SEC Questions Nasdaq Reverse-Merger Listing Proposals
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Overall Analyst Rating:
SELL (= Flat)
Dividend Yield: 1.2%
Revenue Growth %: +9.2%
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The U.S. Securities and Exchange Commission -- a U.S. agency you never want to mess with -- is now questioning the Nasdaq (Nasdaq: NDAQ) about it's policies with respect to U.S.-listed Chinese companies.
According to the Wall Street Journal Tuesday afternoon, the SEC called for more public comment on Nasdaq's reform plan in the wake of several accounting scandals which caused several of the U.S.-listed Chinese companies to collapse. The SEC compared Nasdaq policy with that of the New York Stock Exchange (NYSE: NYX), which is more stringent, and also said the two exchanges should be more "consistent."
The Chinese companies in question enter the U.S. market through what is called a "reverse merger." Reverse mergers are when a private company acquires a public company, sometimes called the "shell," so that it can bypass lengthy, costly, and complex process of going public. Some recent examples include China MediaExpress, China Agritech, Rino International, and Wonder Auto Tech. There are currently five U.S.-listed Chinese companies in long-term halt, with the longest having been halted since April 1st.
Nasdaq currently employs a plan whereby the reverse merger companies cannot list until they have traded OTC or on another exchange for a minimum of six months, and maintain a $4 or better stock price for 30 of 60 days prior to applying for listing. The NYSE and NYSE Amex require at least a year of trading and its stock price it must meet an "absolute and average" measurement for a "sustained period" for NYSE, according to the SEC order.
The NYSE emailed a statement to Dow Jones which said, in part, "Our proposal and Nasdaq's have comparable goals and we believe a harmonized approach is appropriate to provide consistent and effective enhancements to exchange listing standards."
According to the Wall Street Journal Tuesday afternoon, the SEC called for more public comment on Nasdaq's reform plan in the wake of several accounting scandals which caused several of the U.S.-listed Chinese companies to collapse. The SEC compared Nasdaq policy with that of the New York Stock Exchange (NYSE: NYX), which is more stringent, and also said the two exchanges should be more "consistent."
The Chinese companies in question enter the U.S. market through what is called a "reverse merger." Reverse mergers are when a private company acquires a public company, sometimes called the "shell," so that it can bypass lengthy, costly, and complex process of going public. Some recent examples include China MediaExpress, China Agritech, Rino International, and Wonder Auto Tech. There are currently five U.S.-listed Chinese companies in long-term halt, with the longest having been halted since April 1st.
Nasdaq currently employs a plan whereby the reverse merger companies cannot list until they have traded OTC or on another exchange for a minimum of six months, and maintain a $4 or better stock price for 30 of 60 days prior to applying for listing. The NYSE and NYSE Amex require at least a year of trading and its stock price it must meet an "absolute and average" measurement for a "sustained period" for NYSE, according to the SEC order.
The NYSE emailed a statement to Dow Jones which said, in part, "Our proposal and Nasdaq's have comparable goals and we believe a harmonized approach is appropriate to provide consistent and effective enhancements to exchange listing standards."
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