The Nasdaq Stock Market wants to make it harder for companies that have come public through reverse mergers to gain listings on its exchange.
On April 18, Nasdaq submitted a proposed rule change to the Securities and Exchange Commission that would heighten the exchange's listing requirements for such companies, which use a so-called "back-door process" to come public. The procedure, critics say, circumvents the stricter scrutiny that financial-markets regulators give to initial public offerings.According to Nasdaq's proposed rules, a reverse-merger company's stock must trade on one of the over-the-counter markets (or another exchange) for at least six months after filing its first audited financial statements to regulators. The exchange called it a "seasoning" period. Also, the company's stock should maintain a bid price of more than $4 for at least 30 of the first 60 trading days after applying for a listing on a major exchange. Nasdaq is required to obtain SEC approval before it can make the change to its listing requirements, according to a Nasdaq spokesman. Triggering the Nasdaq proposal has been a rash of fraud revelations among Chinese companies that have sought to raise capital on U.S. equities markets by first obtaining stock listings here through the reverse merger process, also known as a reverse takeover, or RTO. Many other Chinese companies have been accused of fraud, particularly by short-sellers. As detailed by the TheStreet in December, the SEC has launched a wide-ranging investigation into the Chinese reverse-merger phenomenon.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV