Spencer Feldman Publishes Article in Bloomberg Law on Nasdaq Delisting for Companies Trading Below $1
Corporate partner Spencer Feldman published an article in Bloomberg Law (subscription required) entitled “Nasdaq Delisting Threat Is Tricky for Companies Trading Below $1.” The article discusses how hundreds of smaller public companies have been deemed non-compliant and subject to delisting from Nasdaq and NYSE American due to their failure to maintain a closing price above $1 per share for 30 consecutive days. Both Nasdaq and NYSE maintain that companies with low stock prices are more likely to have their stocks manipulated and/or engage in fraudulent practices. “Boards of directors routinely consider several aggressive responses, including reverse stock splits, stock buybacks, stock issuances, ramped-up investor relations, and business combinations,” writes Spencer. “These steps are often counterproductive and serve as a temporary band-aid rather than a long-term solution.” Rather than consistently resorting to the threat of delisting, Spencer counsels that the exchanges should opt for less-stringent sanctions such as a public reprimand letter or perhaps even adding an additional letter to a company’s listed ticker symbol. “More drastic sanctions could be saved for companies with repeated and flagrant listing standard violations, such as delinquent SEC filings and failures to maintain a company’s audit committee composition,” he writes.
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