When Liz blogged about Nasdaq’s new ability to deny an initial listing based on the risk of price manipulation by third parties, she noted that companies and their counsel now need to assess qualitative risk factors alongside technical listing compliance when pursuing an initial listing on Nasdaq. The SEC’s notice lists a series of examples of these risk factors that Nasdaq will consider in determining whether to apply this new discretion. To help you identify which IPO candidates may be more closely scrutinized, this Sheppard Mullin blog summarizes them as follows:

Location of Company. The company’s location including considerations such as the availability of legal remedies to U.S. stockholders in that jurisdiction, laws of the foreign jurisdiction that may present challenges to regulators seeking to enforce regulations against such company and the ability of parties to conduct diligence in that jurisdiction.

Influence and Control. Whether a person or entity exercises substantial influence over the company and, if so, where that person or entity is located, availability of legal remedies to U.S. stockholders in that jurisdiction, and laws of the foreign jurisdiction that may present challenges to regulators seeking to enforce rules against the person or entity and the ability of parties to conduct diligence in that jurisdiction.

Key Advisors. Whether there are concerns related to the company’s auditors, underwriters, legal counsel, brokers, or other professional service providers, including any regulatory issues involving such advisors as well as their participation in transactions where the securities were subject to patterns of problematic trading activity.

Management and Board Experience; Integrity. Whether the company’s management and board have experience with U.S. public company requirements, including regulatory and reporting requirements under Nasdaq rules as well as the rules of the SEC and whether there are concerns about the integrity of the Company’s management, board, significant stockholders and/or advisors.

Regulatory Referrals. Whether there are any FINRA, SEC or other regulatory referrals concerning the Company or its advisors.

Liquidity. Whether the company has or had a going concern audit opinion and the company’s plan to remediate such concern.

While these issuer-specific factors will undoubtedly be assessed, the list is non-exhaustive, and the Mayer Brown blog Liz shared suggests that Nasdaq may also consider “broader market patterns and past outcomes associated with similar listings when reviewing applications.”

– Meredith Ervine