Filed Under:
Tickers in this Article: WSTM, DBD, AIG, RAD
I am always on the lookout for stock market anomalies. Like an adventurer in search of the Loch Ness Monster, Bigfoot or the unknown creature that sacrificed its fur to make Donald Trump's hair, I scour the internet underbrush seeking investment oddities. Most of the time, alas, my quest is in vain.

But, occasionally, I hit pay dirt and find Wall Street equivalents of Atlantis, the Holy Grail or a really good movie starring Chuck Norris (well, maybe not the latter - there's a limit to my sleuthing ability). As luck would have it, I had one of these "eureka" moments just last week.

Celebrate Bad Times, Come On!
While noting the day's big market gainers on Oct. 24, 2008, I ran across Workstream (Nasdaq:WSTM), a company whose stock price shot up more than 100% from its low that day on news that it had "received additional notification from the Nasdaq Stock Market that it is not in compliance with the requirements for continued listing set forth in Nasdaq Marketplace Rule 4310(c)(14) because of its failure to file its quarterly report on Form 10-Q for the fiscal quarter ended August 31, 2008."

Ignoring the fact that Nasdaq authorities might consider fewer and/or more succinct rules, I simply say, "huh?" Since when is potential delisting for failure to file financial reports a reason for celebration? It's like a Major League ballplayer being told he's going back to the minors - and throwing a party. Goodbye Boston, hello Pawtucket!

And while the magnitude of Workstream's recent equity ascent is unique, the initial positive reaction to a negative exchange notice apparently is not.

Losing the War, Winning the Battle
When Diebold (NYSE:DBD) was threatened with expulsion by the New York Stock Exchange for failing to file its 10-K in a timely manner, the stock promptly went from $35.88 a share on March 18 (the day of the warning) to $36.47 two days later, despite the fact that the Dow dipped 0.3% during the same period. Imagine the euphoria if, in addition to eighty-sixing their stock, NYSE officials had promised Diebold execs a solid beating as well - why the ensuing block party might have even lured folks from American International Group (NYSE:AIG).

Rite Aid (NYSE:RAD) also found success in failure recently, as shares in the retail drugstore opened 8.5% higher on the trading day following its 8-K filing on Oct. 17 that acknowledged receipt of a NYSE deficiency notice asserting that the company's "stock was below the NYSE's continued listing standard relating to minimum average share price."

Delisting Dollars
Of course, there are some advantages to getting booted from the Nasdaq or NYSE. In addition to initial listing fees, the major exchanges also charge annually, based on the company's number of authorized, or outstanding, shares. For smaller companies, this can amount to more than just laundry money, as illustrated by the tables below:

NYSE Annual Fee Schedule
Type Of Security
Minimum Fee
Fee Per

Primary class of common shares
Each additional class of common shares (including tracking stock)
Primary class of preferred stock (if no class of common shares is listed)
Each additional class of preferred stock (whether primary class is common or preferred)
Each class of warrants
* These fees are applicable as of January 1, 2006.
Source: NYSE Euronext

Nasdaq Global Select Market Annual Fee Schedule
Total Shares Outstanding
ADR Fees
Up to 10 million
10+ to 25 million
25+ to 50 million
50+ to 75 million
75+ to 100 million
100+ to 150 million
Over 150 million
*For issuers except ADRs, "other securities", portfolio depository receipts, trust issued receipts, index fund shares and closed-end funds.
Source: Nasdaq Listing Requiremnts (pdf)

Parting Shots
Whether the money saved outweighs the loss of face (and, perhaps, reputation) is debatable, but at least in the short term, being delisted doesn't seem to hurt a stock's price and, in some cases, may even help it. A toast to my next demotion.

To learn more, check out The Dirt On Delisting.

comments powered by Disqus

Trading Center