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The SEC has approved a Nasdaq rule change regarding issuer disclosure of listing deficiencies. Nasdaq rules provide that when a listed issuer does not meet the exchange’s continued listing standards, Nasdaq notifies the issuer of the deficiency. After a listed issuer receives a Nasdaq staff determination, Nasdaq rules currently require the issuer to make a public announcement disclosing receipt of the notification and the Exchange rules upon which the Nasdaq staff determination is based. Some issuers comply with this requirement by merely disclosing the Nasdaq rule number and a description of such rule, but do not provide additional disclosure to allow the public to understand the deficiency or the underlying basis for it.

The new Nasdaq rule addresses the concern in several ways. First, the Exchange requires issuers to disclose each specific basis and concern cited by Nasdaq in the Nasdaq staff determination. The rule indicates that issuers can provide their own analysis of the issues raised in the Exchange’s delisting determination. Finally, the Nasdaq rules to allow Nasdaq to issue a public announcement if a listed issuer does not make the required announcement or at any level of a proceeding after an issuer receives a Nasdaq staff determination involving an issuer’s listing or trading. For example, if the issuer does not make the public announcement within the allotted time, if the issuer’s public announcement does not contain all of the required information, or if the issuer’s public announcement contains inaccurate or misleading information, Nasdaq may issue a public announcement with the required information.

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