Nasdaq rule changes call for more transparency from listed firms

NEW YORK: As some of its listed firms continue to grapple with problems stemming from issues involving disclosure and transparency, Nasdaq announced last week some rule changes to its corporate governance standards for listed firms.

NEW YORK: As some of its listed firms continue to grapple with problems stemming from issues involving disclosure and transparency, Nasdaq announced last week some rule changes to its corporate governance standards for listed firms.

"This is part of a process that is far from over, according to a statement from Wick Simmons, chairman and CEO of Nasdaq.

Among the changes announced by Nasdaq is a requirement that firms traded on the exchange must now notify shareholders and potential investors, via press release, of any so-called "going-concern qualifications made by the company's auditor. Auditors make going-concern qualifications when they have significant doubts about a company's ability to remain in business for reasonable period of time. While some companies do currently report these concerns in press releases, many have been burying them in SEC filings.

This new requirement comes after Nasdaq saw many of its listed firms spiral into bankruptcy during the recent bear market.

The Nasdaq also added an explicit mention to its governance standards that companies who intentionally omit vital information or fail to provide requested information to Nasdaq can be delisted from the exchange.

Additionally, Nasdaq has amended its policy on material disclosures to match that of the SEC's Reg FD. Previously, Nasdaq required traded firms to announce all material events - events that could affect the value of a stock - via press release. The exchange now says that it will accept the disclosure methods prescribed under Reg FD, which include conference calls, press conferences, and webcasts, as long as the public is provided adequate notice and granted access.

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