April 14, 2000
NASD Restructuring Wins in Landslide Vote of the Members
Washington, DC – The National Association of Securities Dealers, Inc. (NASD®), membership voted overwhelmingly in favor of the NASD restructuring at a special meeting today in Washington, D.C., concluding a five-week, voting process. In the NASD’s highest member voting turnout ever, more than 80 percent of those voting were in favor of the restructuring.
NASD Chairman and Chief Executive Officer, Frank Zarb, in commenting on the vote, said: "The members have spoken. By an overwhelming majority, they are saying that the plan we put forward makes sense. They have given the ‘green light’ to spinning off Nasdaq— positioning it to be the most successful market in the world. They have also validated the return of NASD to its original mission as a member-based organization."
In mid-March, proxy materials were mailed to each of the more than 5,000 NASD members in good standing as of February 18, 2000. Each member firm was entitled to vote on the restructuring, on the basis of one firm, one vote. Members had until today to vote, either in person at the meeting or by proxy.
The results of the vote were as follows:
% of Members
|Members voting in favor||3423||84%|
|Members voting against||652||
*%’s of those voting vote or against, there were also 110 members abstaining
With the membership approval of the plan, the next step will be the sale of approximately 47 to49 percent (on a fully diluted basis) by private placement. This sale is expected to occur by May. A recap of the restructuring plans is provided in the attached fact sheet.
Based on initial tallies, a large number of NASD members have also decided to invest in the new Nasdaq Stock Market. In response to a number of member requests, the NASD is extending the subscription period until April 24, 2000, at 5:00 p.m., Eastern Time.
The National Association of Securities Dealers, Inc., is the largest securities- industry, self-regulatory organization in the United States. It is the parent organization of The Nasdaq Stock Market® , The American Stock Exchange® ,and NASD Regulation, Inc. For more information about the NASD and its subsidiaries, please visit the following Web sites: www.nasd.com; www.nasdaq.com; www.amex.com; or the Nasdaq NewsroomSM at www.nasdaqnews.com.
Fact Sheet on the Proposed NASD Restructuring*
A recap of the NASD proposed restructuring is provided below as follows:
Goals of the Restructuring
The principal goals of the restructuring are to:
Summary of the Restructuring
In summary, a substantial stake in Nasdaq is intended to be sold at fair value in a two-part private placement to a limited number of market participants, issuers, and all NASD members. Over the course of Phase I and II, Nasdaq will offer newly-issued shares and the NASD will offer warrants to purchase outstanding Nasdaq stock.
Nasdaq will offer newly issued shares and the NASD will sell warrants to purchase outstanding Nasdaq stock, in varying amounts, to the following investors:
An approximate timetable for the major remaining restructuring steps is as follows:
||March 10, 2000|
||April 14, 2000|
New Organizational Structure for NASD
By the end of Phases 1 and 2, the NASD’s ownership of Nasdaq on a fully diluted basis is expected to shift from 100 percent – to a minority stake of approximately 22 percent. The major portion of Nasdaq would then be owned by investors consisting of current NASD members, Nasdaq issuers and strategic market participants, as illustrated in the diagram below:
The Baxter Committee
The strategy behind the restructuring was developed through the efforts of a special committee of the Board chaired by NASD Board member Frank R. Baxter. The Baxter Committee was formed in mid-1998 and charged with the task of studying governance and restructuring options for The Nasdaq Stock Market in the face of the challenging, dynamic and increasingly competitive market. The committee worked with outside investment bankers (Salomon Smith Barney) and was composed of NASD Board members representing a cross-section of interests.
The Fairness Committee
A second committee of the board, the Fairness Committee, was created on July 29, 1999, to provide an independent assessment of the restructuring proposal. The Fairness Committee was composed of a cross section of NASD Board members who had not been part of the Baxter Committee. The Fairness Committee was chaired by Professor Robert R. Glauber of Harvard University and engaged its own independent legal and financial advisors (J.P. Morgan). The Fairness Committee carefully reviewed and considered the objectives and terms and conditions of the restructuring. The restructuring plans were modified in a number of important respects based on input from the Fairness Committee. The Fairness Committee unanimously determined that the terms of the restructuring were fair and in the best interests of the NASD and its members.
NASD Small Member Firms Participation and Benefits of the Restructuring
The proposed restructuring offers significant participation and benefits to all NASD members, including those small member firms, as summarized below: