Laxity and Leeway

The Nasdaq, which makes much of its money from listing and transaction fees, does not want to delist companies, contends Oesterle. Nor does it want companies to move to a competing bourse, such as the London Stock Exchange. He says the Nasdaq seems to be carrying companies that are grappling with backdating issues longer than it normally would for late filers.

"If, for example, you were accused of not filing your reports because of some sort of Ponzi scheme, I don't think they would give you much leeway," Oesterle says.

That's not to say the Nasdaq has not delisted companies for missing filing deadlines. Vitesse Semiconductor and Mercury Interactive are among the delinquent filers that have gotten the boot.

And if the Nasdaq is too lax, the SEC has the power to step in. A spokesman for the SEC said he could not comment on the commission's attitude or its response to the Nasdaq's delisting practices for backdaters.

But he said that the SEC has oversight over the Nasdaq and other exchanges and that part of the oversight involves examining how the exchanges are enforcing their rules.

The next couple of months should be telling.

One person involved in the delisting process estimates that as many as eight companies are facing June deadlines and says that another batch of companies will see the clock run out in July.

Chipmaker Integrated Silicon Solutions ( ISSI) filed the last of its missing financials on Tuesday -- Nasdaq's deadline -- restating $32.1 million in additional stock-based compensation between 1997 and 2006 and escaping delisting in the nick of time.

Atmel, another semiconductor company, said last week that it was on track to file its results by "early June," although the company did not specifically say by June 8, which is the deadline it is running up against.

As more companies near their deadlines, the Nasdaq may find itself forced to make a difficult choice of flexing its muscle or exposing its penalties as empty threats.

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