[Federal Register Volume 69, Number 17 (Tuesday, January 27, 2004)]
[Notices]
[Pages 3972-3973]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-1665]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-49109; File No. SR-NASD-2003-23]


Self-Regulatory Organizations; National Association of Securities 
Dealers, Inc.; Order Granting Approval to Proposed Rule Change To 
Clarify the Applicability of the Nasdaq Corporate Governance 
Requirements During the Listing Review Process

January 21, 2004.
    On February 26, 2003, 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''), pursuant to section 19(b)(1) of the 
Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 
thereunder,\2\ a proposed rule change to clarify the applicability of 
its corporate governance requirements during the listing review 
process. On October 10, 2003, NASD, through Nasdaq, submitted Amendment 
No. 1 to the proposed rule change.\3\
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See letter from Mary M. Dunbar, Vice President and Deputy 
General Counsel, to Katherine A. England, Assistant Director, 
Division of Market Regulation, Commission, dated October 9, 2003. 
Amendment No. 1 replaced the original filing in its entirety.
---------------------------------------------------------------------------

    The proposed rule change, as amended, was published for comment in 
the Federal Register on October 23, 2003.\4\ The Commission received no 
comments on the proposal.
---------------------------------------------------------------------------

    \4\ See Securities Exchange Act Release No. 48646 (October 16, 
2003), 68 FR 60747.
---------------------------------------------------------------------------

    The proposed rule change would amend NASD Rule 4810, concerning 
procedures for review of Nasdaq listing

[[Page 3973]]

determinations, to explicitly state that the Listing Hearing and Review 
Council (``Listing Council'') or the NASD Board, as part of its 
respective review, may consider, among other things, any action by an 
issuer during the review process that would have constituted a 
violation of Nasdaq's corporate governance requirements had the 
issuer's securities been listed on Nasdaq at the time.
    The Commission finds that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder applicable to the NASD \5\ and, in particular, the 
requirements of 15A(b)(6) of the Act \6\ and the rules and regulations 
thereunder because it clarifies procedures for review of listing 
determinations. The proposed rule change is designed to place an issuer 
more clearly on notice that any action on its part during the review 
process that would constitute a violation of Nasdaq's corporate 
governance requirements, had the issuer's securities been listed on 
Nasdaq at the time, may be considered by the Listing Council or NASD 
Board as part of its respective review.
---------------------------------------------------------------------------

    \5\ In approving this proposed rule change, the Commission notes 
that it has considered the proposed rule's impact on efficiency, 
competition, and capital formation. 15 U.S.C. 78c(f).
    \6\ 15 U.S.C. 78o-3(b)(6). Section 15A(b)(6) requires that the 
rules of a registered national securities association be 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.
---------------------------------------------------------------------------

    It is therefore ordered, pursuant to section 19(b)(2) of the Act 
\7\, that the proposed rule change (File No. SR-NASD-2003-23) be, and 
it hereby is, approved.
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\8\
---------------------------------------------------------------------------

    \8\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 04-1665 Filed 1-26-04; 8:45 am]
BILLING CODE 8010-01-P