[Federal Register Volume 89, Number 55 (Wednesday, March 20, 2024)]
[Notices]
[Pages 19905-19907]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-05833]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-99734; File No. SR-NASDAQ-2024-010]


Self-Regulatory Organizations; The Nasdaq Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Clarify Its Listing Standards Related to Notification and Disclosure of 
Reverse Stock Splits

March 14, 2024.
    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 March 1, 2024, The Nasdaq Stock Market LLC (``Nasdaq'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``Commission'') the proposed rule change as described in 
Items I and II below, which Items have been prepared by the Exchange. 
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

    The Exchange proposes to clarify its listing standards related to 
notification and disclosure of reverse stock splits.
    The text of the proposed rule change is available on the Exchange's 
website at https://listingcenter.nasdaq.com/rulebook/nasdaq/rules, at 
the principal office of the Exchange, and at the Commission's Public 
Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange 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. The Exchange 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 June 21, 2023, Nasdaq filed with the Commission a proposed rule 
change related to notification and disclosure of reverse stock 
splits.\3\ On November 1, 2023, the Commission approved the proposed 
rule changes.\4\ Nasdaq is proposing to amend Rule IM-5250-3 without 
changing the substance of the rule. Nasdaq also is proposing an 
additional change to the Company Event Notification Form to further 
clarify the requirement for companies to submit a complete form.
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    \3\ See Securities Exchange Act Release No. 98014 (July 28, 
2023), 88 FR 51376 (August 3, 2023).
    \4\ See Securities Exchange Act Release No. 98843 (November 1, 
2023), 88 FR 76867 (November 7, 2023).
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    Nasdaq Rule 5250(e)(7) already provides that if a company takes 
legal action to effect a reverse stock split notwithstanding its 
failure to timely satisfy the requirements of Rules 5250(b)(4) and 
(e)(7), or provides incomplete or inaccurate information about the 
timing or ratio of the reverse stock split in its public disclosure, 
Nasdaq will halt the stock in accordance with the procedure set forth 
in Equity 4, Rule 4120(a)(1).\5\ Nasdaq IM-5250-3

[[Page 19906]]

contains similar language, but does not specifically reference the halt 
authority in in Equity 4, Rule 4120(a)(1). Nasdaq now proposes to 
clarify in IM-5250-3 by including a reference to the halt procedure set 
forth in Equity 4, Rule 4120(a)(1).
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    \5\ Equity 4, Rule 4120(a)(1) provides Nasdaq with the authority 
to halt trading to permit the dissemination of material news under 
Equity 4, Rule 4120(a)(1). Equity 4, 4120(a)(14) provides Nasdaq 
with the authority to halt trading of a security for which Nasdaq is 
the Primary Listing Market before the end of Post-Market Hours on 
the day immediately before the market effective date of a reverse 
stock split.
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    Nasdaq is also attaching an updated Company Event Notification Form 
as Exhibit 3 to the rule filing. Based on Nasdaq's experience to date 
with company filings under the rule, Nasdaq is making changes to the 
form to clarify that the company must have already obtained a new CUSIP 
number and that CUSIP number must be made eligible by DTC before the 
submission of the form. Nasdaq also is making minor wording changes to 
clarify that shareholder approval must be obtained (as opposed to be 
planned) before the form can be submitted, similar to other dates 
collected on the form such as the date that DTC made the new CUSIP 
eligible.\6\ These changes are consistent with the existing 
requirements of Rule 5250(e)(7), which requires the company to submit a 
complete Company Event Notification Form no later than 12:00 p.m. ET 
five (5) business days prior to the proposed market effective date, and 
which provides that Nasdaq will not process a reverse stock split 
unless all information required by the form is timely provided.
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    \6\ We are also making some minor typographical edits in the 
Corporate Events Notification Form, that do not change the substance 
of the rule.
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with section 
6(b) of the Act,\7\ in general, and furthers the objectives of section 
6(b)(5) of the Act,\8\ in particular, in that it is designed to promote 
just and equitable principles of trade, 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, 
by eliminating potential confusion and enhancing clarity and 
transparency in its rules. The proposal is consistent with the 
Exchange's original proposal, as approved by the Commission, and does 
not have any substantive effect on IM-5250-3.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
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    The proposal intends to clarify that Nasdaq will use its material 
news halt under Equity 4, Rule 4120(a)(1) to halt trading in the 
security of any issuer that effects a reverse stock split without 
meeting the requirements set forth in Rules 5250(b)(4) and (e)(7). 
Nasdaq believes that this will help promote clarity, transparency and 
consistency for market participants and companies.
    The proposal also intends to clarify on the Company Event 
Notification Form that a company must file a complete Company Event 
Notification Form no later than 12:00 p.m. ET five (5) business days 
prior to the proposed market effective date, and such submission must 
include all the relevant information required by the form. Nasdaq 
believes that these changes will memorialize changes to our current 
process and better reflect the original intent of the rule, which will 
in turn help promote clarity, transparency and consistency for 
companies submitting the form.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act. The proposed change is designed 
to more clearly describe the current operation and original intent of 
an existing rule and related Company Event Notification Form, without 
changing its substance and, therefore, Nasdaq believes that the 
proposed change will not impose a burden on competition.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were either solicited or received.

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

    The Exchange has filed the proposed rule change pursuant to section 
19(b)(3)(A)(iii) of the Act \9\ and Rule 19b-4(f)(6) thereunder.\10\ 
Because the foregoing proposed rule change does not: (i) significantly 
affect the protection of investors or the public interest; (ii) impose 
any significant burden on competition; and (iii) become operative for 
30 days from the date on which it was filed, or such shorter time as 
the Commission may designate, it has become effective pursuant to 
section 19(b)(3)(A)(iii) of the Act \11\ and subparagraph (f)(6) of 
Rule 19b-4 thereunder.\12\
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    \9\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \10\ 17 CFR 240.19b-4(f)(6).
    \11\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \12\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization 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 satisfied this requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) \13\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\14\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange asked 
that the Commission waive the 30 day operative delay so that the 
proposal may become operative immediately upon filing and states that 
the waiver will allow it to reflect the Exchange's original intent and 
reduce potential confusion for companies and investors. As the proposed 
rule change raises no new or novel issues and promotes clarity and 
consistency with the original intent of Rule IM-5250-3, the Commission 
believes that waiver of the 30-day operative delay is consistent with 
the protection of investors and the public interest. Accordingly, the 
Commission hereby waives the 30-day operative delay and designates the 
proposed rule change as operative upon filing.\15\
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    \13\ 17 CFR 240.19b-4(f)(6).
    \14\ 17 CFR 240.19b-4(f)(6)(iii).
    \15\ For purposes only of waiving the 30-day operative delay, 
the Commission has also considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such 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. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule should be approved or 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. Comments may be submitted by any of 
the following methods:

[[Page 19907]]

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
file number SR-NASDAQ-2024-010 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to file number SR-NASDAQ-2024-010. This 
file number should be included on the subject line if email 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 website (https://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 website viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE, 
Washington, DC 20549 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. Do not 
include personal identifiable information in submissions; you should 
submit only information that you wish to make available publicly. We 
may redact in part or withhold entirely from publication submitted 
material that is obscene or subject to copyright protection. All 
submissions should refer to file number SR-NASDAQ-2024-010 and should 
be submitted on or before April 10, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-05833 Filed 3-19-24; 8:45 am]
BILLING CODE 8011-01-P