In November 2023, Nasdaq introduced a new FAQ to provide guidance on completing the electronic disclosure form required for giving advance notice to Nasdaq’s MarketWatch Department when material non-public information is announced. This includes news releases. While I have previously blogged about Nasdaq notification requirements in general (see HERE), and the recent changes to the Nasdaq reverse split rules (see HERE), including MarketWatch notification (see HERE), and Nasdaq continued listing requirements (see HERE), I have not yet explored Nasdaq Rule 5250(b)(1) MarketWatch disclosure requirements in detail—until now.

Overview of Nasdaq Rule 5250(b)(1)

Nasdaq Rule 5250(b)(1) outlines the obligations of a listed company to disclose material information to the public. Specifically, the Rule states:

"Except in unusual circumstances, a Nasdaq-listed Company shall make prompt disclosure to the public through any Regulation FD compliant method (or combination of methods) of disclosure of any material information that would reasonably be expected to affect the value of its securities or influence investors’ decisions. The Company shall, prior to the release of the information, provide notice of such disclosure to Nasdaq’s MarketWatch Department at least ten minutes prior to public announcement if the information involves any of the events set forth in IM-5250-1 and the public release of the material information is made between 7:00 a.m. to 8:00 p.m ET. If the public release of the material information is made outside the hours of 7:00 a.m. to 8:00 p.m ET, Nasdaq Companies must notify MarketWatch of the material information prior to 6:50 a.m. ET. As described in IM-5250-1, prior notice to the MarketWatch Department must be made through the electronic disclosure submission system available at www.nasdaq.net, except in emergency situations, when notification may instead be provided by telephone or facsimile. For disclosure and notification requirements related to reverse stock splits, please refer to subparagraph (4) below and Rule 5250(e)(7)."

For a refresher on Regulation FD, including compliant methods of disclosure, see HERE.

In-Depth Look at IM-5250-1

IM-5250-1 provides further details on the Rule. It reiterates the requirement for public disclosure of material events but also notes exceptions where confidentiality can be maintained to pursue legitimate corporate objectives. However, companies must be vigilant during unusual trading activity to determine if material information should be disclosed. If rumors or unusual market activity indicate that information on impending developments has become known to the public, a clear public announcement may be necessary.

Nasdaq MarketWatch monitors securities trading in real-time and may contact companies during unusual trading activity to determine if material non-public information has been disclosed. Any information shared with Nasdaq is kept confidential and used solely for regulatory purposes. Depending on the materiality of the information, MarketWatch may advise a temporary trading halt, usually not exceeding 30 minutes, to allow for full dissemination of the information.

Events Requiring 10-Minute Advance Notice

IM-5250-1 includes a non-exclusive list of material events that necessitate a 10-minute advance notice to MarketWatch:

• Financial disclosures (quarterly and annual earnings, earnings restatements, and guidance)
• Corporate reorganizations and acquisitions (mergers, tender offers, asset transactions, bankruptcies, and receiverships)
• New products or discoveries, or developments regarding customers or suppliers
• Senior management changes or a change of control
• Resignation or termination of independent auditors or withdrawal of a previously issued audit report
• Events regarding the company’s securities (defaults on senior securities, calls for redemption, repurchase plans, stock splits, dividends, changes to the rights of security holders, or public or private sales of additional securities)
• Significant legal or regulatory developments
• Any event requiring a Form 8-K

Repeated failure to comply with these notice rules can lead to a public reprimand or, in extreme cases, a delisting determination.

New FAQ on Notice Categories

Nasdaq’s new FAQ provides examples of notice categories to assist companies with their electronic disclosure submissions. Categories include:

• Bankruptcy/Liquidations (e.g., Chapter 7 or 11 bankruptcy, SPAC liquidation)
• Conference Calls/Webcasts/Events (e.g., scheduling notices for future calls, investor presentations)
• Cybersecurity Incidents (e.g., disclosures under Item 1.05 on Form 8-K related to cybersecurity incidents)
• Dividends (e.g., regular or special cash dividends, stock dividends)
• Earnings/Quarterly or Annual Reports (e.g., operating or financial results, non-reliance on previously issued financial results)
• Equity or Debt Financings (e.g., any financing transaction involving debt or equity)
• FDA-Related/Clinical Trials/Study Results (e.g., FDA communications, clinical trial results)
• Listing Deficiency or Compliance Notices (e.g., non-compliance with listing requirements, receipt of a Staff Determination Letter)
• M&A (e.g., announcements related to mergers and acquisitions)
• New Products or Partnership Agreements (e.g., new product announcements, new joint ventures)
• Officer/Director (e.g., corporate officer hires/terminations, board of directors changes)
• Stock Splits (e.g., reverse splits, forward stock splits)
• Other (e.g., any disclosure not fitting within the other categories)