New Nasdaq rule requiring electronic submissions to MarketWatch

By Cydney Posner

The SEC has adopted a Nasdaq rule proposal requiring Nasdaq-listed issuers to submit material news to Nasdaq through Nasdaq’s electronic disclosure submission system, except in emergency situations. Nasdaq rules generally require an issuer to make prompt disclosure to the public, through any Reg FD-compliant method, of material developments and to provide notice to Nasdaq’s MarketWatch prior to the release of the information. Nasdaq reviews these disclosures to determine whether a trading halt is appropriate. Although the electronic system went into effect in 2004, most issuers provide material news notifications by fax, which creates administrative burdens for Nasdaq. Under the new rules, Nasdaq would accept notification by telephone or fax in an emergency. ("Emergency" includes lack of computer or internet access, a technical problem on either the issuer or Nasdaq system or an incompatibility between those systems, and a material development involving no draft disclosure document, but requiring immediate notification to Nasdaq MarketWatch. See Nasdaq IM-4120-1.) If an issuer repeatedly fails to notify Nasdaq prior to the distribution of material news or repeatedly fails to use the electronic disclosure submission system in the absence of an emergency, Nasdaq may issue a Staff Determination that is a public reprimand letter or, in extreme circumstances, a Staff Determination to delist an issuer’s securities.

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