Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”), and Rule 19b-4 thereunder, 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.
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.Start Printed 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
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, 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.
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 Start Printed Page 59482publishes 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.Start Signature
For the Commission by the Division of Market Regulation, pursuant to delegated authority.
Margaret H. McFarland,
[FR Doc. 00-25595 Filed 10-4-00; 8:45 am]
BILLING CODE 8010-01-M