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  Listing Council Decision 2006-9
Identification Number 642
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 Securities and Exchange Commission (“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 unable to timely file its Form 10-K for the year ended December 31, 2005, because management required additional time to complete its assessment of the effectiveness of its internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002. The Panel delisted the company’s securities based on a filing delinquency.
Determination: The company was properly delisted because at the time of the Panel’s decision the company was not current in all required public filings. As of the date of the Listing Council’s consideration of this matter, the company had filed its delinquent 10-K for the year ended December 31, 2005; however, the company had not filed its Form 10-Q for the quarter ended March 31, 2006. The Listing Council takes seriously the requirement to file accurate and reliable financial statements and the concomitant purpose to provide investors with current information regarding the company. The Listing Council finds that investors in securities listed on The NASDAQ Stock Market are entitled to assume that issuers of those securities will promptly and accurately comply with their reporting obligations under the Securities Exchange Act of 1934. In this case, however, even though as of the date of the Listing Council’s deliberations, the company had filed its delinquent Form 10-K for the year ended December 31, 2005, it has still not filed its delinquent Form 10-Q for the quarter ended March 31, 2006. As such, investors did not have access to accurate financial information regarding the company from October 1, 2005 until July 7, 2006, or a period of approximately nine months, and still do not have complete accurate financial information. At the time of the Panel’s decision, the company was not current in all required public filings. Furthermore, in the absence of accurate and reliable financial statements, Staff is unable to determine if the company is in compliance with all of the National Market continued listing requirements.
The Listing Council also denies the company’s request for a 60-day exception to re-list its securities upon becoming current with its periodic reporting obligation. While the Listing Council has the requisite discretionary authority under Listing Rule 4802(b) to entertain such request, the Listing Council finds that it was not appropriate in this instance, given that: (i) the company is a recent repeat offender of the filing requirement. The company’s late filings were the third and fourth consecutive late filings for the company in the past year; (ii) the company has not provided current accurate financial information, and it is unclear to the Listing Council whether the company currently meets either the initial or continued listing requirements for the National Market, (iii) the company’s current filing delinquencies are directly related to many of the issues resulting in its prior delinquency and appearance before a Panel in November 2005, and (iv) the Listing Council’s concurrence with the Panel’s assessment that “multiple deadlines set by the company itself were unmet.” In fact, the Listing Council noted that the company filed its December 31, 2005 Form 10-K on July 7, 2006, one month after the June 5, 2006 extension date it had assured the Panel it could file by, and one week after the June 30, 2006 date it promised in its submission to the Listing Council. The Listing Council notes that Listing Rule 4802(f)* provides, in part, that a security that has been delisted shall be required, prior to reinclusion, to comply with the requirements for initial inclusion. As such, because the Panel appropriately delisted the company’s securities from the National Market, the initial listing requirements provide the correct standard for a review of the company’s listing qualifications. The Listing Council finds that the company will need to file a new listing application together with all applicable initial fees with the Listing Qualifications Department, and the review of such application should be handled in the same manner as any new application to trade.
* Listing Rule 4802(f) replaced former Listing Rule 4430(e). See SR-NASD-2004-125, which was effective August 26, 2005.
Publication Date*: 7/31/2012 Mailto Link Identification Number: 642
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