[Federal Register Volume 74, Number 10 (Thursday, January 15, 2009)]
[Notices]
[Pages 2640-2641]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-778]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59219; File No. SR-NASDAQ-2008-099]


Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Extend the Temporary Suspension of the Continued Listing Requirements 
Related to Bid Price and Market Value of Publicly Held Shares for 
Listing on the Nasdaq Stock Market Through April 19, 2009

January 8, 2009.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that, on December 18, 2008, The NASDAQ Stock Market LLC 
(``Nasdaq'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II 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\ 15 U.S.C. 78a.
    \3\ 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 extend the temporary suspension of the 
application of the continued inclusion bid price and market value of 
publicly held shares requirements for listing on the Nasdaq Stock 
Market through April 19, 2009.

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
    On October 16, 2008, Nasdaq filed a proposed rule change, which was 
immediately effective, to temporarily suspend the bid price \4\ and 
market value of publicly held shares \5\ continued listing requirements 
otherwise applicable to issuers of common stock, preferred stock, 
secondary classes of common stock, shares or certificates of beneficial 
interest of trusts, limited partnership interests, American Depositary 
Receipts, and their equivalents.\6\ This suspension is currently 
scheduled to last until January 16, 2009, to provide temporary relief 
to companies from the application of these requirements during a period 
in which the financial markets face almost unprecedented turmoil, 
resulting in a crisis in investor confidence and concerns about the 
proper functioning of the securities markets.\7\
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    \4\ Nasdaq's continued listing requirements relating to bid 
price are set forth in Rules 4310(c)(4), 4320(e)(2)(E)(ii), 
4450(a)(5), 4450(b)(4), and 4450(h)(3) and the related compliance 
periods are set forth in Rules 4310(c)(8)(D), 4320(e)(2)(E)(ii), and 
4450(e)(2). Under these rules, a security is considered deficient if 
it fails to achieve at least a $1 closing bid price for a period of 
30 consecutive business days. Once deficient, Capital Market issuers 
are provided one automatic 180-day period to regain compliance. 
Thereafter, these issuers can receive an additional 180-day 
compliance period if they comply with all Capital Market initial 
inclusion requirements except bid price. Global Market issuers are 
also provided one automatic 180-day period to regain compliance, 
after which they can transfer to the Capital Market, if they comply 
with all Capital Market initial inclusion requirements except bid 
price, to take advantage of the second 180-day compliance period. A 
company can regain compliance by achieving a $1 closing bid price 
for a minimum of ten consecutive business days.
    \5\ Nasdaq's continued listing requirements relating to market 
value of publicly held shares are set forth in Rules 4310(c)(7), 
4320(e)(5), 4450(a)(2), 4450(b)(3) and 4450(h)(2) and the related 
compliance periods are set forth in Rules 4310(c)(8)(B) and 
4450(e)(1). Under these rules, a security is considered deficient if 
it fails to achieve the minimum market value of publicly held shares 
requirement for a period of 30 consecutive business days. 
Thereafter, companies have a compliance period of 90 calendar days 
to achieve compliance by meeting the applicable standard for a 
minimum of ten consecutive business days.
    \6\ Securities Exchange Act Release No. 58809 (October 17, 
2008), 73 FR 63222 (October 23, 2008) (SR-NASDAQ-2008-082). One 
comment was submitted on this proposal by Alan F. Eisenberg, 
Executive Vice President, the Biotechnology Industry Organization. 
This comment supported the suspension and ``any efforts by the 
Commission and NASDAQ to extend [the suspension], as necessary, 
beyond the termination date of January 16, 2009.''
    \7\ See, e.g., Securities Exchange Act Release No. 58588 
(September 18, 2008), 73 FR 55174 (September 24, 2008) (``The 
Commission is aware of the continued potential of sudden and 
excessive fluctuations of securities prices and disruption in the 
functioning of the securities markets that could threaten fair and 
orderly markets. Given the importance of confidence in our financial 
markets as a whole, we have also become concerned about sudden and 
unexplained declines in the prices of securities. Such price 
declines can give rise to questions about the underlying financial 
condition of an issuer, which in turn can create a crisis of 
confidence without a fundamental underlying basis. This crisis of 
confidence can impair the liquidity and ultimate viability of an 
issuer, with potentially broad market consequences.'').
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    Market conditions have not improved since the suspension began and, 
in fact, both the number of securities trading below $1 and the number 
of securities trading between $1 and $2 on Nasdaq has increased. Nasdaq 
continues to believe that there was no fundamental change in the 
underlying business model or prospects for many of these companies, and 
that a decline in general investor confidence has resulted in depressed 
pricing for companies that otherwise remain suitable for continued 
listing. These same conditions continue to make it difficult for 
companies to successfully implement a plan to regain compliance with 
the price or market value of publicly held shares tests.
    Given these extraordinary market conditions, Nasdaq has determined 
that it is appropriate to continue the temporary suspension of the bid 
price and market value of publicly held shares requirements for an 
additional three months, until April 19, 2009. Under this proposal, 
companies would not be cited for new bid price or market value of 
publicly held shares deficiencies during the suspension period, and the 
time allowed to companies already in a compliance period or in the 
hearings process for bid price or market value of publicly held shares 
deficiencies would remain suspended with respect to those 
requirements.\8\ Following the temporary suspension, any new 
deficiencies with the bid price or market value of publicly held shares 
requirements would be determined using data starting on April 20, 
2009.\9\ When the suspension expires, companies that were in a 
compliance period as of October 16, 2008, when the suspension first 
began, would receive the balance of any pending compliance

[[Page 2641]]

periods in effect at the time of the initial suspension.\10\ Similarly, 
companies that were in the Hearings process prior to October 16, 2008, 
would resume in that process at the same stage they were in when the 
suspension first went into effect. Nasdaq will continue to monitor 
securities to determine if they regain compliance during the temporary 
suspension.
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    \8\ Nasdaq would continue to identify on its Web site and in its 
daily data feed to vendors those companies in a compliance period or 
in the hearings process as not satisfying the continued listing 
standards, unless the company regains compliance during the 
suspension. A company would continue to be subject to delisting for 
failure to comply with other listing requirements.
    \9\ Nasdaq would not consider the bid price or market value of 
publicly held shares for the period before or during the suspension 
with respect to a company that was not yet non-compliant with those 
requirements at the start of the suspension.
    \10\ For example, if a company was 120 days into its first 180-
day compliance period for a bid price deficiency when the suspension 
first started and the company does not regain compliance during the 
suspension, the company would have sixty days remaining, starting on 
April 20, 2009, to regain compliance. The company may be eligible 
for the second 180-day compliance period if it satisfies the 
conditions for the second compliance period at the conclusion of the 
first compliance period.
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    Nasdaq believes that extending the temporary suspension will permit 
companies to continue focusing on running their businesses, rather than 
satisfying market-based requirements that are largely beyond their 
control in the current environment. Moreover, this extension will allow 
investors to buy shares of some of these lower-priced securities 
without fear that the company will receive a delisting notification or 
be delisted in the very near term.\11\ Nasdaq will continue to monitor 
market conditions and consider whether it is appropriate to further 
extend the suspension.
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    \11\ As noted above, following the suspension, companies 
presently in the compliance process will remain at that same stage 
of the process.
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2. Statutory Basis
    Nasdaq believes that the proposed rule change is consistent with 
the provisions of Section 6 of the Act,\12\ in general and with 
Sections [sic] 6(b)(5) of the Act,\13\ in particular in that it is 
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. The proposed 
rule change is designed to remove uncertainty regarding the ability of 
companies to remain listed on Nasdaq during this especially turbulent 
market environment, thereby protecting investors, facilitating 
transactions in securities, and removing an impediment to a free and 
open market.
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    \12\ 15 U.S.C. 78f.
    \13\ 15 U.S.C. 78f(b)(5).
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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

    While written comments were not solicited about the proposed 
extension, there was one comment submitted by the Biotechnology 
Industry Organization on the original suspension of the bid price and 
market value of publicly held shares requirements, which supported the 
extension. That comment is described in footnote 6, above.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the proposed rule change: (i) Does not significantly affect 
the protection of investors or the public interest; (ii) does not 
impose any significant burden on competition; and (iii) 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, the proposed rule change has 
become effective pursuant to Section 19(b)(3)(A) of the Act \14\ and 
Rule 19b-4(f)(6) thereunder.\15\
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    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 17 CFR 240.19b-4(f)(6). Pursuant to Rule 19b-4(f)(6)(iii) 
under the Act, the Exchange is required to give the Commission 
written notice of its intent to file the proposed rule change, along 
with a brief description and text of 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. 
The Exchange has requested that the Commission waive the 5-day pre-
filing notice requirement. The Commission has determined to waive 
this requirement.
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission may summarily abrogate the rule change if it 
appears to the Commission that such action is necessary or 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. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an e-mail to [email protected]. Please include 
File Number SR-NASDAQ-2008-099 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.
    All submissions should refer to File Number SR-NASDAQ-2008-099. 
This file number should be included on the subject line if e-mail is 
used. To help the Commission process and review your comments more 
efficiently, please use only one method. The Commission will post all 
comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). 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, on official 
business days between the hours of 10 a.m. and 3 p.m. Copies of the 
filing also will be available for inspection and copying at the 
principal office of the Exchange. All comments received will be posted 
without change; the Commission does not edit personal identifying 
information from submissions. You should submit only information that 
you wish to make available publicly. All submissions should refer to 
File Number SR-NASDAQ-2008-099 and should be submitted on or before 
February 5, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
Florence E. Harmon,
Deputy Secretary.
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    \16\ 17 CFR 200.30-3(a)(12).
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 [FR Doc. E9-778 Filed 1-14-09; 8:45 am]
BILLING CODE 8011-01-P