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  Listing Council Decision 2006-6
Identification Number 645
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-Q for the quarter ended June 30, 2005, due to an audit committee investigation into inventory invoices that had not been properly accounted for on the company’s December 31, 2004 year-end financial statements. The Panel delisted the company’s securities based on a filing delinquency. Subsequent to its delisting, but before the Listing Council’s deliberations, the company became current in its periodic reporting obligations.
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. 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 consideration of this matter, the company was current in its periodic reports obligations with the SEC, investors did not have access to accurate financial information regarding the company from August 17, 2005 until February 3, 2006, or a period of approximately five and one-half months. The Listing Council notes that the Panel provided the company with two extensions, in addition to its original extension of time, to become compliant with the filing requirement. The Listing Council observes that the Panel, in looking to provide the company with reasonable extensions, looked to the company for assistance in setting the prescribed deadlines. The Listing Council finds that the company was given every opportunity to regain compliance and notes that the company argued that it was on the “cusp of compliance” each time the Panel provided the company with an additional extension. While the Listing Council was sympathetic to the company’s argument that the timing of the filing was outside the company’s control, the Listing Council concurs with the Panel’s assessment that the company is solely responsible for compliance with the marketplace rules.
The Listing Council also denies the company’s request that the company be allowed to re-list under the continued listing requirements on the Capital Market upon becoming current with its periodic reporting obligation. The Listing Council notes that Listing Rule 4802(f)* provides, in part, that a security that has been delisted shall be required, prior to re-inclusion, to comply with the requirements for initial inclusion. As such, because the Panel appropriately delisted the company’s securities from the Capital 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 Listing Qualifications, and the review of such application should be handled in the same manner as any new application to trade on The NASDAQ Stock Market.
* Listing Rule 4802(f) replaced former Listing Rule 4430(e). See SR-NASD-2004-125, which became effective on August 26, 2005.
Publication Date*: 7/31/2012 Mailto Link Identification Number: 645
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