Federal Register: August 8, 2006 (Volume 71, Number 152)
DOCID: FR Doc 06-6707
SECURITIES AND EXCHANGE COMMISSION
Veterans Employment and Training Service
DOCUMENT ID: [Release No. 34-54241]
NOTICE: Part V
SUBJECT CATEGORY:
In the Matter of the Application of the Nasdaq Stock Market, Inc. and the NASDAQ Stock Market LLC for an Exemption From Section 12(a) Allowing Trading of Certain Unregistered Securities
DOCUMENT SUMMARY:
July 31, 2006.
I. Introduction
On January 13, 2006, the Commission approved the application of the
Nasdaq Stock Market, Inc. (``Nasdaq'') to register one of its
subsidiaries, the NASDAQ Stock Market LLC (``Nasdaq Exchange'') as a
national securities exchange.\1\ Prior to Nasdaq's submission of the
application to become an exchange, Nasdaq was a whollyowned subsidiary
of the National Association of Securities Dealers, Inc. (``NASD'') that
operated as an interdealer quotation system. Historically under NASD
rules, a company's securities were eligible for listing on Nasdaq if
the security was registered under either Section 12(g) \2\ or Section
12(b) \3\ of the Securities Exchange Act of 1934 (``Exchange Act'').\4\
However, in certain circumstances, NASD rules also permitted the
trading of securities that are exempt from registration under Section 12(g) of the Exchange Act.
\1\ See Release No. 3453128 (January 13, 2006) [71 FR 3550]. \2\ 15 U.S.C. 78l(g).
\3\ 15 U.S.C. 78l(b).
\4\ 15 U.S.C. 78a et seq.
Among other exempt securities, NASD rules allow the trading of any
security of an insurance company that is exempt from registration under
Section 12(g)(2)(G) of the Exchange Act \5\ and the securities of
certain foreign private issuers that are exempt from Section 12(g) registration pursuant to Exchange Act Rule 12g32(b).\6\
\5\ 15 U.S.C. 78l(g)(2)(G). Section 12(g)(2)(G) provides that
any security issued by an insurance company is exempt from registration if all of the following conditions are met:
determination of such State commissioner, officer or agency substantially conforms to that so prescribed.
Commissioners.
\6\ See 17 CFR 240.12g32(b).
Once the Nasdaq Exchange begins to operate as a national securities
exchange, Section 12(a) of the Exchange Act \7\ would prohibit any
Nasdaq Exchange member, broker, or dealer from effecting any
transaction in any security, other than an ``exempted security'' as
defined in Section 3(a)(12) of the Exchange Act,\8\ on the Nasdaq
Exchange, unless the security is registered under Section 12(b) of the
Exchange Act. There are no exemptions from Section 12(b) registration
afforded to insurance companies and foreign private issuers that
correspond to the exemptions available to these issuers under Section
12(g)(2)(G) of the Exchange Act and Exchange Act Rule 12g32(b).
Accordingly, the securities of these issuers would need to be
registered under Section 12(b) of the Exchange Act before transactions
in those securities could be effected by Nasdaq Exchange members,
brokers and dealers, consistent with Section 12(a) on the Nasdaq Exchange, absent the exemption provided by this order.
\7\ 15 U.S.C. 78l(a).
\8\ 15 U.S.C. 78c(a)(12).
II. Request by Nasdaq and the Nasdaq Exchange for an Exemption From Section 12(a) of the Exchange Act
On July 31, 2006, the Commission received an application (the
``Nasdaq Application'') \9\ from the Nasdaq and the Nasdaq Exchange for
an exemption pursuant to Section 36 of the Exchange Act,\10\ in
accordance with the procedures set forth in Exchange Act Rule 012.\11\
Section 36 of the Exchange Act gives the Commission the authority to
exempt any person, security or transaction from any Exchange Act
provision by rule, regulation or order, to the extent that the
exemption is necessary or appropriate in the public interest and
consistent with the protection of investors. Nasdaq and the Nasdaq
Exchange have requested a threeyear exemption from Section 12(a) of
the Exchange Act, with respect to transactions in securities of the
issuers listed in Exhibit C to the Nasdaq Application that are
currently exempt from registration under Section 12(g) of the Exchange
Act. According to Nasdaq and the Nasdaq Exchange, the securities of
four insurance companies and nine foreign private issuers currently are trading on Nasdaq in reliance on these exemptions.\12\
\9\ Letter from Edward S. Knight to Nancy M. Morris (July 31,
2006). The Nasdaq Application is included in accompanying Release No. 3454240 (July 31, 2006).
\10\ 15 U.S.C. 78mm.
\11\ 17 CFR 240.012. Exchange Act Rule 012 sets forth
procedures for filing applications for orders for exemptive relief pursuant to Section 36.
\12\ See the Nasdaq Application.
An exemption from Section 12(a) would permit Nasdaq Exchange members and brokers or dealers to effect transactions in these securities on the Nasdaq Exchange without registration under Section 12(b) of the Exchange Act. Nasdaq and the Nasdaq Exchange believe that the threeyear period will provide these issuers with adequate time to complete the Section 12(b) registration process and prepare financial statements should they choose to continue to have their securities traded on the Nasdaq Exchange after expiration of the threeyear period. Under the terms of the requested exemption, the insurance companies would have to continue to satisfy the conditions set forth in Section 12(g)(2)(G) of the Exchange Act and the foreign private issuers would have to remain in compliance with the conditions set forth in Exchange Act Rule 12g32(b) to qualify for the exemption.
Prior to submitting this request, Nasdaq and the Nasdaq Exchange
notified the insurance companies and the foreign private issuers of
their plan to request a Section 12(a) exemption on the issuers' behalf
and allowed each issuer that did not wish to be the subject of the
request to optout of the process. Nasdaq and the Nasdaq Exchange
provided these issuers a period of 10 business days to notify Nasdaq of
an optout preference. The issuers that chose to optout from the request are listed in Exhibit B to the Nasdaq Application.
III. Order Granting Nasdaq's Application for an Exemption Pursuant to Section 36 of the Exchange Act
We believe that exempting Nasdaq Exchange members, brokers and
dealers for a limited time from the requirements of Section 12(a)
regarding the trading of the securities listed in Exhibit C to the
Nasdaq Application is necessary and appropriate in the public interest,
and is consistent with the protection of investors in order to afford
these issuers time to comply with the Section 12(b) registration
requirements. As represented by Nasdaq and the Nasdaq Exchange in their request, immediate registration under Section 12(b) could
[[Page 45360]]
force these issuers to withdraw from Nasdaq, consequently depriving
U.S. investors of the accustomed market for the securities of those
issuers and, in some cases, potentially reducing the depth and
liquidity of the market for these securities. We believe that a three
year exemption will serve the public interest by minimizing any
unnecessary disruptions that could result from the sudden withdrawal of
these securities from Nasdaq, thereby potentially exposing investors in
these securities to a less liquid market, absence of market
surveillance by an exchange, and delays in execution of transfers.
We concur with Nasdaq and the Nasdaq Exchange that the requested
threeyear exemption period is appropriate and will provide the
affected issuers with sufficient transition time to register their
securities.\13\ Until the expiration of the exemption granted by this
Order, Nasdaq Exchange members, brokers and dealers will be permitted
to effect transactions in the securities subject to this exemption so
long as the issuers of these securities continue to satisfy the
conditions of Section 12(g)(2)(G) of the Exchange Act or Exchange Act Rule 12g32(b), whichever is applicable.
\13\ Issuers whose securities are exempt from Section 12(g)
under Section 12(g)(2)(G) of the Exchange Act or Exchange Act Rule
12g32(b) would be required to prepare and file a registration
statement on Form 10 for domestic companies or Form 20F for foreign
private issuers. Under Form 20F, foreign private issuers would have
to restate their financial statements in accordance with U.S. generally accepted accounting principles, or provide a
reconciliation of their primary financial statements to U.S. GAAP,
for at least two fiscal years. Thus, the three year period would
give these issuers sufficient time to prepare the required financial
statements should they choose to continue to have their securities traded on the Nasdaq Exchange.
Accordingly, it is ordered pursuant to Section 36 of the Exchange Act that, under the terms and conditions set forth below, a Nasdaq Exchange member, broker or dealer may effect a transaction on the Nasdaq Exchange in a security of an issuer listed in Exhibit C to the Nasdaq Application that has not been registered under Section 12(b) of the Exchange Act without violating Section 12(a) of the Exchange Act. This exemption shall take effect on August 1, 2006, the same date as the start of Nasdaq Exchange's operation, and shall expire on August 1, 2009.
This exemption is limited to the securities of the issuers listed in Exhibit C to the Nasdaq Application and is conditioned on the continued satisfaction of the conditions set forth in Section 12(g)(2)(G) of the Exchange Act with respect to the securities of the insurance companies, or Exchange Act Rule 12g32(b) with respect to the securities of the foreign private issuers. As specified in the Nasdaq Application, Nasdaq will verify the satisfaction of these conditions. In addition, this exemption does not extend to any other section or provision of the Exchange Act.
By the Commission (Chairman Cox and Commissioners Glassman, Atkins, Campos and Nazareth).
Nancy M. Morris,
Secretary.
[FR Doc. 066707 Filed 8706; 8:45 am]
BILLING CODE 801001P
SUMMARY:
Securities and Exchange Commission,
DOCUMENT BODY 2:
July 31, 2006.
I. Introduction
On January 13, 2006, the Commission approved the application of the
Nasdaq Stock Market, Inc. (``Nasdaq'') to register one of its
subsidiaries, the NASDAQ Stock Market LLC (``Nasdaq Exchange'') as a
national securities exchange.\1\ Prior to Nasdaq's submission of the
application to become an exchange, Nasdaq was a whollyowned subsidiary
of the National Association of Securities Dealers, Inc. (``NASD'') that
operated as an interdealer quotation system. Historically under NASD
rules, a company's securities were eligible for listing on Nasdaq if
the security was registered under either Section 12(g) \2\ or Section
12(b) \3\ of the Securities Exchange Act of 1934 (``Exchange Act'').\4\
However, in certain circumstances, NASD rules also permitted the
trading of securities that are exempt from registration under Section 12(g) of the Exchange Act.
\1\ See Release No. 3453128 (January 13, 2006) [71 FR 3550]. \2\ 15 U.S.C. 78l(g).
\3\ 15 U.S.C. 78l(b).
\4\ 15 U.S.C. 78a et seq.
Among other exempt securities, NASD rules allow the trading of any
security of an insurance company that is exempt from registration under
Section 12(g)(2)(G) of the Exchange Act \5\ and the securities of
certain foreign private issuers that are exempt from Section 12(g) registration pursuant to Exchange Act Rule 12g32(b).\6\
\5\ 15 U.S.C. 78l(g)(2)(G). Section 12(g)(2)(G) provides that
any security issued by an insurance company is exempt from registration if all of the following conditions are met:
determination of such State commissioner, officer or agency substantially conforms to that so prescribed.
Commissioners.
\6\ See 17 CFR 240.12g32(b).
Once the Nasdaq Exchange begins to operate as a national securities
exchange, Section 12(a) of the Exchange Act \7\ would prohibit any
Nasdaq Exchange member, broker, or dealer from effecting any
transaction in any security, other than an ``exempted security'' as
defined in Section 3(a)(12) of the Exchange Act,\8\ on the Nasdaq
Exchange, unless the security is registered under Section 12(b) of the
Exchange Act. There are no exemptions from Section 12(b) registration
afforded to insurance companies and foreign private issuers that
correspond to the exemptions available to these issuers under Section
12(g)(2)(G) of the Exchange Act and Exchange Act Rule 12g32(b).
Accordingly, the securities of these issuers would need to be
registered under Section 12(b) of the Exchange Act before transactions
in those securities could be effected by Nasdaq Exchange members,
brokers and dealers, consistent with Section 12(a) on the Nasdaq Exchange, absent the exemption provided by this order.
\7\ 15 U.S.C. 78l(a).
\8\ 15 U.S.C. 78c(a)(12).
II. Request by Nasdaq and the Nasdaq Exchange for an Exemption From Section 12(a) of the Exchange Act
On July 31, 2006, the Commission received an application (the
``Nasdaq Application'') \9\ from the Nasdaq and the Nasdaq Exchange for
an exemption pursuant to Section 36 of the Exchange Act,\10\ in
accordance with the procedures set forth in Exchange Act Rule 012.\11\
Section 36 of the Exchange Act gives the Commission the authority to
exempt any person, security or transaction from any Exchange Act
provision by rule, regulation or order, to the extent that the
exemption is necessary or appropriate in the public interest and
consistent with the protection of investors. Nasdaq and the Nasdaq
Exchange have requested a threeyear exemption from Section 12(a) of
the Exchange Act, with respect to transactions in securities of the
issuers listed in Exhibit C to the Nasdaq Application that are
currently exempt from registration under Section 12(g) of the Exchange
Act. According to Nasdaq and the Nasdaq Exchange, the securities of
four insurance companies and nine foreign private issuers currently are trading on Nasdaq in reliance on these exemptions.\12\
\9\ Letter from Edward S. Knight to Nancy M. Morris (July 31,
2006). The Nasdaq Application is included in accompanying Release No. 3454240 (July 31, 2006).
\10\ 15 U.S.C. 78mm.
\11\ 17 CFR 240.012. Exchange Act Rule 012 sets forth
procedures for filing applications for orders for exemptive relief pursuant to Section 36.
\12\ See the Nasdaq Application.
An exemption from Section 12(a) would permit Nasdaq Exchange members and brokers or dealers to effect transactions in these securities on the Nasdaq Exchange without registration under Section 12(b) of the Exchange Act. Nasdaq and the Nasdaq Exchange believe that the threeyear period will provide these issuers with adequate time to complete the Section 12(b) registration process and prepare financial statements should they choose to continue to have their securities traded on the Nasdaq Exchange after expiration of the threeyear period. Under the terms of the requested exemption, the insurance companies would have to continue to satisfy the conditions set forth in Section 12(g)(2)(G) of the Exchange Act and the foreign private issuers would have to remain in compliance with the conditions set forth in Exchange Act Rule 12g32(b) to qualify for the exemption.
Prior to submitting this request, Nasdaq and the Nasdaq Exchange
notified the insurance companies and the foreign private issuers of
their plan to request a Section 12(a) exemption on the issuers' behalf
and allowed each issuer that did not wish to be the subject of the
request to optout of the process. Nasdaq and the Nasdaq Exchange
provided these issuers a period of 10 business days to notify Nasdaq of
an optout preference. The issuers that chose to optout from the request are listed in Exhibit B to the Nasdaq Application.
III. Order Granting Nasdaq's Application for an Exemption Pursuant to Section 36 of the Exchange Act
We believe that exempting Nasdaq Exchange members, brokers and
dealers for a limited time from the requirements of Section 12(a)
regarding the trading of the securities listed in Exhibit C to the
Nasdaq Application is necessary and appropriate in the public interest,
and is consistent with the protection of investors in order to afford
these issuers time to comply with the Section 12(b) registration
requirements. As represented by Nasdaq and the Nasdaq Exchange in their request, immediate registration under Section 12(b) could
[[Page 45360]]
force these issuers to withdraw from Nasdaq, consequently depriving
U.S. investors of the accustomed market for the securities of those
issuers and, in some cases, potentially reducing the depth and
liquidity of the market for these securities. We believe that a three
year exemption will serve the public interest by minimizing any
unnecessary disruptions that could result from the sudden withdrawal of
these securities from Nasdaq, thereby potentially exposing investors in
these securities to a less liquid market, absence of market
surveillance by an exchange, and delays in execution of transfers.
We concur with Nasdaq and the Nasdaq Exchange that the requested
threeyear exemption period is appropriate and will provide the
affected issuers with sufficient transition time to register their
securities.\13\ Until the expiration of the exemption granted by this
Order, Nasdaq Exchange members, brokers and dealers will be permitted
to effect transactions in the securities subject to this exemption so
long as the issuers of these securities continue to satisfy the
conditions of Section 12(g)(2)(G) of the Exchange Act or Exchange Act Rule 12g32(b), whichever is applicable.
\13\ Issuers whose securities are exempt from Section 12(g)
under Section 12(g)(2)(G) of the Exchange Act or Exchange Act Rule
12g32(b) would be required to prepare and file a registration
statement on Form 10 for domestic companies or Form 20F for foreign
private issuers. Under Form 20F, foreign private issuers would have
to restate their financial statements in accordance with U.S. generally accepted accounting principles, or provide a
reconciliation of their primary financial statements to U.S. GAAP,
for at least two fiscal years. Thus, the three year period would
give these issuers sufficient time to prepare the required financial
statements should they choose to continue to have their securities traded on the Nasdaq Exchange.
Accordingly, it is ordered pursuant to Section 36 of the Exchange Act that, under the terms and conditions set forth below, a Nasdaq Exchange member, broker or dealer may effect a transaction on the Nasdaq Exchange in a security of an issuer listed in Exhibit C to the Nasdaq Application that has not been registered under Section 12(b) of the Exchange Act without violating Section 12(a) of the Exchange Act. This exemption shall take effect on August 1, 2006, the same date as the start of Nasdaq Exchange's operation, and shall expire on August 1, 2009.
This exemption is limited to the securities of the issuers listed in Exhibit C to the Nasdaq Application and is conditioned on the continued satisfaction of the conditions set forth in Section 12(g)(2)(G) of the Exchange Act with respect to the securities of the insurance companies, or Exchange Act Rule 12g32(b) with respect to the securities of the foreign private issuers. As specified in the Nasdaq Application, Nasdaq will verify the satisfaction of these conditions. In addition, this exemption does not extend to any other section or provision of the Exchange Act.
By the Commission (Chairman Cox and Commissioners Glassman, Atkins, Campos and Nazareth).
Nancy M. Morris,
Secretary.
[FR Doc. 066707 Filed 8706; 8:45 am]
BILLING CODE 801001P