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SECURITIES AND EXCHANGE COMMISSION

Securities and Exchange Commission

DOCUMENT ID: [Release No. 34-58029; File No. SR-NASDAQ-2008-053]

NOTICE: NOTICES

ACTION: Self-Regulatory Organizations; Proposed Rule Changes:

SUBJECT CATEGORY: Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing of Proposed Rule Change To Modify the Definition of ``Independent Director''

DOCUMENT SUMMARY: June 26, 2008.

Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act''),\1\ and Rule 19b4 thereunder,\2\ notice is hereby given that on June 6, 2008, The NASDAQ Stock Market LLC (``Nasdaq''), filed with the Securities and Exchange Commission (``SEC'' or ``Commission'') the proposed rule change as described in Items I, II, and III below, which Items have been substantially prepared by Nasdaq. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons.
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b4.
I. SelfRegulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change

Nasdaq proposes to amend Rule 4200(a)(15)(B) and IM4200 to modify Nasdaq's definition of ``independent director.'' Nasdaq will implement the proposed rule upon approval.

The text of the proposed rule change is available at Nasdaq, at the Commission's Public Reference Room, and on Nasdaq's Web site at http:// nasdaq.complinet.com.
II. SelfRegulatory 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. SelfRegulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change

1. Purpose

The purpose of this rule filing is to modify Nasdaq's definition of an ``independent director.''

Nasdaq's rules generally preclude a director from being considered independent if the director has received more than $100,000 in compensation from the issuer.\3\ When Nasdaq first adopted this rule in 1999, the threshold was $60,000, which was chosen to be consistent with the $60,000 disclosure threshold set by the Commission in Regulation S K, Item 404.\4\ In August 2006, the Commission adopted final rules raising the threshold in Regulation SK, Item 404 from $60,000 to $120,000.\5\ Following this change to the SEC's rules, Nasdaq, as an intermediate step, increased the threshold in its independence definition from $60,000 to $100,000,\6\ which was consistent with the threshold in the comparable rule of the New York Stock Exchange, Inc. (``NYSE'').\7\
\3\ Nasdaq Rule 4200(a)(15)(B).
\4\ The rule filing stated that ``* * * Nasdaq believes that a compensation threshold of $60,000 is appropriate as it corresponds to the de minimis threshold for disclosure of relationships that may affect the independent judgment of directors set forth in SEC Regulation SK, Item 404.'' See Securities Exchange Act Release No. 41982 (October 6, 1999), 64 FR 55510 (October 13, 1999).
\5\ See Securities Exchange Act Release No. 54302A (August 29, 2006), 71 FR 53158 (September 8, 2006).
\6\ See Securities Exchange Act Release No. 55463 (March 13, 2007), 72 FR 13327 (March 21, 2007).
\7\ See Section 303A.02(b)(ii) of the NYSE Listed Company Manual.

On June 8, 2007, NYSE amended a prior rule proposal filed with the Commission regarding changes to certain of its corporate governance requirements.\8\ In the amendment, NYSE proposed increasing the threshold in its independence definition from $100,000 to $120,000. In its statement of the purpose of its proposal, NYSE explained that ``[t]his change reflects the SEC's recent amendment to the dollar threshold applicable to related party transactions that must be disclosed under Item 404 of Regulation SK.'' \9\
\8\ See Amendment No. 1 to File No. SRNYSE200581.
\9\ Id., citing Securities Act Release No. 8732A (August 29, 2006), 71 FR 53158 (September 8, 2006).

Nasdaq believes that the monetary threshold in its independence definition should be consistent with the amount in Regulation SK, Item 404. Using a consistent standard would enhance Nasdaq's ability to assess compliance with the independent director requirements because companies are required to disclose compensation in excess of $120,000, but are not necessarily required to disclose compensation between $100,000 and $120,000. Finally, Nasdaq believes that its rules and the NYSE rules should be consistent with regard to the definition [[Page 38017]]
of an independent director. As such, and given that Nasdaq's objective has always been to make its independence threshold consistent with the SEC's disclosure threshold in Regulation SK, Item 404, Nasdaq is proposing to increase its independence threshold from $100,000 to $120,000.

2. Statutory Basis

Nasdaq believes that the proposed rule change is consistent with the provisions of Section 6 of the Act,\10\ in general, and with Section 6(b)(5) of the Act,\11\ in particular. Section 6(b)(5) of the Act requires, among other things, that Nasdaq's rules be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, 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. The proposed change is consistent with these requirements in that it will conform Nasdaq's requirement to SEC disclosure requirements and proposed NYSE rule changes, and provide a standard that is clear, straightforward, and easy for issuers to understand and apply. \10\ 15 U.S.C. 78f.
\11\ 15 U.S.C. 78f(b)(5).
B. SelfRegulatory 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. SelfRegulatory 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 Nasdaq 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 email to rulecomments@sec.gov. Please include File Number SRNASDAQ2008053 on the subject line.
    Paper Comments
  • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 205491090. All submissions should refer to File Number SRNASDAQ2008053. 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 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 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 SRNASDAQ2008053 and should be submitted on or before July 23, 2008.

    For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\12\
    \12\ 17 CFR 200.303(a)(12).
    Florence E. Harmon,
    Acting Secretary.
    [FR Doc. E814983 Filed 7108; 8:45 am]
    BILLING CODE 801001P

    SUMMARY: NASDAQ Stock Market LLC,


    DOCUMENT BODY 2: June 26, 2008.

    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act''),\1\ and Rule 19b4 thereunder,\2\ notice is hereby given that on June 6, 2008, The NASDAQ Stock Market LLC (``Nasdaq''), filed with the Securities and Exchange Commission (``SEC'' or ``Commission'') the proposed rule change as described in Items I, II, and III below, which Items have been substantially prepared by Nasdaq. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons.
    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b4.
    I. SelfRegulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change

    Nasdaq proposes to amend Rule 4200(a)(15)(B) and IM4200 to modify Nasdaq's definition of ``independent director.'' Nasdaq will implement the proposed rule upon approval.

    The text of the proposed rule change is available at Nasdaq, at the Commission's Public Reference Room, and on Nasdaq's Web site at http:// nasdaq.complinet.com.
    II. SelfRegulatory 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. SelfRegulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change

    1. Purpose

    The purpose of this rule filing is to modify Nasdaq's definition of an ``independent director.''

    Nasdaq's rules generally preclude a director from being considered independent if the director has received more than $100,000 in compensation from the issuer.\3\ When Nasdaq first adopted this rule in 1999, the threshold was $60,000, which was chosen to be consistent with the $60,000 disclosure threshold set by the Commission in Regulation S K, Item 404.\4\ In August 2006, the Commission adopted final rules raising the threshold in Regulation SK, Item 404 from $60,000 to $120,000.\5\ Following this change to the SEC's rules, Nasdaq, as an intermediate step, increased the threshold in its independence definition from $60,000 to $100,000,\6\ which was consistent with the threshold in the comparable rule of the New York Stock Exchange, Inc. (``NYSE'').\7\
    \3\ Nasdaq Rule 4200(a)(15)(B).
    \4\ The rule filing stated that ``* * * Nasdaq believes that a compensation threshold of $60,000 is appropriate as it corresponds to the de minimis threshold for disclosure of relationships that may affect the independent judgment of directors set forth in SEC Regulation SK, Item 404.'' See Securities Exchange Act Release No. 41982 (October 6, 1999), 64 FR 55510 (October 13, 1999).
    \5\ See Securities Exchange Act Release No. 54302A (August 29, 2006), 71 FR 53158 (September 8, 2006).
    \6\ See Securities Exchange Act Release No. 55463 (March 13, 2007), 72 FR 13327 (March 21, 2007).
    \7\ See Section 303A.02(b)(ii) of the NYSE Listed Company Manual.

    On June 8, 2007, NYSE amended a prior rule proposal filed with the Commission regarding changes to certain of its corporate governance requirements.\8\ In the amendment, NYSE proposed increasing the threshold in its independence definition from $100,000 to $120,000. In its statement of the purpose of its proposal, NYSE explained that ``[t]his change reflects the SEC's recent amendment to the dollar threshold applicable to related party transactions that must be disclosed under Item 404 of Regulation SK.'' \9\
    \8\ See Amendment No. 1 to File No. SRNYSE200581.
    \9\ Id., citing Securities Act Release No. 8732A (August 29, 2006), 71 FR 53158 (September 8, 2006).

    Nasdaq believes that the monetary threshold in its independence definition should be consistent with the amount in Regulation SK, Item 404. Using a consistent standard would enhance Nasdaq's ability to assess compliance with the independent director requirements because companies are required to disclose compensation in excess of $120,000, but are not necessarily required to disclose compensation between $100,000 and $120,000. Finally, Nasdaq believes that its rules and the NYSE rules should be consistent with regard to the definition [[Page 38017]]
    of an independent director. As such, and given that Nasdaq's objective has always been to make its independence threshold consistent with the SEC's disclosure threshold in Regulation SK, Item 404, Nasdaq is proposing to increase its independence threshold from $100,000 to $120,000.

    2. Statutory Basis

    Nasdaq believes that the proposed rule change is consistent with the provisions of Section 6 of the Act,\10\ in general, and with Section 6(b)(5) of the Act,\11\ in particular. Section 6(b)(5) of the Act requires, among other things, that Nasdaq's rules be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, 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. The proposed change is consistent with these requirements in that it will conform Nasdaq's requirement to SEC disclosure requirements and proposed NYSE rule changes, and provide a standard that is clear, straightforward, and easy for issuers to understand and apply. \10\ 15 U.S.C. 78f.
    \11\ 15 U.S.C. 78f(b)(5).
    B. SelfRegulatory 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. SelfRegulatory 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 Nasdaq 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 email to rulecomments@sec.gov. Please include File Number SRNASDAQ2008053 on the subject line.
    Paper Comments
  • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 205491090. All submissions should refer to File Number SRNASDAQ2008053. 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 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 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 SRNASDAQ2008053 and should be submitted on or before July 23, 2008.

    For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\12\
    \12\ 17 CFR 200.303(a)(12).
    Florence E. Harmon,
    Acting Secretary.
    [FR Doc. E814983 Filed 7108; 8:45 am]
    BILLING CODE 801001P


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