

[Federal Register: March 21, 2007 (Volume 72, Number 54)]
[Notices]               
[Page 13327-13328]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr21mr07-102]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55463; File No. SR-NASDAQ-2006-041]

 
Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing of Amendment No. 1 and Order Granting Accelerated 
Approval to Proposed Rule Change as Modified by Amendment No. 1 To 
Modify an Aspect of the Definition of Independent Director

March 13, 2007.

I. Introduction

    On October 3, 2006, The NASDAQ Stock Market LLC (``Nasdaq'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change to modify an aspect of Nasdaq's definition of 
``independent director.'' The proposed rule change was published for 
comment in the Federal Register on November 28, 2006.\3\ The Commission 
received no comment letters on the proposal as published. On March 2, 
2007, Nasdaq filed Amendment No. 1 to the proposed rule change. The 
Commission is publishing notice of Amendment No. 1 to the proposed rule 
change and granting approval to the proposed rule change as modified by 
Amendment No. 1 on an accelerated basis.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 54797 (November 20, 
2006), 71 FR 68855 (``Notice'').
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II. Description of the Proposed Rule Change

    Under current Nasdaq Rule 4200(a)(15)(B), a director of a listed 
issuer is generally precluded from being considered independent if that 
director has received more than $60,000 in compensation from the issuer 
during any period of twelve consecutive months within the three years 
preceding the determination of independence.\4\ The proposed rule 
change would raise this amount to $100,000, the same figure specified 
by the New York Stock Exchange (``NYSE'') in its comparable 
independence standard.\5\
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    \4\ See Nasdaq Rule 4200(a)(15)(b).
    \5\ See Section 303A.02(b)(ii) of the NYSE Listed Company 
Manual. See also Amendment No. 1 to the proposed rule change.

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[[Page 13328]]

III. Discussion and Commission Findings

    The Commission finds that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder applicable to Nasdaq,\6\ and, in particular, with Section 
6(b)(5) of the Act.\7\
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    \6\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. 15 U.S.C. 78c(f).
    \7\ 15 U.S.C. 78f(b)(5).
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    The Commission believes that the proposed rule change is reasonable 
and would align Nasdaq's ``bright line'' test with respect to a 
director's receipt of compensation from the issuer more closely with 
the equivalent rule of the NYSE. The Commission notes that, under the 
proposed rule change, a Nasdaq listed issuer's board would still have 
the responsibility to make an affirmative determination that an 
independent director has no relationship whatsoever with the issuer 
that would impair his or her independence, even when the director has 
passed the ``bright line'' test of the rule and has not accepted (and 
has no family member who has accepted) more than $100,000 in 
compensation from the issuer during the relevant period.\8\
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    \8\ See Nasdaq Rule 4200(a)(15) and IM-4200--``Definition of 
Independence.'' See also Notice, supra note 3, at note 8.
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IV. Solicitation of Comments Concerning the Proposed Rule Change

    Interested persons are invited to submit written data, views and 
arguments concerning the proposed rule change, 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 rule-comments@sec.gov. Please include 

File Number SR-NASDAQ-2006-041 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.
    All submissions should refer to File Number SR-NASDAQ-2006-041. 
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. Copies of such 
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-2006-041 and should be submitted on or before 
April 11, 2007.

V. Accelerated Approval of the Proposed Rule Change

    Nasdaq has requested that the Commission approve the proposed rule 
change as modified by Amendment No. 1 on an accelerated basis.\9\ 
Pursuant to Section 19(b)(2) of the Act,\10\ the Commission may not 
approve any proposed rule change, or amendment thereto, prior to the 
30th day after the date of publication of notice of the filing thereof, 
unless the Commission finds good cause for so doing and publishes its 
reasons for so finding.
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    \9\ See Amendment No. 1.
    \10\ 15 U.S.C. 78s(b)(2).
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    The Commission hereby finds good cause to approve the proposed rule 
change as amended by Amendment No. 1 on an accelerated basis. The 
proposed rule change as published in the Notice would have raised the 
amount of compensation that precludes a director from being an 
``independent director'' from $60,000 to $120,000. Amendment No. 1 
established the compensation threshold at $100,000. The Commission 
believes that this change raises no new regulatory issues and aligns 
Nasdaq's rule with the equivalent rule of the NYSE. The Commission 
believes that no reasonable purpose would be served by delaying 
implementation of the proposal.
    Accordingly, pursuant to Section 19(b)(2) of the Act,\11\ the 
Commission finds good cause to approve the proposed rule change as 
modified by Amendment No. 1 prior to the 30th day after notice in the 
Federal Register.
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    \11\ Id.
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VI. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\12\ that the proposed rule change (File No. SR-NASDAQ-2006-041), 
as modified by Amendment No. 1, be, and it hereby is, approved.
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    \12\ Id.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-5084 Filed 3-20-07; 8:45 am]

BILLING CODE 8010-01-P
