Nasdaq Temporarily Suspends Delisting Regulations - InformationWeek

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Nasdaq Temporarily Suspends Delisting Regulations

Officials want to give struggling companies a second chance in a downtrodden market further devastated by the Sept. 11 attacks.

Nasdaq has taken unprecedented action to help companies cope with a foundering market. The tech-heavy exchange's board of directors has for the first time temporarily suspended the $1 minimum bid price, as well as its requirement that a certain portion of shares in each stock be available for purchase by public investors. The suspension, which will last until Jan. 2, 2002, is effective immediately.

Nasdaq officials say they want to give struggling companies a second chance in a downtrodden market further devastated by the Sept. 11 attacks that left parts of New York's financial district in ruins. Nasdaq Spokesman Michael DeMeo says getting delisted is "a major event" for a company because of the uncertainties it raises. Companies that were facing delisting now will have a clean slate for the rest of the year, DeMeo says. Regardless of where they were in the process, those that had been sent delisting notices will be able to proceed as if they had never received them.

But most companies that are in danger of being delisted have far more problems than low stock price or heavy insider stock ownership, says Jennifer Mundine, an investor relations manager at Telescan Inc., which was delisted from the exchange Wednesday because neither its stock price, insider ownership, nor net tangible assets were in compliance with Nasdaq regulations. "It was not going to resolve or eliminate our deficiencies," says Mundine.

Watering down listing regulations actually may do more harm than good, says Damon Kovelsky, an analyst with Meridian Research. "By making listing requirements weaker or easier, investors will become more unsure of the companies that are allowed to trade on that exchange," Kovelsky says. "In a way, it cheapens the exchange."

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