BILL ANALYSIS
SENATE COMMITTEE ON BANKING, FINANCE,
AND INSURANCE
Senator Ronald Calderon, Chair
AB 991 (Silva) Hearing Date: June 17, 2009
As Amended April 20, 2009
Fiscal: No
Urgency: No
SUMMARY Would update numerous references to various stock
exchanges, markets, and regulatory bodies in the California
Corporations Code and make related technical and conforming
changes.
DIGEST
Existing law provides for the Corporations Code, administered by
the Commissioner of Corporations, which includes, among its
provisions, the Corporate Securities Law of 1968.
This bill
1. Would make numerous technical corrections to the
Corporations Code, to reflect changes in the names of
various stock exchanges, markets, and regulatory bodies.
Specifically, the bill would make the following changes:
a. References to the Nasdaq Stock Market and the
National Market System of the Nasdaq Stock Market would
be deleted, where there is an existing general reference
to a national securities exchange;
b. References to the Nasdaq Stock Market and the
National Market System of the Nasdaq Stock Market would
be replaced with references to the NASDAQ Global Market
and the NASDAQ Capital Market, where there is an existing
specific reference to a particular national securities
exchange;
c. References to American Stock Exchange or AMEX would
be replaced with NYSE Amex LLC;
d. References to Pink Sheets, LLC would be replaced
AB 991 (Silva), Page 2
with references to Pink OTC Markets, Inc.;
e. References to the Pacific Stock Exchange would be
replaced with a reference to the NYSE Arca;
f. References to the National Association of Securities
Dealers, National Association of Securities Dealers,
Incorporated (NASD), and National Association of
Securities Dealers Regulation, Inc. would be replaced
with references to the Financial Industry Regulatory
Authority.
COMMENTS
1. Purpose of the bill To make technical and clarifying
changes intended to improve administration of the Corporate
Securities Law of 1968 and other sections of the
Corporations Code that reference national stock exchanges.
2. Background According to the Corporations Committee of the
Business Law Section of the California State Bar (this
bill's sponsor), the need for the changes proposed by AB 991
arises from the following events:
On January 13, 2006, the Securities and Exchange Commission (the
" SEC ") approved the application of Nasdaq to become a
national securities exchange under Section 6 of the
Securities Exchange Act of 1934, as amended (the " 34 Act ").
Pursuant to such authority, Nasdaq began operating as a
national securities exchange on August 1, 2006. Previously,
Nasdaq was not considered a national securities exchange,
but securities quoted on Nasdaq's "National Market System"
(which has certain listing standards) were treated similarly
to securities listed on national securities exchanges for
various purposes under California securities laws. With
Nasdaq's change in status, it is no longer necessary to
distinguish between national securities exchanges and
Nasdaq.
Effective July 1, 2006, Nasdaq renamed the "Nasdaq National
Market" (sometimes referred to as the "National Market
System of the NASDAQ Stock Market") as the "Nasdaq Global
Market" and created a new segment within the Nasdaq Global
Market called the "Nasdaq Global Select Market."
(References to the Nasdaq Global Market include those
AB 991 (Silva), Page 3
securities listed on the Nasdaq Global Market and the Nasdaq
Global Select Market.) Similarly, on September 27, 2005,
Nasdaq renamed the "Nasdaq Small Cap Market" as the "Nasdaq
Capital Market."
The "Emerging Company Marketplace" previously operated by the
American Stock Exchange (the " Amex ") was closed on May 11,
1995.
The Pacific Exchange (sometimes referred to as the "Pacific
Stock Exchange" and historically designated as a national
securities exchange by the SEC) was acquired by Archipelago
Holdings in September 2005, which in turn was acquired by
the New York Stock Exchange (the " NYSE ") in February 2006.
The NYSE now operates the Pacific Exchange as "NYSE Arca,"
which continues to be designated as a national securities
exchange under Section 6 of the 34 Act. NYSE Arca does not
maintain a market for "small corporate offering
registration" securities as had been maintained by the
Pacific Exchange (known as the "SCOR Marketplace").
On July 26, 2007, the SEC approved the consolidation of the
enforcement arm of the NYSE and the National Association of
Securities Dealers, Inc. (the " NASD ") and its subsidiary,
the National Association of Securities Dealers Regulation,
Inc. (the " NASDR "), to form the Financial Industry
Regulatory Authority (" FINRA "). The NASD previously was the
corporate parent of The Nasdaq Stock Market, Inc. and the
NASDR was the regulatory body governing Nasdaq and
broker-dealers who trade Nasdaq securities. FINRA is the
successor to the NASD, and the NASD and the NASDR have no
ongoing separate existence.
Certain provisions of the Code incorrectly refer to the
"OTC-Bulletin Board" and the "Pink Sheets, LLC," which are
correctly known as the "OTC Bulletin Board" and the "Pink
Sheets LLC."
On August 9, 2007, the Commissioner of Corporations for the
State of California (the "Commissioner") promulgated
Commissioner's Release 87-C, pursuant to which the
Commissioner certified the NASDAQ Global Market of the
NASDAQ Stock Market LLC as a national securities exchange
pursuant to subdivision (o) of California Corporations Code
Section 25100.
AB 991 (Silva), Page 4
3. Support . This bill is sponsored by the Corporations
Committee of the Business Law Section of the California
State Bar, for the reasons stated above.
4. Opposition None received.
POSITIONS
Support
Corporations Committee of the Business Law Section of the
California State Bar (sponsor)
Oppose
None received
Consultant: Eileen Newhall (916) 651-4102