[Federal Register Volume 75, Number 63 (Friday, April 2, 2010)]
[Notices]
[Pages 16877-16878]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-7430]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-61789; File No. SR-NASDAQ-2010-037]
Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Modify Nasdaq's Rules To Eliminate an Outdated Reference
March 26, 2010.
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 15, 2010, 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. Nasdaq has designated the proposed rule change as
effecting a change described under Rule 19b-4(f)(6) under the Act,\3\
which renders the proposal effective upon filing with the Commission.
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.
\3\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of the
Substance of the Proposed Rule Change
Nasdaq proposes to modify Rule 5605(c), which contains the audit
committee charter requirements, to eliminate an outdated reference to
Independence Standards Board Standard 1.
The text of the proposed rule change is below. Proposed new
language is in italics; proposed deletions are in brackets.\4\
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\4\ Changes are marked to the rule text that appears in the
electronic manual of Nasdaq found at http://nasdaqomx.cchwallstreet.com.
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* * * * *
5605. Board of Directors and Committees
(a)-(b) No change.
(c) Audit Committee Requirements
(1) Audit Committee Charter
Each Company must certify that it has adopted a formal written
audit committee charter and that the audit committee has reviewed
and reassessed the adequacy of the formal written charter on an
annual basis. The charter must specify:
(A) No change.
(B) The audit committee's responsibility for ensuring its
receipt from the outside auditors of a formal written statement
delineating all relationships between the auditor and the Company,
[consistent with Independence Standards Board Standard 1, and the
audit committee's responsibility for] actively engaging in a
dialogue with the auditor with respect to any disclosed
relationships or services that may impact the objectivity and
independence of the auditor and for taking, or recommending that the
full board take, appropriate action to oversee the independence of
the outside auditor; and
(C)-(D) No change.
IM-5605-3. No change.
(2)-(5) No change.
(d)-(e) No change.
* * * * *
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
Nasdaq Rule 5605(c)(1) describes the provisions that are required
to be included in the audit committee charter of each Nasdaq-listed
company. Among those provisions, Rule 5605(c)(1)(B) requires that the
charter specify the audit committee's responsibility for ``ensuring its
receipt from the outside auditors of a formal written statement
delineating all relationships between the auditor and the Company,
consistent with Independence Standards Board Standard 1. * * * ''
The Independence Standards Board (``ISB''), which was created in
1997 through an agreement between the SEC and the AICPA ceased
operations in 2001.\5\ In 2002, Congress adopted Section 103(b) of the
Sarbanes-Oxley Act,\6\ directing the Public Company Accounting
Oversight Board (the ``PCAOB'') to establish rules on auditor
independence for public companies. Pursuant to that authority, the
PCAOB adopted Rule 3526, Communication with Audit Committees Concerning
Independence.\7\ This rule was designed
[[Page 16878]]
to build on ISB Standard 1, and superseded that standard and two
related interpretations.
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\5\ SEC Press Release 2001-72, available at http://www.sec.gov/news/press/2001-72.txt.
\6\ 15 U.S.C. 7213.
\7\ Exchange Act Release No. 58415 (August 22, 2008), 73 FR
50843 (August 28, 2008) (File No. PCAOB-2008-003). This rule
requires auditor's [sic] to deliver certain information concerning
their independence to the audit committee and to discuss that
information with the committee.
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Nasdaq proposes to remove the reference in its rules to the
superseded ISB Standard. This proposed change will not change the
substantive requirements that must be contained in the audit committee
charter.
2. Statutory Basis
Nasdaq believes that the proposed rule change is consistent with
the provisions of Section 6 of the Act,\8\ in general, and Section
6(b)(5) of the Act,\9\ in particular, because 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 facilitating transactions in securities, and to
remove impediments to and perfect the mechanism of a free and open
market and a national market system. The proposed rule change is
designed to update Nasdaq's requirements concerning auditor
independence by eliminating an outdated, redundant reference.
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\8\ 15 U.S.C. 78f.
\9\ 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, as amended.
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
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, if consistent with
the protection of investors and the public interest, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \10\ and Rule 19b-
4(f)(6)(iii) thereunder.\11\
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\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 17 CFR 240.19b-4(f)(6)(iii). In addition, Rule 19b-
4(f)(6)(iii) requires that a self-regulatory organization submit to
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 Commission notes that Nasdaq satisfied the five-
day pre-filing notice requirement.
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At any time within 60 days of the filing of the proposed rule
change, the Commission may summarily abrogate 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.
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-2010-037 on the subject line.
Paper Comments:
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, Station Place, 100 F
Street, NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-NASDAQ-2010-037. 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 Web site
viewing and printing in the Commission's Public Reference Room on
official business days between the hours of 10 a.m. and 3 p.m. Copies
of such filing also will be available for inspection and copying at the
principal office of Nasdaq. 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-2010-037 and should be submitted on or before
April 23, 2010.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
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\12\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-7430 Filed 4-1-10; 8:45 am]
BILLING CODE 8011-01-P