Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Noticing of Filing of Amendment No. 1 and Order Granting Accelerated Approval of a Proposed Rule Change, as Modified by Amendment No. 1, To Adopt Listing Rule IM-5101-4

[Federal Register Volume 91, Number 109 (Monday, June 8, 2026)]

[Notices]

[Pages 34675-34680]

From the Federal Register Online via the Government Publishing Office [ www.gpo.gov ]

[FR Doc No: 2026-11379]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-105603; File No. SR-NASDAQ-2026-009]

Self-Regulatory Organizations; The Nasdaq Stock Market LLC;

Noticing of Filing of Amendment No. 1 and Order Granting Accelerated

Approval of a Proposed Rule Change, as Modified by Amendment No. 1, To

Adopt Listing Rule IM-5101-4

June 3, 2026.

I. Introduction

On February 20, 2026, The Nasdaq Stock Market LLC (``Nasdaq'' or

``Exchange'') filed with the Securities and Exchange Commission

(``SEC'' or ``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 adopt Nasdaq Rule IM-5101-4,

which would provide Nasdaq with the authority to delist a security

where the Commission has previously suspended trading and the Exchange

determines it appropriate and in the public interest to do so. The

proposed rule change was published in the Federal Register on March 6,

2026.\3\ On April 16, 2026, pursuant to Section 19(b)(2) of the Act,\4\

the Commission designated a longer period within which to take action

on the proposed rule change.\5\ On May 21, 2026, the Exchange filed

Amendment No. 1 to the proposed rule change, which superseded the

original filing in its entirety.\6\ The Commission is publishing this

notice and order to solicit comments on Amendment No. 1 from interested

persons and to approve 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. 104917 (Mar. 3,

2026), 91 FR 11104 (``Notice''). Comments received on the proposed

rule change are available at: https://www.sec.gov/rules-regulations/public-comments/sr-nasdaq-2026-009 .

\4\ 15 U.S.C. 78s(b)(2).

\5\ See Securities Exchange Act Release No. 105252, 91 FR 21353

(Apr. 21, 2026). The Commission designated June 4, 2026, as the date

by which the Commission shall approve, disapprove, or institute

proceedings to determine whether to disapprove the proposed rule

change. See id.

\6\ In Amendment No. 1, the Exchange: (1) provided additional

description of certain aspects of the proposal; (2) made technical

and non-substantive changes to the proposal; and (3) addressed

comments received on the proposal. The full text of Amendment No. 1

can be found on the Commission's website at: https://www.sec.gov/comments/SR-NASDAQ-2026-009/srnasdaq2026009-789019-2393806.pdf

(``Amendment No. 1'').

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II. Description of Proposed Rule Change, as Modified by Amendment No. 1

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\7\ All capitalized terms not otherwise defined in this order

shall have the meanings set forth in the Nasdaq Listing Rules.

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The Nasdaq Rule 5000 Series contains rules related to the

qualification, listing, and delisting of companies on the Exchange.

Currently, Nasdaq Rule 5101 provides that, in addition to applying the

enumerated criteria set forth in the Nasdaq Rule 5000 Series, the

Exchange has broad discretionary authority over the initial and

continued listing of securities on Nasdaq 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.

Among other things, the Exchange may use this discretion to suspend and

delist particular securities based on any event, condition, or

circumstance that exists or occurs that makes continued listing on

Nasdaq inadvisable or unwarranted in the opinion of Nasdaq, even though

the securities meet all enumerated criteria for continued listing.\8\

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\8\ See Nasdaq Rule 5101.

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The Exchange proposes to adopt Nasdaq Rule IM-5101-4 to provide

that where a security exhibits trading activity that is indicative of

potential manipulation, and the Commission has implemented a temporary

trading suspension of that security pursuant to Section 12(k) of the

Act (``Section 12(k) suspension''),\9\ the Exchange may exercise its

authority under Nasdaq Rule 5101 to delist the security when it

determines that doing so is necessary to protect investors. As

proposed, the Exchange would be permitted to exercise the discretionary

authority even when the security and the listed company otherwise

satisfy all applicable Nasdaq listing standards at the time of

determination.\10\

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\9\ 15 U.S.C. 78l(k). Under Section 12(k) of the Act, if in its

opinion the public interest and the protection of investors so

require, the Commission is authorized by order to summarily suspend

trading in any security (other than an exempted security) for a

period not exceeding ten business days. 15 U.S.C. 78l(k)(1)(A).

\10\ See proposed Nasdaq Rule IM-5101-4.

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The Exchange states that it would exercise its discretion to delist

a company on a case-by-case basis, and in applying that discretion, it

would consider whether the listed securities may be susceptible to

manipulation based on factors related to concerns the Exchange and

other regulators have identified with companies that previously were

the subject of

[[Page 34676]]

problematic or unusual trading, including considerations related to the

company's advisors (including auditors, underwriters, law firms,

brokers, clearing firms, or other professional service providers that

are currently or have in the past worked for the company).\11\ In

particular, in making the determination to delist a security, the

Exchange will consider all relevant facts and circumstances, including

the following:

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\11\ See Amendment No. 1, supra note 6, at 5.

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where the company is located, including the availability

of legal remedies to U.S. shareholders in that jurisdiction, the

existence of blocking statutes, data privacy laws and other laws in

foreign jurisdictions that may present challenges to regulators seeking

to enforce rules against the company, the ability of parties to conduct

comprehensive due diligence in that jurisdiction, and the transparency

of regulators in the jurisdiction;

whether a person or entity exercises substantial influence

over the company and, if so, where that person or entity is located,

including the availability of legal remedies to U.S. shareholders in

that jurisdiction, the existence of blocking statutes, data privacy

laws and other laws in foreign jurisdictions that may present

challenges to regulators seeking to enforce rules against the person or

entity, the ability of parties to conduct comprehensive due diligence

in that jurisdiction, and the transparency of regulators in the

jurisdiction;

whether the public float, share distribution and trading

patterns in the company's security raise concerns about adequate

liquidity and potential concentration, including consideration of other

explanations of any observed volatility or significant price moves;

evidence of third-party social media activity or similar

schemes designed to influence price and demand in the security;

disclosures of material news by the company, and whether

such disclosures adequately explain the trading activity observed;

whether the company has recently issued securities and the

terms of any such issuances, including the size of any discounts;

whether such shares are subject to resale; and whether the company

obtained shareholder approval for the share issuance (without regard to

whether an exemption to Nasdaq's shareholder approval for the issuance

was available);

whether there are issues concerning the company's advisors

(including auditors, underwriters, law firms, brokers, clearing firms,

or other professional service providers), based on factors including,

but not limited to, whether the advisor has been reviewed by applicable

regulators and, if so, what were the results of those reviews;

[cir] if the company's advisor is a new entity, whether the

advisor's principals were involved with other firms with a regulatory

history;

whether any of the company's advisors were involved in

other transactions where the securities became subject to a pattern of

concerning or volatile trading;

whether the company's management and Board has experience

or familiarity with U.S. public company requirements, including

regulatory and reporting requirements under Nasdaq rules and federal

securities laws;

whether there are any FINRA, SEC or other regulatory

referrals related to the company or its advisors, or the trading of the

company's securities, which can be included in the record of the matter

and, if applicable, the results of those referrals;

whether the company currently has, or recently has had, a

going concern audit opinion and, if so, what is the company's plan to

continue as a going concern;

whether there are other factors that raise concerns about

the integrity of the company's board, management, significant

shareholders, or advisors; and

any other material information, whether mitigating or

concerning, provided by the company or otherwise available in the

record of the matter.\12\

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\12\ See proposed Nasdaq Rule IM-5101-4. The Exchange states

that these factors are based in part on the factors in Nasdaq Rule

IM-5101-3 (Application of Discretion to Deny Initial Listing). See

Amendment No. 1, supra note 6, at 5.

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Proposed Nasdaq Rule IM-5101-4 specifies that because trading

activity that is indicative of potential manipulation may occur when a

security lacks sufficient public float, investor base, or trading

interest to support the depth and liquidity necessary to maintain a

fair and orderly market, the Exchange may use this authority even where

the potential manipulation appears to be driven by third parties with

no known connection to the company, and even where Nasdaq cannot

determine whether the company or any associated individual was

involved. Further, the Exchange will consider evidence provided by the

company that there is sufficient public float, investor base, or

trading interest.\13\

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\13\ See proposed Nasdaq Rule IM-5101-4. The Exchange states

that when determining whether to apply this discretion, the Exchange

may request additional information from a company and such

information can form the basis for a trading halt under Nasdaq Rule

4120(a)(5)(B). See Amendment No. 1, supra note 6, at 8.

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Under the proposal, Exchange Staff will issue a Staff Delisting

Determination under Nasdaq Rule 5810(c)(1) if the Exchange determines

to delist a security pursuant to this authority.\14\ A company can seek

review of such a Staff Delisting Determination pursuant to Nasdaq Rule

5815.\15\

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\14\ ``Staff Delisting Determination'' means a written

determination by the Exchange's Listing Qualification Department to

delist a listed company's securities for failure to meet a continued

listing standard. See Nasdaq Rule 5805(h).

\15\ See proposed Nasdaq Rule IM-5101-4.

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III. Discussion and Commission Findings

After careful review, the Commission finds that the proposed rule

change, as modified by Amendment No. 1, is consistent with the

requirements of the Act and the rules and regulations thereunder

applicable to a national securities exchange.\16\ In particular, the

Commission finds that the proposed rule change, as modified by

Amendment No. 1, is consistent with Section 6(b)(5) of the Act,\17\

which requires, among other things, that the rules of an exchange 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, and not be designed to permit unfair discrimination between

customers, issuers, brokers, or dealers. The Commission also finds that

the proposed rule change, as modified by Amendment No. 1, is consistent

with Section 6(b)(7) of the Act,\18\ which requires, among other

things, that the rules of an exchange provide fair procedure for the

prohibition or limitation by the exchange of any person with respect to

access to services offered by the exchange. In addition, the Commission

finds that the proposed rule change is consistent with Section 6(b)(8)

of the Act,\19\ which requires that the rules of an exchange do not

impose any burden on competition not necessary or appropriate in

furtherance of the purposes of the Act.

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\16\ In approving this proposed rule change, the Commission has

considered the proposed rule's impact on efficiency, competition,

and capital formation. See 15 U.S.C. 78c(f).

\17\ 15 U.S.C. 78f(b)(5).

\18\ 15 U.S.C. 78f(b)(7).

\19\ 15 U.S.C. 78f(b)(8).

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The Commission has consistently recognized that the development and

[[Page 34677]]

enforcement of meaningful listing standards \20\ by an exchange is of

critical importance to financial markets and the investing public.\21\

Among other things, the Commission has stated that listing standards

provide the means for an exchange to screen issuers that seek to become

listed, and to provide listed status only to bona fide companies that

have or will have sufficient public float, investor base, and trading

interest to provide the depth and liquidity to promote fair and orderly

markets.\22\ Meaningful listing standards also are important given

investor expectations regarding the nature of securities that have

achieved an exchange listing, and the role of an exchange in overseeing

its market and assuring compliance with its listing standards.\23\

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\20\ This reference to ``listing standards'' refers to both

initial and continued listing standards.

\21\ See, e.g., Securities Exchange Act Release No. 57785 (May

6, 2008), 73 FR 27597 (May 13, 2008) (SR-NYSE-2008-17).

\22\ See, e.g., Securities Exchange Act Release Nos. 81856 (Oct.

11, 2017), 82 FR 48296, 48298 (Oct. 17, 2017) (SR-NYSE-2017-31);

81079 (July 5, 2017), 82 FR 32022, 32023 (July 11, 2017) (SR-NYSE-

2017-11); 65708 (Nov. 8, 2011), 76 FR 70799, 70802 (Nov. 15, 2011)

(SR-NASDAQ-2011-073); 63607 (Dec. 23, 2010); 75 FR 82420, 82422

(Dec. 30, 2010) (SR-NASDAQ-2010-137); and 57785 (May 6, 2008), 73 FR

27597, 27599 (May 13, 2008) (SR-NYSE-2008-17). The Commission has

stated that adequate listing standards, by promoting fair and

orderly markets, are consistent with Section 6(b)(5) of the Act, in

that they are, among other things, designed to prevent fraudulent

and manipulative acts and practices, promote just and equitable

principles of trade, and protect investors and the public interest.

See, e.g., Securities Exchange Act Release Nos. 82627 (Feb. 2,

2018), 83 FR 5650, 5633, n.53 (Feb. 8, 2018) (SR-NYSE-2017-30);

87648 (Dec. 3, 2019), 84 FR 67308, 67314, n.42 (Dec. 9, 2019) (SR-

NASDAQ-2019-059); and 88716 (Apr. 21, 2020), 85 FR 23393, 23395,

n.22 (Apr. 27, 2020) (SR-NASDAQ-2020-001).

\23\ See, e.g., Securities Exchange Act Release Nos. 88716 (Apr.

21, 2020), 85 FR 23393 (Apr. 27, 2020) (SR-NASDAQ-2020-001); 88389

(Mar. 16, 2020), 85 FR 16163 (Mar. 20, 2020) (SR-NASDAQ-2019-089).

See also Securities Exchange Act Release No. 81856 (Oct. 11, 2017),

82 FR 48296, 48298 (Oct. 17, 2017) (SR-NYSE-2017-31) (stating that

``[a]dequate standards are especially important given the

expectations of investors regarding exchange trading and the

imprimatur of listing on a particular market'' and that ``[o]nce a

security has been approved for initial listing, maintenance criteria

allow an exchange to monitor the status and trading characteristics

of that issue . . . so that fair and orderly markets can be

maintained'').

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The Exchange states that its listing standards include continuing

financial and liquidity requirements that are designed to help ensure

that listed companies maintain sufficient public float, investor base,

and trading interest, to promote fair and orderly markets, while also

allowing companies of all sizes to raise capital.\24\ According to the

Exchange, notwithstanding these requirements, it has recently observed

problematic or unusual trading in certain listed companies.\25\ The

Exchange states that such trading has apparently been effectuated

through recommendations made to investors by unknown persons via social

media to purchase, hold, and/or sell the securities.\26\ The Commission

has also issued Section 12(k) suspensions of trading in securities in

companies based on potential manipulation by third-parties through the

use of recommendations that appear to be designed to artificially

inflate the price and trading volume of the securities and a

determination that the public interest and the protection of investors

require a suspension of trading in the securities.\27\ The Exchange

states that it believes that the ability of third parties to manipulate

a security's price can indicate that the security does not have

sufficient liquidity, and the issuing company does not have sufficient

market interest, for listing to be appropriate.\28\

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\24\ See Amendment No. 1, supra note 6, at 4.

\25\ See id.

\26\ See id.

\27\ See id. See also, e.g., Securities Exchange Act Release

Nos. 104112 (Sept. 26, 2025) (Smart Digital Group Limited), 104113

(Sept. 26, 2025) (QMMM Holding Limited), 104163 (Oct. 3, 2025)

(Etoiles Capital Group Co., Ltd.), 104164 (Oct. 3, 2025) (Platinum

Analytics Cayman Limited), 104165 (Oct. 3, 2025) (Pitanium Limited),

104166 (Oct. 8, 2025) (Empro Group Inc.), 104167 (Oct. 8, 2025)

(NusaTrip Incorporated), 104168 (Oct. 16, 2025) (Premium Catering

(Holdings) Limited), 104169 (Oct. 22, 2025) (Robot Consulting Co.,

Ltd.), 104176 (Nov. 11, 2025) (Charming Medical Limited), 104317

(Dec. 4, 2025) (Magnitude International Ltd), 104613 (Jan. 14, 2026)

(JM Group Limited), 104763 (Feb. 1, 2026) (TechCreate Group Ltd.).

\28\ See Amendment No. 1, supra note 6, at 4-5.

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As discussed above, proposed Nasdaq Rule IM-5101-4 addresses the

Exchange's use of its discretionary authority to delist a company

based, in part, on the presence of potentially manipulative trading

activity. Specifically, where a security exhibits trading activity

indicative of potential manipulation and the Commission has implemented

a Section 12(k) suspension, the Exchange may exercise its authority

under Nasdaq Rule 5101 to allow it to delist the security where it

determines such action is necessary to protect investors. In exercising

its discretion, the Exchange will consider all relevant facts and

circumstances, including a set of identified factors.

One commenter expressed support for the proposal, stating that it

will enable Nasdaq to immediately begin the delisting process when a

company is the subject of a Section 12(k) suspension and ``Nasdaq, in

its gatekeeping role as a national securities exchange, determines that

the company may be susceptible to manipulation based on Nasdaq's

evaluation of the factors in the [p]roposal.'' \29\ This commenter

stated that, in general, the Commission's recent Section 12(k)

suspensions have followed ``manipulative schemes operated by unknown

persons, who make recommendations to investors via social media

designed to artificially inflate the price and volume of the securities

of the target company.'' \30\ This commenter also stated that it

supports Nasdaq's inclusion of the factors it will consider when

determining whether to initiate delisting proceedings for securities

that have been subject to a Section 12(k) suspension.\31\

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\29\ Letter from Katie Kolchin, Managing Director, Head of

Equity & Options Market Structure and Gerald O'Hara, Vice President

& Assistant General Counsel, SIFMA, dated Mar. 27, 2026 (``SIFMA

Letter''), at 1.

\30\ Id. at 2.

\31\ See id. at 2.

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Other commenters raised concerns regarding the proposal.\32\

Several commenters opposed the proposal because it would grant Nasdaq

authority to delist a company even without any wrongdoing on the part

of the company or its management.\33\ Commenters also raised concerns

that the proposal provides the Exchange with broad discretionary

authority and lacks objective standards to constrain Exchange decision-

making.\34\ Similarly, several commenters stated that the proposal

invites arbitrary application.\35\

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One commenter stated that the Exchange has not demonstrated the

existence of a systemic problem that would require this delisting

power.\36\ Additionally, commenters stated that delisting a company in

these circumstances would harm the company's shareholders.\37\

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\32\ See Letters from Aseel, dated Apr. 23, 2026 (``Aseel

Letter''); Salem Alruwisan, dated Apr. 8, 2026 (``Alruwisan

Letter''); Asma, dated Apr. 7, 2026 (``Asma Letter''); Ahmad, dated

Apr. 3, 2026 (``Ahmad Letter''); Marc Indeglia, The Small Public

Company Coalition, dated Mar. 27, 2026 (``SPCC Letter''); Alex

Cheung, dated Mar. 24, 2026 (``Cheung Letter''); Rob, dated Mar. 24,

2026 (``Rob Letter''). See also Letter from Hamad Aldossary, dated

Apr. 21, 2026 (``H. Aldossary Letter'') (expressing concerns, as a

retail investor, about the current situation surrounding a company

that has been subject to a Section 12(k) suspension); Letter from

Khaled Aldossary, dated Apr. 21, 2026 (``K. Aldossary Letter'')

(same); Letter from Abdulrhman kamal alabdali, dated Apr. 2, 2026

(stating that it is ``unclear'' why new customers do not receive

sufficient warnings or safeguards regarding ``high-risk or

potentially delisted stocks''). The Commission also received a

comment letter regarding changes to the index methodology for the

Nasdaq 100. See Letter from Habib Fanny, dated Mar. 16, 2026. This

comment is not germane to the proposal.

\33\ See Aseel Letter; Ahmad Letter; Asma Letter; Alruwisan

Letter; Cheung Letter; Rob Letter; SPCC Letter.

\34\ See Rob Letter; Ahmad Letter; Asma Letter; Cheung Letter;

SPCC Letter at 9-11.

\35\ See Aseel Letter (``[i]f delisting becomes an arbitrary

process based on subjective interpretations of `public interest,'

investors will permanently withdraw''); SPCC Letter at 12 (stating

that the proposal ``establishes a standardless regime under which

Nasdaq may decide--based on open-ended factors, catchall provisions,

and whatever else it deems relevant''); Cheung Letter (stating that

the proposal provides ``broad, post-facto power to delist on a

seemingly arbitrary basis after investors have already purchased

shares''); Rob Letter (``arbitrary power risks abuse and erodes the

fairness that U.S. capital markets are supposed to uphold'').

\36\ See SPCC Letter at 2-4.

\37\ See SPCC Letter at 6; Ahmad Letter; Rob Letter; H.

Aldossary Letter; K. Aldossary Letter. One commenter also stated

that ``the proposal does not target the wrongdoer; it punishes the

victim.'' SPCC Letter at 6.

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In response to commenters, the Exchange states that the

Commission's recent Section 12(k) suspensions reflect a demonstrated

and recurring pattern of activity.\38\ The Exchange also states that

its existing continued listing standards do not currently address the

distinct risk posed by third-party manipulation schemes that exploit

structural vulnerabilities in a company's securities because existing

quantitative metrics are not designed to capture these schemes arising

from third-party conduct.\39\ According to the Exchange, the proposal

is a ``prophylactic measure'' designed to protect investors from

continued exposure to securities that have demonstrated a

susceptibility to manipulation.\40\ The Exchange states that where it

appears that a company is subject to manipulation by third parties, it

is indicative that a security may not have sufficient liquidity, and

the issuing company may not have sufficient market interest, for

continued listing to be appropriate.\41\ The Exchange states that

therefore the proposal is appropriate, without regard to specific

misconduct by the issuer.\42\ The Exchange also states that proposed

Nasdaq Rule IM-5101-4 enumerates specific factors that the Exchange

will consider to determine whether delisting is appropriate, all of

which are directly relevant to assessing whether a security's

structural characteristics and market history make it susceptible to

manipulation.\43\

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\38\ See Amendment No. 1, supra note 6, at 9.

\39\ See id.

\40\ See id. at 11.

\41\ See id.

\42\ See id.

\43\ See id. at 12.

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The Exchange's proposal is reasonably designed to protect investors

and the public interest by specifying that the Exchange will exercise

its discretion to delist a company's security if the security exhibits

trading activity indicative of potential manipulation, the Commission

has imposed a Section 12(k) suspension relating to that security, and

the Exchange determines that delisting the security is necessary to

protect investors. The Commission agrees that the presence of

potentially manipulative trading activity may indicate that a security

lacks sufficient public float, investor base, or trading interest to

provide the depth and liquidity to promote fair and orderly markets. In

these circumstances, the security may continue to be susceptible to

manipulative trading activity. Moreover, the Commission agrees that it

is consistent with the Act for the Exchange to exercise its

discretionary authority as the listing exchange and delist a security

that is exhibiting potentially manipulative trading activity when the

Exchange determines that delisting is necessary to protect investors,

even if the Exchange cannot determine that the company or any

individuals associated with the company were involved.\44\ In setting

forth how the Exchange will apply its discretionary authority over

continued listing in these circumstances, the proposal is reasonably

designed to reduce the risk of manipulative trading, promote just and

equitable principles of trade, and help to protect investors and the

public interest.

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\44\ See In re Tassaway, Securities Exchange Act Release No.

11291, 45 SEC. 706, 709. 1975 SEC LEXIS 2057, at 6 (Mar. 13, 1975)

(``[P]rimary emphasis must be placed on the interests of prospective

future investors . . . [who are] entitled to assume that the

securities in [Nasdaq] meet [Nasdaq's] standards.'').

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The Exchange's consideration of the factors enumerated in proposed

Nasdaq Rule IM-5101-4, among ``all relevant facts and circumstances,''

when making its delisting determination should help the Exchange make a

reasoned decision about whether to delist a security that is exhibiting

trading activity indicative of potential manipulation. The factors are

based, in part, on factors used in Nasdaq Rule IM-5101-3, which

provides that the Exchange may use its discretionary authority under

Nasdaq Rule 5101 to deny initial listing to a company based on factors

that make the company's security susceptible to manipulation.\45\ The

factors in proposed Nasdaq Rule IM-5101-4 also include additional

considerations specific to continued listing and Section 12(k)

suspensions, including, but not limited to, trading patterns, evidence

of third-party social media activity, disclosure of material news, and

recent securities issuances. Proposed Nasdaq Rule IM-5101-4 also

provides that the Exchange will consider any other material

information, whether mitigating or concerning, provided by the company

or otherwise available in the record of the matter; and will consider

evidence provided by the company that there is sufficient public float,

investor base, or trading interest to support a fair and orderly

market. The Exchange's application of these factors to make a case-by-

case determination, rather than automatically delisting a company's

security based on the presence of a Section 12(k) suspension or

specific trading observations alone, will allow the Exchange to use its

judgment to determine whether or not continued listing is appropriate.

Further, if the Exchange issues a Staff Delisting Determination in

accordance with proposed Nasdaq Rule IM-5101-4, the affected company

will be able to seek review pursuant to Nasdaq Rule 5815. The proposed

rule therefore is reasonably designed to prevent fraudulent and

manipulative acts and practices, protect investors and the public

interest, and to help ensure that the Exchange applies its discretion

to delist a company's securities in a manner that is not unfairly

discriminatory, consistent with Section 6(b)(5) of the Act.

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\45\ See Nasdaq Rule IM-5101-3. Nasdaq Rule IM-5101-3 contains a

non-exclusive list of factors that the Exchange will consider in

making its determination of whether to deny initial listing even if

the applicant meets all stated listing requirements. Many of these

same factors are in proposed Nasdaq Rule IM-5101-4, including the

existence of laws in foreign jurisdictions that may present

challenges to regulators seeking to enforce rules against the

company; whether any of the company's advisors were involved in

prior transactions where the securities became subject to a pattern

of concerning or volatile trading; whether there are any regulatory

referrals related to the company or its advisors; and whether the

company currently has, or recently has had, a going concern audit

opinion.

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Several commenters stated that companies have no practical way to

monitor or prevent manipulative online behavior by unrelated third

parties and bad actors (including competitors) that could be

incentivized to abuse the proposed rule to trigger suspension and

delisting of a targeted company.\46\ In response, the Exchange states

that, under the proposal, delisting is not a guaranteed outcome and the

Exchange will apply the enumerated factors in determining whether it is

appropriate to delist a security.\47\ The Exchange also states that

Section 12(k) suspensions ``remain very rare, making it difficult for a

competitor or other bad actor to predict when a suspension may be

imposed.'' \48\ As discussed above, the

[[Page 34679]]

ability for third parties to manipulate a security's price may indicate

that the security does not have sufficient liquidity to promote fair

and orderly markets. The Exchange's application of its discretionary

authority and consideration of the enumerated factors, in addition to

the evidence of potentially manipulative trading activity and presence

of a Section 12(k) suspension, is reasonably designed to ensure that a

security will be delisted when it is consistent with the protection of

investors and the public interest.

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\46\ See Cheung Letter; Rob Letter; SPCC Letter at 2, 6.

\47\ See Amendment No. 1, supra note 6, at 11.

\48\ Id. The Exchange states that the type of underlying bad

actor activity raised by these commenters would violate the anti-

fraud provisions of the federal securities laws. See id.

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One commenter stated that a Section 12(k) suspension could ``become

the trigger for immediate and effectively indefinite removal from a

national securities exchange.'' \49\ Another commenter stated that the

proposal raises ``serious'' due process concerns because there would be

``no clear, objective criteria, no required hearing, and no meaningful

appeal process.'' \50\ In response, the Exchange states that delisting

would not be automatic upon a Section 12(k) suspension, but instead the

Section 12(k) suspension would be a prerequisite, after which the

Exchange would exercise case-by-case discretion considering all

relevant facts and circumstances, including those factors enumerated in

proposed Nasdaq Rule IM-5101-4, which include a consideration of

mitigating information provided by the company.\51\ The Exchange also

states that under Nasdaq Rule 5810, Nasdaq Staff would issue a

delisting letter setting forth the factual bases for the Staff

Delisting Determination.\52\ The company could seek review of the Staff

Delisting Determination before a Hearings Panel pursuant to Nasdaq Rule

5815, which appeal would stay any suspension or delisting action, and

the company also could appeal to the Nasdaq Listing and Hearing Review

Council (``Listing Council'') pursuant to Nasdaq Rule 5820 and seek

relief from the Commission under Section 19(d) of the Act.\53\

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\49\ SPCC Letter at 4-5.

\50\ Rob Letter. Another commenter stated that the proposal

raises due process concerns by allowing the delisting of companies

``based on `suspicion' rather than proven misconduct by the issuing

company.'' Ahman Letter.

\51\ See Amendment No. 1, supra note 6, at 10. The Exchange

states that this construct will help to ensure that no company is

delisted without an opportunity to demonstrate that its securities

can support a fair and orderly market. See id.

\52\ See id.

\53\ See id.

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The proposal provides for a fair procedure for the Exchange to make

a delisting determination. During the Exchange's consideration of

whether to delist a company, the company will have the opportunity to

provide evidence and narrative in support of its continued listing. The

company also will receive in writing the factual basis for the Staff

Delisting Determination and may appeal the Staff Delisting

Determination while remaining listed on the Exchange.\54\ During the

appeal process, the company will have another opportunity to provide

evidence and narrative in support of their continued listing to an

independent Hearings Panel, separate from the Nasdaq Staff who made the

delisting determination, as well as to the Listing Council and,

ultimately, the Commission.\55\ The proposed rule therefore is

consistent with Section 6(b)(7) of the Act in that it provides a fair

procedure for the prohibition or limitation by the Exchange of any

person with respect to access to services offered.

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\54\ See Nasdaq Rules 5810(a) and 5815.

\55\ See Nasdaq Rules 5805(d), 5815, and 5820; 15 U.S.C. 78s(d).

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Several commenters stated that the proposal would make raising

capital more difficult for small public companies and increase risks to

investors.\56\ While the Commission acknowledges that there are many

benefits to companies and their shareholders related to being listed on

a national securities exchange, these benefits do not override the need

for an exchange to maintain and enforce continued listing

standards.\57\ As discussed above, in the presence of potentially

manipulative trading activity and a Section 12(k) suspension, the

Exchange may exercise its discretionary authority to delist a security

when necessary to protect investors and the public interest, consistent

with Section 6(b)(5) of the Act. Accordingly, the proposal will not

impose any burden on competition that is not necessary or appropriate

in furtherance of the purposes of the Act, consistent with Section

6(b)(8) of the Act.

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\56\ See Cheung Letter; Rob Letter; SPCC Letter at 4-6. One

commenter states that the added risk of delisting under the proposal

would ``make it materially more difficult for small public companies

to attract and retain both equity and debt financing.'' SPCC Letter

at 5. This commenter also states that investors would ``likewise

bear substantial costs'' as ``delisting shifts trading from a

national securities exchange to less transparent and liquid venues,[

] increasing volatility and reducing oversight.'' Id. at 6.

\57\ See supra note 23 and accompanying text.

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Several commenters provided suggested alternatives to the proposal.

One commenter recommended ``the establishment of specific criteria,

linking delisting decisions to actual violations, and focusing on the

parties responsible for the manipulation.'' \58\ Another commenter

recommended, among other things, ``[c]lear and specific criteria for

delisting decisions'' and a ``[r]equirement for tangible evidence of

wrongdoing by the company.'' \59\ Another commenter recommended

mandatory ``safe harbor'' provisions and a ``cure period'' to protect

public investors from the fallout of delisting actions.\60\ In

addition, one commenter that supported the proposal stated that when

the Exchange determines to delist a company pursuant to the proposed

rule, ``it should also provide clarity and transparency to the

company's public shareholders regarding the expected timeline for

delisting the company from Nasdaq.'' \61\ These suggestions are not

part of Nasdaq's proposal and the Commission must approve the proposal

if it finds that the proposal is consistent with the Act and rules

thereunder. For the reasons discussed herein, the proposal is

consistent with the Act.\62\

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\58\ See Alruwisan Letter.

\59\ See Asma Letter.

\60\ See Ahmad Letter.

\61\ SIFMA Letter at 2. In response to this commenter, the

Exchange states that it requires a company to disclose receipt of a

Staff Delisting Determination within four business days on a Form 8-

K or by issuing a press release. See Amendment No. 1, supra note 6,

at 11, n.16; Nasdaq Rule 5810(b). In addition, Nasdaq maintains a

public library of FAQs that describe the delisting process,

including the applicable steps and time frames. See Amendment No. 1,

supra note 6, at 11, n.16.

\62\ The Commission's findings herein are based on a

determination that it is consistent with the Act for the Exchange to

adopt proposed Nasdaq Rule IM-5101-4 to provide how the Exchange

will utilize its authority under Nasdaq Rule 5101 to delist a

security where the security exhibits trading activity that is

indicative of potential manipulation, the Commission has implemented

a Section 12(k) suspension, and the Exchange determines that

delisting the security is necessary to protect investors. In this

order, the Commission does not take a position regarding the extent

of the Exchange's authority under current Nasdaq rules, including

Nasdaq Rule 5101, to delist a security in these circumstances.

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Based on the foregoing, the Commission finds that the proposed rule

change, as modified by Amendment No. 1, is consistent with the Act.

IV. Solicitation of Comments on Amendment No. 1 to the Proposed Rule

Change

Interested persons are invited to submit written data, views, and

arguments concerning whether the proposed rule change, as modified by

Amendment No. 1, is consistent with the Act. Comments may be submitted

by any of the following methods:

Electronic Comments

Use the Commission's internet comment form ( https://www.sec.gov/rules/sro.shtml ); or

[[Page 34680]]

Send an email to [email protected] . Please include

file number SR-NASDAQ-2026-009 on the subject line.

Paper Comments

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-NASDAQ-2026-009. 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 ( https://www.sec.gov/rules/sro.shtml ). Copies of the filing 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-NASDAQ-2026-009 and should be submitted

on or before June 29, 2026.

V. Accelerated Approval of the Proposed Rule Change, as Modified by

Amendment No. 1

The Commission finds good cause to approve the proposed rule

change, as modified by Amendment No. 1, prior to the thirtieth day

after the date of publication of notice of the filing of Amendment No.

1 in the Federal Register. Amendment No. 1 provides additional clarity

to the proposal by (1) providing additional explanation of certain

aspects of the proposal; (2) providing responses to comment letters;

and (3) making other technical and non-substantive changes for

readability. The changes and additional discussion in Amendment No. 1

assist the Commission in evaluating the proposal and determining that

it is consistent with the Act. Amendment No. 1 does not alter any

substantive provisions of the proposed rule change, or raise any

regulatory issues substantially different, from what is set forth in

the Notice, which was subject to public comment. For these reasons, the

Commission finds good cause, pursuant to Section 19(b)(2) of the

Act,\63\ to approve the proposed rule change, as modified by Amendment

No. 1, on an accelerated basis.

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\63\ 15 U.S.C. 78s(b)(2).

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VI. Conclusion

It is therefore ordered, pursuant to Section 19(b)(2) of the

Act,\64\ that the proposed rule change (SR-NASDAQ-2026-009), as

modified by Amendment No. 1, be and hereby is, approved on an

accelerated basis.

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\64\ Id.

For the Commission, by the Division of Trading and Markets,

pursuant to delegated authority.\65\

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\65\ 17 CFR 200.30-3(a)(12).

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Sherry R. Haywood,

Assistant Secretary.

[FR Doc. 2026-11379 Filed 6-5-26; 8:45 am]

BILLING CODE 8011-01-P