TheCorporateCounsel.net

Last month, Meredith blogged about the SEC’s decision to approve Nasdaq’s new $5 million minimum market cap requirement for continued listing. Just to bring everyone up to date, last week, the SEC stayed the new listing standard’s implementation. This excerpt from a recent Goodwin blog explains the SEC’s action:

The stay was triggered after the Small Public Company Coalition (SPCC) and Cemtrex each filed notices of their intent to ask the full Commission to review the Division of Trading and Markets’ approval. SPCC says it represents small public companies affected by the rule and participated extensively in the rulemaking process, while Cemtrex says it is directly affected because its MVLS is already below the proposed $5 million threshold and the rule could subject it to suspension and delisting.

Under Rule 431(e) of the SEC’s Rules of Practice, filing a notice of intent to petition for Commission review automatically stays an action taken under delegated authority unless one of a few narrow exceptions applies. As a result, the SEC’s July 29 letter did not itself grant a stay; rather, it confirmed that the approval order had been automatically stayed pending further action by the Commission. The petitioners now have five days to file their petitions for review setting forth the basis for challenging the approval.

The blog says that if the petitioners move forward, the SEC must decide whether to review the Division’s approval of the rule. If it does, then it will then have to figure out whether to affirm, modify, reverse, set aside, or remand the matter for further proceedings. There’s no specified timeline for review, so this could take a while. Whatever action the SEC takes, the matter may ultimately end up in federal court.

– John Jenkins