Even Wall Street has standards.
I know that might sound hard to believe, but to benefit from the liquidity, capital-raising power and prestige that come with a listing on the New York Stock Exchange or Nasdaq (QQQ), a company has to follow a few rules.
Among other requirements, to maintain a listing on the NYSE, a company has to have an average market cap and stockholders’ equity of at least $50 million and must have an average share price of $1 or more over a 30-day period. Nasdaq continued listing requirements are slightly different, but the same concepts regarding assets, market cap and share price apply.
For both NYSE and Nasdaq listing, companies are also required make timely financial disclosures.
Enter Ocwen Financial Corporation’s (OCN), which recently made the news for failing to file its annual report in a timely manner.
Ocwen Financial received a deficiency letter from the NYSE. In plain English, this essentially means that OCN is on the naughty mat until it learns how to obey the rules.
Ocwen stock is not at immediate risk for being delisted, however.
OCN has six months to get its house in order before the NYSE takes any further action. And if after that six-month period Ocwen still has yet to publish its annual filings, the NYSE has the option to allow another six months to pass before initiating delisting. Of course, the NYSE could also opt to delist the company now if it felt that something dodgy was going on.
I expect Ocwen Financial to get its books in order well before a delisting happens. But this brings up a good question — one that all investors should learn the answer to:
What happens when the shares of a company you own get delisted?
A delisting is scary. And frankly, you generally have no business owning a stock facing delisting because, with few exceptions, a company that fails the continued listing requirements is almost always on the express train to bankruptcy.
