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Nasdaq Examines Delisting Regulations

Will Nasdaq find itself trading penny stocks? It could have more definitive information about how it will handle future delistings within a week.
The economic fallout of the Sept. 11 attacks continues as the Nasdaq exchange Wednesday revealed it is taking a closer look at its regulations regarding the delisting of companies whose share price drops below $1. The tech-heavy exchange has seen many stock prices fall severely since it reopened after a four-day hiatus following the attacks.

A Nasdaq spokesman says the exchange regularly revisits its listing requirements to ensure fairness, and that it could have more definitive information about how it will handle future delistings within a week.

Currently, Nasdaq warns companies that they could be delisted once their stock has been trading below $1 for 30 consecutive days. Companies receive a reprieve if their stock price recovers and remains more than $1 for 10 consecutive days. After receiving notification, companies whose stock price remains below $1 still can fend off delisting by demonstrating that they're taking steps to fuel the value of their shares. Such steps could include anything from providing details of revenue-generation initiatives to undertaking reverse stock splits. Failed online grocer Webvan attempted the latter before it shut its doors in July.

Nasdaq is not alone in its efforts to bolster the markets. Federal Reserve chairman Alan Greenspan cut interest rates once trading resumed after the attacks, and the Securities and Exchange Commission modified its regulations governing stock buyback plans to allow companies to reacquire shares and thus prevent their value from tumbling further.

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