forth in paragraph (b):
    (1)-(4) No change.
    (5) Halt trading in a security listed on Nasdaq when Nasdaq 
requests from the issuer information relating to:
    (i) No change;
    (ii) The issuer's ability to meet Nasdaq listing qualification 
requirements, as set forth in the Rule 4300 , [and] 4400, and 4800 
Series; or
    (iii) No change.
    (b) No change.

[[Page 59481]]

IM-4120-2. Disclosure of Written Notice of Staff Determination

    Rule 4815(b) requires that an issuer make a public announcement 
through the news medial disclosing the receipt of a Written Notice of 
Staff Determination (``Staff Determination'') to prohibit continued 
listing of the issuer's securities under Rule 4815(a) as a result of 
the issuer's failure to comply with the continued listing requirements, 
and the Rule(s) upon which the Staff Determination was based. Such 
public announcement shall be made as promptly as possible, but not more 
than seven calendar days following the receipt of the Staff 
Determination. If the public announcement is not made by the issuer 
within the time allotted, trading of its securities shall be halted, 
even if the issuer appeals the Staff Determination as set forth in Rule 
4820. If the issuer fails to make the public announcement by the time 
that the Listing Qualifications Panel issues its decision, that 
decision will also determine whether to delist the issuer's securities 
for failure to make the public announcement.
    Rule 4815(b) does not relieve an issuer of its obligation to make a 
materially assessment of the pending delisting action as it may relate 
to the disclosure requirements of the federal securities laws, nor 
should it be construed as providing a safe harbor under the federal 
securities laws. It is suggested that the issuer consult with 
corporate/securities counsel in assessing its disclosure obligations 
under the federal securities laws.
    (Existing IM-4120-2 and IM-4120-3 renumbered as IM-4120-3 and IM-
4120-4)
Rule 4815. Written Notice of Staff Determination
    (a) If the Listing Qualifications Department or the Listing 
Investigations Department reaches a determination (the ``Staff 
Determination'') to limit or prohibit the initial or continued listing 
of an issuer's securities, it will notify the issuer, describe the 
specific grounds for the determination, identify the quantitative 
standard or qualitative consideration set forth in the Rule 4000 Series 
that the issuer has failed to satisfy, and provide notice that upon 
request the issuer will be provided an opportunity for a hearing under 
this Rule 4800 Series.
    (b) An issuer that receives a Staff Determination to prohibit 
continued listing of the issuer's securities under Rule 4815(a) shall 
make a public announcement through the news media disclosing the 
receipt of the Staff Determination, including the Rule(s) upon which 
the Staff Determination was based. Prior to the release of the public 
announcement, an issuer shall provide such disclosure to Nasdaq's Stock 
Watch and Listing Qualifications Departments.* The public 
announcement shall be made as promptly as possible, but not more than 
seven calendar days following receipt of the Staff Determination.
    * Notification may be provided to the StockWatch section 
of Nasdaq's MarketWatch Department at 1-800-537-3929 or (301) 590-6411 
(telephone), (301) 590-6482 (facsimile) and to the Hearings Department 
of Nasdaq's Listing Qualifications Department at (301) 978-8079 
(telephone), (301) 978-8080 (facsimile).
* * * * *

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
    The purpose of the proposed rule change is to require a Nasdaq 
issuer to publicly disclose the receipt of a written delisting notice 
for failure to comply with the continued listing requirements (``Staff 
Determination''). Since Nasdaq does not currently have such a 
requirement, some Nasdaq issuers publicly disclose the receipt of a 
Staff Determination while other issuers do not make the disclosure. 
Nasdaq believes that requiring public disclosure of the receipt of a 
Staff Determination serves to protect present and potential investors 
in an issuer's securities.
    In order to provide investors with the greatest protection 
possible, Nasdaq believes that the public announcement should not only 
disclose the receipt of a Staff Determination, but also indicate the 
Marketplace Rule(s) upon which the Staff Determination was based. By 
furnishing investors with the specific continued listing requirement(s) 
that an issuer has failed to meet, Nasdaq believes that investors will 
be able to make a more informed decision regarding their investment (or 
potential investment) in an issuer's securities. Furthermore, Nasdaq 
proposes that an issuer be required to make the public announcement as 
promptly as possible, but not more than seven calendar days following 
the receipt of the Staff Determination. Nasdaq believes that this time 
frame will provide an issuer with a sufficient opportunity to prepare a 
public announcement while also ensuring that investors receive the 
information in a timely manner. If an issuer fails to disclose the 
receipt of a Staff Determination, trading of its securities will be 
halted until the disclosure is made, even if the issuer appeals the 
determination to the Listing Qualifications Panel, as provided for 
under Marketplace Rule 4820. If an issuer fails to make the public 
announcement by the time that the Listing Qualifications Panel issues 
its decision, that decision will also determine whether to delist an 
issuer's securities for failure to make the public announcement.
2. Statutory Basis
    Nasdaq believes that the proposed rule change is consistent with 
the provisions of Section 15A(b)(6) of the Act,\3\ in that the proposal 
is designed to protect investors and the public interest. As noted 
above, the proposed rule change is aimed at ensuring that investors are 
notified that Nasdaq has determined to delist an issuer's securities 
for non-compliance with the continued listing requirements.
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    \3\ 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

    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

[[Page 59482]]

publishes its reasons for so finding or (ii) as to which the NASD 
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 
NASD. All submissions should refer to file number SR-NASD-00-48 and 
should be submitted by October 26, 2000.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\4\
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    \4\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-25595 Filed 10-4-00; 8:45 am]
BILLING CODE 8010-01-M