Notice2024-25526
Self-Regulatory Organizations; NYSE American LLC; Notice of Filing of Proposed Change Amending Section 1003 of the NYSE American LLC Company Guide To Provide for the Suspension and Delisting of Any Company That: (i) Has Effected One or More Reverse Stock Splits Over the Prior Two-Year Period With a Cumulative Ratio of 200 Shares or More to One; or (ii) Has Effectuated a Reverse Stock Split and the Effectuation of Such Reverse Stock Split Results in the Company's Security Falling Below Any of the Continued Listing Requirements of Section 1003
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
November 4, 2024
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 89 Issue 213 (Monday, November 4, 2024)</title>
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[Federal Register Volume 89, Number 213 (Monday, November 4, 2024)]
[Notices]
[Pages 87661-87663]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-25526]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-101457; File No. SR-NYSEAMER-2024-61]
Self-Regulatory Organizations; NYSE American LLC; Notice of
Filing of Proposed Change Amending Section 1003 of the NYSE American
LLC Company Guide To Provide for the Suspension and Delisting of Any
Company That: (i) Has Effected One or More Reverse Stock Splits Over
the Prior Two-Year Period With a Cumulative Ratio of 200 Shares or More
to One; or (ii) Has Effectuated a Reverse Stock Split and the
Effectuation of Such Reverse Stock Split Results in the Company's
Security Falling Below Any of the Continued Listing Requirements of
Section 1003
October 29, 2024.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given
that, on October 16, 2024, NYSE American LLC (``NYSE American'' or
``Exchange'') 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 the self-regulatory
organization. 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\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend Section 1003 of the NYSE American
LLC Company Guide to provide for the suspension and delisting of any
company that: (i) has effected one or more reverse stock splits over
the prior two-year period with a cumulative ratio of 200 shares or more
to one; or (ii) has effectuated a reverse stock split and the
effectuation of such reverse stock split results in the company's
security falling below any of the continued listing requirements of
Section 1003. The proposed rule change is available on the Exchange's
website at <a href="http://www.nyse.com">www.nyse.com</a>, at the principal office of the Exchange, and
at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
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 those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend subsection (f) (``Other Events'') of
Section 1003 (``Application of Policies'') of the Company Guide to add
two additional circumstances under which the Exchange would have the
authority to suspend and delist a listed company. Specifically,
proposed Section 1003(f)(vi) would give the Exchange the authority to
suspend and delist any listed company that has effected one or more
reverse stock splits over the prior two-year period with a cumulative
ratio of 200 shares or more to one. In addition, proposed Section
1003(f)(vii) would give the Exchange the authority to suspend and
delist any listed company that has effected a reverse stock split if
the effectuation of such reverse stock split results in the company's
security falling below any of the continued listing requirements of
Section 1003. Any action taken by a listed company that is governed by
proposed Sections 1003(f)(vi) and 1003(f)(vii) would result in the
immediate commencement of suspension and delisting procedures in
accordance with the procedures set out in Section 1010 of the Company
Guide.\4\ A listed issuer would not be eligible to follow the
procedures outlined in Section 1009 with respect to any action in
violation of proposed Sections 1003(f)(vi) or (vii).
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\4\ Part 12 of the Company Guide provides that these companies
can seek review of a delisting determination from the Committee for
Review of the Board of Directors of the Exchange.
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Section 1003(f)(v) (``Low Selling Price Issues'') of the Company
Guide provides that, in the case of a common stock selling for a
substantial period of time at a low price per share, the Exchange may
suspend and delist a company if such company shall fail to effect a
reverse split of such shares within a reasonable time after being
notified that the Exchange deems such action to be appropriate under
all the circumstances. In its review of the question of whether it
deems a reverse split of a given issue to be appropriate, the Exchange
will consider all pertinent factors including, market conditions in
general, the number of shares outstanding, plans which may have been
formulated by management, applicable regulations of the state or
country of incorporation or of any governmental agency having
jurisdiction over the issuer, the relationship to other Exchange
policies regarding continued listing, and, in respect of securities of
foreign issuers, the general practice in the country of origin of
trading in low-selling price issues. Proposed Section 1003(f)(vii) is
consistent with the provisions of Section 1003(f)(v) as described
above, as well as with the Exchange's consistent policy that it would
immediately suspend and delist a listed company if the company effects
a reverse stock split to cure a low selling price issue under Section
1003(f)(v) and the company would fall below another quantitative
continued listing standard as a direct result of effecting that reverse
stock split.
Many companies seek to address low selling price issues under
Section 1003(f)(v) by effectuating a reverse stock
[[Page 87662]]
split. However, the Exchange has observed that some companies,
typically those in financial distress or experiencing a prolonged
operational downturn, engage in a pattern of repeated reverse stock
splits. The Exchange believes that such behavior is often indicative of
deep financial or operational distress within such companies rendering
them inappropriate for trading on the Exchange for investor protection
reasons. In these situations, the Exchange has observed that the
challenges facing such companies, generally, are not temporary and may
be so severe that the company is not likely to regain compliance on a
sustained basis.
The Exchange believes that it is consistent with the protection of
investors and the public interest to delist any company that (i) has
effected one or more reverse stock splits over the prior two-year
period with a cumulative ratio of 200 shares or more to one or (ii)
takes a deliberate action that causes it to fall below an Exchange
listing standard, including as in the current proposal, the
effectuation of a reverse split that causes a company to fall below a
quantitative continued listing standard.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\5\ in general, and furthers the
objectives of Section 6(b)(5) of the Act,\6\ 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 regulating,
clearing, settling, processing information with respect to, and
facilitating transactions in securities, to remove impediments to and
perfect the mechanism of a free and open market and a national market
system, and, in general, to protect investors and the public interest.
Specifically, the Exchange believes that the proposal is consistent
with the protection of investors and the public interest because it
enhances the Exchange's listing requirements and limits the ability of
listed companies with a history of having a low stock price to use
reverse stock splits as a means to remain qualified for listing. In
that regard, the Exchange has observed that the challenges facing such
companies generally are not temporary and may be so severe that the
company is not likely to remain compliant with Exchange listing
standards after curing its low selling price by means of a reverse
stock split. Moreover, the price concerns with these companies can be a
leading indicator of other listing compliance concerns, and these
companies often become subject to delisting for other reasons within a
short period of time. The Exchange believes that it is consistent with
the protection of investors and the public interest to immediately
commence suspension and delisting procedures with respect to any
company that (i) has effected one or more reverse stock splits over the
prior two-year period with a cumulative ratio of 200 shares or more to
one or (ii) takes a deliberate action that causes it to fall below an
Exchange listing standard, including as in the current proposal, the
effectuation of a reverse split that causes a company to fall below a
quantitative continued listing standard.
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\5\ 15 U.S.C. 78f(b).
\6\ 15 U.S.C. 78f(b)(5).
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The Exchange believes the proposed rule change furthers the
objectives of Section 6(b)(7) of the Act \7\ in that the Exchange
continues to provide a fair procedure for companies subject to these
enhanced listing requirements. Part 12 of the Company Guide provides
that these companies can seek review of a delisting determination from
the Committee for Review of the Board of Directors of the Exchange. As
a result, the Exchange believes that the proposed rule appropriately
balances the need for appropriate listing standards with the statutory
requirement to protect investors and the public interest.
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\7\ 15 U.S.C. 78f(b)(7).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange believes that the proposal will not impose any burden
on competition that is not necessary or appropriate in furtherance of
the purposes of Section 6(b)(8) of the Act.\8\ While the Exchange does
not believe there will be any impact on competition from the proposed
change, any impact on competition that does arise will be necessary to
better protect investors, in furtherance of a central purpose of the
Act.
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\8\ 15 U.S.C. 78f(b)(8).
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The Exchange believes that the proposal will not impose a burden on
intermarket competition that is not necessary or appropriate in
furtherance of the purposes of the Act because the proposed rule change
is designed to protect investors and facilitate a fair and orderly
market, which are both important purposes of the Act. To the extent
that there is any impact on intermarket competition, it is incidental
to these objectives.
The Exchange does not believe that the proposed rule change imposes
a burden on intra-market competition because the provisions apply to
all market participants and issuers on the Exchange equally.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period up to 90 days (i) as the
Commission may designate 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 or disapprove the 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
<bullet> Use the Commission's internet comment form (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#e496918881c9878b8989818a9097a4978187ca838b92"><span class="__cf_email__" data-cfemail="fa888f969fd7999597979f948e89ba899f99d49d958c">[email protected]</span></a>. Please include
file number SR-NYSEAMER-2024-61 on the subject line.
Paper Comments
<bullet> Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to file number SR-NYSEAMER-2024-61. This
file number should be included on the subject line if email 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 website (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule
[[Page 87663]]
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 website viewing and printing 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 the
filing also will be available for inspection and copying at the
principal office of the Exchange. Do not include personal identifiable
information in submissions; you should submit only information that you
wish to make available publicly. We may redact in part or withhold
entirely from publication submitted material that is obscene or subject
to copyright protection. All submissions should refer to file number
SR-NYSEAMER-2024-61 and should be submitted on or before November 25,
2024.
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\9\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\9\
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-25526 Filed 11-1-24; 8:45 am]
BILLING CODE 8011-01-P
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