BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 991|
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CONSENT
Bill No: AB 991
Author: Silva (R)
Amended: 04/20/09 in Assembly
Vote: 21
SENATE BANKING, FINANCE, AND INS. COMMITTEE : 11-0, 6/17/09
AYES: Calderon, Cogdill, Correa, Cox, Harman, Kehoe, Liu,
Lowenthal, Padilla, Runner, Wolk
NO VOTE RECORDED: Florez
ASSEMBLY FLOOR : 78-0, 5/11/09 (Consent) - See last page
for vote
SUBJECT : Corporations: NASDAQ: national securities
exchange
SOURCE : Corporations Committee of the Business Law
Section of
the California State Bar
DIGEST : This bill updates numerous references to various
stock exchanges, markets, and regulatory bodies in the
California Corporations Code and makes related technical
and conforming changes.
ANALYSIS : Existing law provides for the Corporations
Code, administered by the Commissioner of Corporations,
which includes, among its provisions, the Corporate
Securities Law of 1968.
CONTINUED
AB 991
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This bill:
1. Makes numerous technical corrections to the Corporations
Code, to reflect changes in the names of various stock
exchanges, markets, and regulatory bodies.
Specifically, the bill makes the following changes:
A. References to the National Association of
Securities Dealers Automated Quotations (NASDAQ)
Stock Market and the National Market System of the
NASDAQ Stock Market will 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
will 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
American Express (AMEX) will be replaced with the
New York Stock Exchange (NYSE) AMEX limited
liability Company (LLC).
D. References to Pink Sheets, LLC will be replaced
with references to Pink Over-the-Counter (OTC)
Markets, Inc.
E. References to the Pacific Stock Exchange will be
replaced with a reference to the NYSE Archipelago
Exchange (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. will be replaced with references
to the Financial Industry Regulatory Authority.
Comments
Purpose of the bill to make technical and clarifying
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changes intended to improve administration of the Corporate
Securities Law of 1968 and other sections of the
Corporations Code that reference national stock exchanges.
Background
According to the sponsor of this bill, the Corporations
Committee of the Business Law Section of the California
State Bar, the need for the changes proposed by this bill
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
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
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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.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 6/18/09)
Corporations Committee of the Business Law Section of the
California State Bar (source)
ASSEMBLY FLOOR :
AYES: Adams, Ammiano, Anderson, Arambula, Beall, Bill
AB 991
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Berryhill, Tom Berryhill, Blakeslee, Block, Blumenfield,
Brownley, Buchanan, Caballero, Charles Calderon, Carter,
Chesbro, Conway, Cook, Coto, Davis, De La Torre, De Leon,
DeVore, Emmerson, Eng, Evans, Feuer, Fletcher, Fong,
Fuentes, Fuller, Furutani, Gaines, Galgiani, Garrick,
Gilmore, Hagman, Hall, Harkey, Hayashi, Hernandez, Hill,
Huber, Huffman, Jeffries, Jones, Knight, Krekorian, Lieu,
Logue, Bonnie Lowenthal, Ma, Mendoza, Miller, Monning,
Nava, Nestande, Niello, Nielsen, John A. Perez, V. Manuel
Perez, Portantino, Price, Ruskin, Salas, Saldana, Silva,
Skinner, Smyth, Solorio, Audra Strickland, Swanson,
Torlakson, Torres, Torrico, Tran, Villines, Bass
NO VOTE RECORDED: Duvall, Yamada
JJA:do 6/23/09 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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