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Libraries:
Listing Council Decisions
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Identification Number
643
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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 fiscal year ended September 30, 2005, due to accounting issues identified after the company moved its corporate headquarters and changed auditors. Thereafter, the company
failed to timely file Forms 10-Q for the quarters ended December 31, 2005 and March 31, 2006. Additionally, the company determined that its previously filed financial statements from September 2002 forward should not be relied upon. 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 still not filed its Form 10-K for the fiscal year ended September 30, 2005, Forms 10-Q for the quarters ended December 31, 2005 and March 31, 2006, or any prior period restatements. 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, investors have not had access to accurate financial information regarding the company from July 1, 2005 through
the present, a period of over 12 months. 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 company also requested that the Listing Council grant the company an expedited re-listing on upon becoming current with its periodic reporting obligation. The Listing Council denies this request and believes that the exception is not appropriate in
this instance. The Listing Council notes that the independent Investigation began in December 2005; however, it was not until mid-May 2006, a period of over five months, before the Panel was provided with any indication that the company was also dealing with
signs of earnings management, possible CEO involvement, or tone at the top issues. The Listing Council views the Panel’s behavior as sympathetic to the company’s situation; particularly, after the company’s previous independent auditors advised the company’s
management and the Audit Committee of a material weakness related to insufficient personnel resources and the technical accounting expertise within the company's accounting function, and thereafter when concerns regarding the accuracy of the work of the company’s
independent
consultant further delayed the company meeting its deadlines. While the Listing Council finds that the Panel was generous, it does not find fault with the Panel’s judgment, in affording the company the multiple extensions and opportunities to achieve the
company-proffered and, subsequently missed, designated milestones. The Panel appeared to provide the company with every opportunity to cure its “accounting issues”; however, the results of the Audit Committee Investigation clearly indicated there were other
than accounting issues that plagued the company. The Listing Council also recognizes that it was not until late May 2006, five months after the company attended a Panel Hearing and disclosed the ongoing Investigation, before the company was finally delisted.
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.
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Publication Date*:
7/31/2012
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Identification Number:
643
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