Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Provide Nasdaq With Limited Discretion To Deny Initial Listing to Certain Companies

<NOTICE> SECURITIES AND EXCHANGE COMMISSION <DEPDOC>[Release No. 34-104464; File No. SR-NASDAQ-2025-104]</DEPDOC> <SUBJECT>Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Provide Nasdaq With Limited Discretion To Deny Initial Listing to Certain Companies</SUBJECT> <DATE>December 19, 2025.</DATE> Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”), <SU>1</SU> <FTREF/> and Rule 19b-4 thereunder, <SU>2</SU> <FTREF/> notice is hereby given that on December 12, 2025, The Nasdaq Stock Market LLC (“Nasdaq” or “Exchange”) filed with the Securities and Exchange Commission (“SEC” or “Commission”) the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. <FTNT> <SU>1</SU>  15 U.S.C. 78s(b)(1). </FTNT> <FTNT> <SU>2</SU>  17 CFR 240.19b-4. </FTNT> <HD SOURCE="HD1">I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change</HD> The Exchange proposes to provide Nasdaq with limited discretion to deny initial listing to companies, even where the applicant meets all stated listing requirements. The text of the proposed rule change is available on the Exchange's website at <E T="03">https://listingcenter.nasdaq.com/rulebook/nasdaq/rulefilings,</E> and at the principal office of the Exchange. <HD SOURCE="HD1">II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change</HD> In its filing with the Commission, the Exchange 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. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. <HD SOURCE="HD2">A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change</HD> <HD SOURCE="HD3">1. Purpose</HD> Recently, Nasdaq has observed problematic or unusual trading in certain listed companies. Further, the Commission has imposed temporary trading suspensions pursuant to Section 12(k) of the Act on several listed securities based, generally, on concerns about potential manipulation in the securities effectuated through recommendations made to investors by unknown persons via social media to purchase, hold, and/or sell the securities. The Commission stated its belief that these recommendations appear to be designed to artificially inflate the price and volume of the securities and that the public interest and the protection of investors require a suspension of trading in the securities. <SU>3</SU> <FTREF/> In most cases, the affected securities were listed for less than one year. <FTNT> <SU>3</SU>   <E T="03">See, e.g.,</E> Securities Exchange Act Releases 34-104112 (September 26, 2025) (Smart Digital Group, Limited), 34-104113 (September 26, 2025) (QMMM Holding Limited), 34-104163 (October 3, 2025) (Etoiles Capital Group Co., Ltd.), 34-104164 (October 3, 2025) (Platinum Analytics Cayman Limited), 34-104165 (October 3, 2025) (Pitanium Limited), 34-104166 (October 8, 2025) (Empro Group Inc.), 34-104167 (October 8, 2025) (NusaTrip Incorporated), 34-104168 (October 16, 2025) (Premium Catering (Holdings) Limited), 34-104169 (October 22, 2025) (Robot Consulting Co., Ltd.), 34-104176 (November 11, 2025) (Charming Medical Limited), 34-104180 (November 14, 2025) (MaxsMaking Inc.), 34-104317 (December 4, 2025) (Robot Consulting Co., Ltd.) (collectively, the “Commission Suspension Orders”). </FTNT> The Commission Suspension Orders generally appear to be based on activities of third parties, and there are no specific allegations in the Commission Suspension Orders against the companies, or persons associated with the companies, as being involved in the potentially manipulative trading activity. Nasdaq's listing requirements, which these companies satisfied both at the time of listing and on an ongoing basis, are based on the characteristics of the company itself and the securities it seeks to list. Likewise, Nasdaq Rule 5101, in conjunction with IM-5101-1, provides some discretion to deny listing where the company itself has engaged in misconduct or where an individual with a history of regulatory misconduct is associated with the company. <SU>4</SU> <FTREF/> Nasdaq Rule 5101 does not allow denial of a listing based on the potential for one or more unaffiliated third parties to engage in misconduct impacting a company's securities. <SU>5</SU> <FTREF/> The Commission is obliged to set aside a decision to deny listing that does not comport with Nasdaq rules. <SU>6</SU> <FTREF/> Therefore, Nasdaq requires additional authority to exercise discretion to deny a listing based on the potential for one or more third parties to engage in misconduct impacting a company's securities. Similarly, Nasdaq rules do not presently allow it to deny listing to a company based on its review of trading patterns of other companies with similar characteristics or based on considerations related to the company's advisors, and it requires additional authority to exercise discretion to do so. <SU>7</SU> <FTREF/> <FTNT> <SU>4</SU>   <E T="03">See</E> Listing Rule IM-5101-1. In approving the predecessor to Rule 5101, the Commission stated that it believed the rule change provided “greater assurance [to existing or prospective investors] that the risk associated with investing in Nasdaq is market risk rather than the risk that the promoter or other persons exercising substantial influence over the company is acting in an illegal manner.” Exchange Act Release No. 34151 (June 3, 1994), 59 FR 29843 (June 9, 1994) at 29845; <E T="03">id.</E> at 29844, citing as the reason for the proposed rule concerns about “an increase in recent years in the number of applications for inclusion in Nasdaq by issuers that are managed, controlled or influenced by persons with a history of significant securities or commodities violations.” </FTNT> <FTNT> <SU>5</SU>   <E T="03">See id.</E> at 29845 (noting concerns raised during the comment process that “discretion accorded the NASD was unlimited and could lead the NASD to exclude an issuer from Nasdaq on a basis wholly unrelated to the legitimate concerns of administering Nasdaq.”) </FTNT> <FTNT> <SU>6</SU>  15 U.S.C. 78s(f). </FTNT> <FTNT> <SU>7</SU>   <E T="03">Cf.</E> Section 104.00 of the NYSE Listed Company Manual and Section 201 of NYSE American Company Guide requiring that companies go through a pre-review process before they are permitted to apply for listing. </FTNT> Nasdaq is concerned about the allegedly manipulative trading taking place in listed securities and that pending applicants, despite meeting all listing requirements, have characteristics similar to those subject to the Commission's trading suspensions and therefore may be susceptible to similar manipulation. While Nasdaq proposed certain changes to the listing requirements in September 2025, <SU>8</SU> <FTREF/> those changes remain pending  <SU>9</SU> <FTREF/> and Nasdaq believes that additional rules would help to address the concerns identified in the Commission Suspension Orders. For example, Nasdaq may identify similarities between companies seeking initial listing and the advisors to the companies that are the subject of the Commission Suspension Orders (including auditors, underwriters, law firms, brokers, clearing firms, or other professional service providers). For another example, Nasdaq may consider the impact of foreign laws on the potential recourse available to U.S. regulators or investors in the event of misconduct. Accordingly, Nasdaq proposes to adopt a new rule, IM-5101-3, providing Nasdaq with authority under Rule 5101 to deny initial listing based on factors that could make the listed security susceptible to manipulation related to concerns Nasdaq and other regulators have identified with previously listed companies that are similarly situated to the company or based on considerations related to the company's advisors (including auditors, underwriters, law firms, brokers, clearing firms, or other professional service providers), even where the applicant meets all stated listing requirements. <FTNT> <SU>8</SU>  Exchange Act Release No. 103982 (September 16, 2025), 90 FR 45280 (September 19, 2025) (SR-Nasdaq-2025-068); Exchange Act Release No. 103979 (September 16, 2025), 90 FR 45298 (September 19, 2025) (SR-Nasdaq-2025-069). </FTNT> <FTNT> <SU>9</SU>  Exchange Act Release No. 104058 (September 25, 2025), 90FR 46973 (September 30, 2025) (designating December 18, 2025, as the date the Commission shall either approve or disapprove, or institute proceedings to determine whether to disapprove, SR-Nasdaq-2025-069). </FTNT> The proposed rule change includes a series of non-exclusive factors that Nasdaq will consider in determining whether to apply this discretion. These factors include the following: • 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  <SU>10</SU> <FTREF/> and, if so, where that person or entity is located, includ ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 24k characters. Full document text is stored and available for version comparison. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━