
[Federal Register: April 24, 2008 (Volume 73, Number 80)]
[Notices]               
[Page 22191-22193]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr24ap08-89]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57685; File No. SR-NASDAQ-2008-013]

 
Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing of Proposed Rule Change Relating to the Adoption of 
Additional Initial Listing Standards for Special Purpose Acquisition 
Vehicles

April 18, 2008.
    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 14, 2008, The NASDAQ Stock Market LLC (``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.
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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 the 
Substance of the Proposed Rule Change

    The proposed rule change adopts additional listing criteria that 
Nasdaq proposes to apply when listing acquisition vehicles. Nasdaq will 
implement the proposed rule upon approval.
    The text of the proposed rule change is below. Proposed new 
language is in italics; proposed deletions are in brackets.\3\
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    \3\ Changes are marked to the rule text that appears in the 
electronic manual of Nasdaq found at http://nasdaq.complinet.com.

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[IM-4300.] IM-4300-1. Use of Discretionary Authority

    No changes.
IM-4300-2. Listing of Companies Whose Business Plan Is To Complete One 
or More Acquisitions

    Generally, Nasdaq will not permit the initial or continued listing 
of a company that has no specific business plan or that has indicated 
that its business plan is to engage in a merger or acquisition with an 
unidentified company or companies.
    However, in the case of a company whose business plan is to 
complete an initial public offering and engage in a merger or 
acquisition with one or more unidentified companies within a specific 
period of time, Nasdaq will permit the listing if the company meets all 
applicable initial listing requirements, as well as the conditions 
described below.
    (a) Gross proceeds from the initial public offering must be 
deposited in a trust account maintained by an independent trustee, an 
escrow account maintained by an ``insured depository institution,'' as 
that term is defined in Section 3(c)(2) of the Federal Deposit 
Insurance Act or in a separate bank account established by a registered 
broker or dealer (collectively, a ``deposit account'').
    (b) Within 36 months of the effectiveness of its IPO registration 
statement, the company must complete one or more business combinations 
having an aggregate fair market value of at least 80% of the value of 
the deposit account (excluding any deferred underwriters fees and taxes 
payable on the income earned on the deposit account) at the time of the 
agreement to enter into the initial combination.
    (c) Until the company has satisfied the condition in paragraph (b) 
above, each business combination must be approved by a majority of the 
company's independent directors.
    (d) Until the company has satisfied the condition in paragraph (b) 
above, each business combination must be approved by a majority of the 
shares of common stock voting at the meeting at which the combination 
is being considered.
    Until the company completes a business combination where all 
conditions in paragraph (b) above are met, the company must notify 
Nasdaq on the appropriate form about each proposed business 
combination. Following each business combination, the combined company 
must meet the requirements for initial listing. If the company does not 
meet the requirements for initial listing following a business 
combination or does not comply with one of the requirements set forth 
above, Nasdaq will issue a Staff Determination under Rule 4804 to 
delist the company's securities.

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
    In the past, Nasdaq has applied its discretionary authority under 
Rule 4300 to deny listing to companies whose business plan is to 
complete an initial public offering and engage in a subsequent, 
unidentified merger or acquisition (an ``acquisition vehicle'').\4\ 
However, Nasdaq has observed that a number of such recent offerings 
have included investor protections that serve to mitigate Nasdaq's past 
concerns about listing such companies.\5\ As a result, Nasdaq has 
reconsidered its prior policy and determined to list acquisition 
vehicles provided they do not otherwise raise public interest 
concerns.\6\ In order to provide transparency to that change in policy, 
and to describe certain additional criteria that Nasdaq will require 
for acquisition vehicles, Nasdaq proposes to adopt IM-4300-2, which 
will set out criteria designed to afford investors in acquisition 
vehicles additional protection.
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    \4\ Nasdaq Rule 4300 provides Nasdaq with broad discretionary 
authority over the initial and continued listing of securities in 
order to maintain the quality of and public confidence in its 
market, to prevent fraudulent and manipulative acts and practices, 
to promote just and equitable principles of trade, and to protect 
investors and the public interest, even though the securities meet 
all enumerated criteria for initial or continued listing.
    \5\ In addition, while some of Nasdaq's past denials were based, 
in part, upon concerns surrounding the underwriter or sponsor of the 
company, Nasdaq has observed that the underwriters and sponsors of 
recent offerings do not raise similar concerns.
    \6\ As it does with any initial listing, Nasdaq will evaluate 
the reputation of the company's sponsors and underwriters pursuant 
to Nasdaq Rule 4300 in determining whether listing is appropriate.
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    First, these companies must meet all applicable initial listing 
requirements. Thus, for initial listing, companies seeking to list on 
the Nasdaq Global Market must have a minimum market value of listed 
securities of $75 million and companies seeking to list on the

[[Page 22192]]

Nasdaq Capital Market must have a minimum market value of listed 
securities of $50 million.\7\ In addition, Nasdaq has determined to 
impose the following additional criteria for listing a company whose 
business plan is to complete an initial public offering and engage in a 
subsequent, unidentified merger or acquisition: \8\
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    \7\ Nasdaq Rules 4310(c)(2)(B) and 4420(c). Note that given the 
nature of these companies, they will not satisfy the alternative 
initial listing requirements because of the income and operating 
history requirements of those standards. If the company chooses to 
list a unit, then Rule 4310(c)(10) or 4420(h) would also be 
applicable. As noted below, these companies will be required to 
satisfy the initial listing requirements following subsequent 
business combinations.
    \8\ These criteria were derived from protections Nasdaq has 
observed built into recent transactions and Rule 419 under the 
Securities Act of 1933, 17 CFR 230.419.
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    (a) Gross proceeds from the initial public offering must be 
deposited in a trust account maintained by an independent trustee, an 
escrow account maintained by an ``insured depository institution,'' as 
that term is defined in Section 3(c)(2) of the Federal Deposit 
Insurance Act or in a separate bank account established by a registered 
broker or dealer (collectively, a ``deposit account'').
    (b) Within 36 months of the effectiveness of its IPO registration 
statement, the company must complete one or more business combinations 
having an aggregate fair market value of at least 80% of the value of 
the deposit account (excluding any deferred underwriters fees and taxes 
payable on the income earned on the deposit account) at the time of the 
agreement to enter into the initial combination.
    (c) Until the company has satisfied the condition in paragraph (b) 
above, each business combination must be approved by a majority of the 
company's independent directors.
    (d) Until the company has satisfied the condition in paragraph (b) 
above, each business combination must be approved by a majority of the 
shares of common stock voting at the meeting at which the combination 
is being considered.
    Nasdaq will also review such a company in connection with each 
acquisition to assure that it remains appropriate to continue to list 
the company. In that regard, Nasdaq will require that the company meet 
the initial listing requirements upon conclusion of the transaction \9\ 
and will conduct a regulatory review of any individuals that become 
newly involved with the company as a result of the transaction. If the 
company does not meet the requirements for initial listing following a 
business combination or does not comply with one of the requirements 
set forth above, Nasdaq will issue a Staff Determination under Rule 
4804 to delist the company's securities.\10\
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    \9\ Companies will not be required to pay a new listing fee in 
connection with such a review.
    \10\ The Commission notes acquisition companies listed on Nasdaq 
would need to meet the applicable Nasdaq's continued listing 
standards. See Telephone conversation between Steve L. Kuan, Special 
Counsel, Division of Trading and Markets, Commission and Arnold 
Golub, Associate General Counsel, Nasdaq, on April 4, 2008. For 
example, acquisition companies that list on the Nasdaq Global Market 
would need to meet the Global Market continued listing standards in 
Nasdaq Rule 4450. Further, the Commission notes that units would 
need to meet the listing standards in Nasdaq Rule 4310(c)(10), which 
requires all component parts to meet the applicable initial and 
continued listing standards.
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2. Statutory Basis
    Nasdaq believes that the proposed rule change is consistent with 
the provisions of Section 6 of the Act,\11\ in general and with 
Sections 6(b)(5) of the Act,\12\ in particular. Section 6(b)(5) 
requires, among other things, that a registered national securities 
exchange's rules must be designed to prevent fraudulent and 
manipulative acts and practices, to promote just and equitable 
principles of trade, and, in general, to protect investors and the 
public interest. The proposed rule change is consistent with these 
requirements in that it imposes additional requirements on acquisition 
vehicles, which are designed to protect investors and the public 
interest and prevent fraudulent and manipulative acts and practices on 
the part of acquisition vehicles and their promoters.
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    \11\ 15 U.S.C. 78f.
    \12\ 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

    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 publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization 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. 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-2008-013 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-2008-013. 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, 100 F Street, 
NE., Washington, DC 20549, 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 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

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you wish to make available publicly. All submissions should refer to 
File Number SR-Nasdaq-2008-013 and should be submitted on or before May 
15, 2008.

    For the Commission, by the Division of Trading and Markets, 
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. E8-8912 Filed 4-23-08; 8:45 am]

BILLING CODE 8010-01-P
