Posted on: Monday, October 14, 2002

Nasdaq may lower $1 rule

By Monique Wise
Bloomberg News Service

BOCA RATON, Fla. — The Nasdaq Stock Market, where shares of more than 500 companies trade at 99 cents or less, may lower the $1 minimum companies must maintain to stay listed, Nasdaq Chairman Hardwick Simmons said.

"The question is: Should we relax our rules for real companies with real balance sheets and real businesses," said Simmons, speaking at the Security Trader Association's annual meeting here. "We're studying the issue."

Ericsson AB, the Swedish telephone-equipment maker with a market value of $7 billion, traded on Nasdaq at 47 cents. Palm Inc., the maker of hand-held computing devices with a market value of $400 million, traded at 69 cents. Palm shareholders recently approved a reverse stock split to avoid a delisting.

The second-largest U.S. stock market may ease share-price standards as it's toughening other listing rules related to the independence of company boards in the wake of a spate of U.S. corporate scandals. The Nasdaq Listing and Hearing Review Council, which determines listing standards, will meet this week to discuss options, Simmons said.

"Sixty percent of the 3,800 companies whose shares are listed on Nasdaq sell for less than $5," Simmons said.

The stock market, which is home to many technology companies including Microsoft Corp. and Cisco Systems Inc., gives companies whose stock slips below $1 a share 90 days to return to compliance.

After 9/11, Nasdaq suspended the listing requirements for three months; it reinstated them in January.

"After careful examination, Nasdaq believes that minimum bid price and market value of public float continue to be useful requirements," Nasdaq said in a statement last December.