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  Listing Council Decision 2007-1
Identification Number 639
Rule 4310(c)(14): The issuer shall file with NASDAQ three (3) copies of all reports and other documents filed or required to be filed with the Commission. This requirement is considered fulfilled for purposes of this paragraph if the issuer files the report or document with the Commission through the Electronic Data Gathering, Analysis, and Retrieval system. An issuer that is not required to file reports with the Commission shall file with NASDAQ three (3) copies of reports required to be filed with the appropriate regulatory authority. All required reports shall be filed with NASDAQ on or before the date they are required to be filed with the Commission or appropriate regulatory authority. Annual reports filed with NASDAQ shall contain audited financial statements.

Issue: The company was not able to file its delinquent periodic SEC reports due to a stock option backdating investigation. Based on a Panel’s decision, the company was scheduled to be suspended, pending delisting, by the Panel, because the Panel was at the limit of its discretionary authority. The Listing Council exercised its discretionary authority by calling for review the Panel’s decision, and by also determining to stay any future Panel determinations to suspend the company’s securities from trading, pending further action by the Listing Council.

Determination: The company was suspended, pending delisting, by the Listing Council because the company was not current in all required public filings. Furthermore, in its submission to the Listing Council, the company noted that it could not demonstrate compliance within 60 days, which was outside the limits of the Listing Council’s discretion. The Listing Council has considered the extraordinary circumstances that many companies find themselves in and has undertaken a
facts and circumstances analysis in this case to determine if additional remedies are appropriate.
The Listing Council recognizes that the company:
  • Reacted quickly and took appropriate steps once the potential stock option problem was identified. The company moved quickly to inform its Audit Committee, who, in turn, immediately began an internal investigation, with the help of outside consultants, to determine the depth and breadth of the problem.
  • Promptly notified regulatory authorities and the investing public of its internal investigation and the investigation of the SEC and the Department of Justice.
  • Removed and replaced its Chairman of the Board, CFO, and Senior General Counsel, once the preliminary results of the Special Committee were discussed with the Board.
  • Adopted remedial measures recommended by the Special Committee such as freezing all stock option exercises until restated financial statements are filed.
  • Promptly notified the investing public of its need to restate its financial statements and cautioned investors not to rely on previously filed financial information.
  • Recently engaged five new, independent, outside directors.
The Listing Council was also particularly cognizant, and considered, that the Panel had exhausted its ability to provide the company with an additional extension of time, and would have provided the company more time if available under the rules.
Accordingly, the Listing Council finds that the Panel’s determination to delist the company’s securities for failure to comply with the filing requirement, but staying the suspension pending further action by the Listing Council, was appropriate at the time of the decision. However, after a review of the record in this matter, the Listing Council notes that Listing Rule 4802(b) only allows the Listing Council the discretion to grant exceptions for a period not to exceed 60 days from the date of the Listing Council Decision or 180 days from the date of the Panel Decision with respect to the deficiency for which the exception is granted. However, the company, in its supplemental submission to the Council, stated that it did not expect to be able to complete its “new” investigation until the second quarter of 2007, which also contemplates that the company would not be able to demonstrate compliance with Listing Rule 4310(c)(14) until some unknown time thereafter.
Consequently, the Listing Council finds that even if it determined to exercise the full extent of its discretion on behalf of the company, by the company’s own admission, such time would still not be enough to demonstrate compliance with Listing Rule 4310(c)(14). As such, the Listing Council sees no reason to exercise its discretion in this particular instance. The Listing Council finds that the company’s plan of compliance is not sufficiently definitive and does not appear to be able to be executed in the near term. Based on the foregoing, the Listing Council has determined to suspend, pending delisting, the company’s securities from The NASDAQ Stock Market because the company does not comply with the filing requirement of Listing Rule 4310(c)(14).
Publication Date*: 7/31/2012 Mailto Link Identification Number: 639
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