[Federal Register Volume 70, Number 59 (Tuesday, March 29, 2005)]
[Notices]
[Page 15968]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-1385]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-51420; File No. SR-NASD-2005-003]


Self-Regulatory Organizations; Order Granting Approval to 
Proposed Rule Change To Amend Rule 4350(n) and IM-4350-7 To Conform the 
Time Frame for the Disclosure of a Waiver to a Company's Code of 
Conduct to the Time Frame Required for Similar Disclosure by the 
Commission's Form 8-K

March 23, 2005.
    On January 12, 2005, 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 amend NASD Rule 4350 and 
related interpretive material to conform the time frame for the 
disclosure of a waiver to a company's code of conduct to the time frame 
required for similar disclosure by the Commission's Form 8-K. The 
proposed rule change was published for comment in the Federal Register 
on February 18, 2005.\3\ The Commission received no comments on the 
proposal.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 51197 (February 14, 
2005), 70 FR 8414 (February 18, 2005).
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    NASD Rule 4350(n) and interpretive material IM-4350-7 require 
issuers listed on Nasdaq to adopt codes of conduct that are applicable 
to all directors, officers, and employees. Each code of conduct must 
require that any waiver of the code for executive officers or directors 
may be made only by the board of directors of the issuer and must be 
disclosed to shareholders, along with the reasons for the waiver. The 
rule specifies that issuers (other than foreign private issuers) must 
disclose such waivers in a Form 8-K within five business days. The 
proposed rule change would amend the rule and interpretive material to 
require such disclosure within four business days.
    The Commission finds that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder applicable to a national securities association,\4\ and, in 
particular, the requirements of section 15A(b)(6) of the Act.\5\ The 
Commission believes that the proposed timing for disclosure of waivers 
is consistent with similar requirements of Commission rules concerning 
disclosure of waivers by issuers (other than foreign private issuers) 
for principal executive, financial, and accounting officers.\6\
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    \4\ 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).
    \5\ 15 U.S.C. 78o-3(b)(6).
    \6\ Item 406(a) of Regulations S-K and S-B (17 CFR 229.406(a) 
and 228.406(a)) requires an issuer to disclose whether the issuer 
has adopted a code of ethics that applies to its principal executive 
officer, principal financial officer, principal accounting officer 
or controller, or persons performing similar functions. Issuers are 
also required to disclose waivers of the code that are granted to 
those individuals. See Item 5.05(b) of Form 8-K (17 CFR 249.308). 
Recent amendments to Form 8-K shorten the time frame for this 
disclosure from five business days to four business days. See 
Securities Act Release No. 8400 (March 16, 2004), 69 FR 15594 (March 
25, 2004). These amendments were effective August 23, 2004.
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    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\7\ that the proposed rule change (File No. SR-NASD-2005-003) be, 
and it hereby is, approved.
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    \7\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E5-1385 Filed 3-28-05; 8:45 am]
BILLING CODE 8010-01-P