NASDAQ delisting letter sent when SEC filings are delinquent

Standard

Usana’s most recent 10-Q filing with the Securities and Exchange Commission was NOT reviewed by an independent auditor.

From NASDAQ’s FAQ:

What are the repercussions if my company’s auditors did not review the quarterly financial statements as required under SAS 100?

If the company is required to have its interim financial statements reviewed under SAS 100 and does not comply, NASDAQ views the company to be delinquent in its filing obligations. NASDAQ will issue a delisting letter, in which the company has the following choices:

  • Accept the determination to delist;
  • Submit the filing within seven (7) calendar days; or
  • Request a hearing.

The company may appeal NASDAQ’s determination to delist at that time. See Hearings Process for additional information.

In addition, NASDAQ will broadcast an indicator over its market data dissemination network noting the company’s non-compliance. The indicator will be displayed with quotation information related to the company’s securities on NASDAQ.com, NASDAQTrader.com and by other third-party providers of market data information. Also, NASDAQ posts a list of all non-compliant NASDAQ companies and the reason(s) for such non-compliance on our website. Click here to view the list. The company will be included in this list commencing two business days from the date of the delist letter.

How long can a company remain listed if it becomes filing delinquent because of issues related to accounting for stock options?

When a company is late in filing a required periodic report with the SEC, NASDAQ staff is required to immediately send a delisting letter to the company. The staff does not have discretion to allow a company in this situation additional time to remain listed. However, the staff delist letter may be appealed to a Listing Qualifications Hearings Panel. A request for a hearing before the Panel will stay the delisting pending the Panel’s decision.

Members of the Panel are independent of NASDAQ, and are appointed by NASDAQ’s Board of Directors. The Panel has the discretion to grant the company additional time to remain listed, provided the company has a specific plan to regain compliance and is taking appropriate steps to deal with the circumstances which caused the delinquency. The Panel may not, however, grant an extension which would exceed the earlier of 90 days from the date of its decision or 180 days from the date of the staff delisting notification. See Hearings Process for additional information.

An issuer may appeal a Panel decision to the NASDAQ Listing and Hearing Review Council (“Listing Council”). The Listing Council, which is also comprised of people independent of NASDAQ, is charged with reviewing all decisions of the Panel and with advising the NASDAQ Board on questions relating to issuer listings. An appeal to the Listing Council does not stay the Panel’s decision to deny continued listing to the company. See Appeals Process for additional information.

In addition, all Panel decisions are subject to being called for review by the Listing Council. In connection with a call for review, the Listing Council has the discretion to stay the Panel’s decision. Should the Listing Council grant a stay, then the company would remain listed during the pendency of the Listing Council’s review. If the Listing Council determines it is appropriate, it may grant the company additional time to regain compliance while listed, until the earlier of 60 days from the date of its decision or 180 days from the Panel’s decision.

Finally, the NASDAQ Board of Directors has the ability to call any Listing Council decision for review. Like the Listing Council process, the Board has the discretion to stay the Listing Council’s decision in connection with a call for review. Should the Board grant a stay, then the company would remain listed during the pendency of the Board’s review. If the Board determines it is appropriate, it may grant the company additional time to regain compliance while listed. While the rules do not limit the maximum time the Board may provide, it should be noted that the Board has been unwilling to allow a company to remain listed for a period more than one year from the due date of the company’s first delinquent annual report.

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