U.S. Securities and Exchange Commission approves new rules, Nasdaq will accelerate the removal of micro-listed companies
The group will revise the listing rules and accelerate the removal of companies whose operating conditions continue to deteriorate. Regulators have previously continued to focus on frequent violent market fluctuations and accusations of market manipulation in micro-market capitalization stock trading. The U.S. Securities and Exchange Commission (SEC) approved a new rule on Wednesday: If the market value of a Nasdaq-listed company's listed securities falls below $5 million for 30 consecutive days, the company's stock will be immediately suspended from trading and the delisting process will be initiated, and the appeal channels will be significantly narrowed. The tougher listing standards are expected to hit the microcap and penny stock markets across the board. Regulators have warned many times that the market is rife with “pump and dump” securities fraud that relies on digital means. The U.S. Securities and Exchange Commission stated in the announcement: Low-priced stocks with low market capitalization are more likely to be manipulated and experience violent trading fluctuations. Criminals only need a small amount of funds to influence their stock prices. The exchange operator proposed this new rule in January this year and received support from mainstream Wall Street institutions such as Castle Securities, Charles Schwab, and the Securities Industry and Financial Markets Association (SIFMA); however, small and medium-sized listed companies, relevant lawyers and industry consultants strongly opposed it. Most opponents believe that this new regulation, which aims to curb illegal operations, will harm start-ups that operate in compliance with regulations. Mark Indelia, chairman of the Alliance of Small Public Companies (an organization that serves investors in the micro-cap and small-cap market) said: "This rule will deal a heavy blow to small and medium-sized enterprises, hinder corporate financing, and will also give rise to bad speculative motives for short-selling small listed companies. This runs counter to the current core guidance of the China Securities Regulatory Commission to 'revitalize the IPO market and expand corporate financing channels.'" Data shows that there are currently nearly 180 listed companies on Nasdaq with a total market value of less than US$5 million, which has just hit the regulatory red line set by the new plan.