Analysis – U.S. Exchanges Overhaul Bid Price Compliance Rules – Tougher Rules During Tougher Times

By Jeffrey Baumel, Ira Kotel and Rob Condon

The U.S. Securities and Exchange Commission (the “SEC”) recently approved rule changes by the Nasdaq Stock Market, LLC (“Nasdaq”) relating to the minimum bid price requirements for listed companies and the use by listed companies of reverse stock splits to maintain compliance with Nasdaq’s continuing listing requirements. In addition, the SEC has announced proposed rule changes by both Nasdaq and the New York Stock Exchange (“NYSE”) which would make it more difficult for companies to utilize multiple reverse stock splits to maintain compliance with the bid price criteria of each exchange. These changes, if adopted in full, are particularly noteworthy given that failure to maintain the minimum bid price is the most common cause for public companies’ noncompliance with stock exchange continued listing standards.

The full insight can be found here.