Nasdaq Getting Tough on Chinese Reverse Mergers

Bowing to criticism from the financial press, from short-sellers and others, the Nasdaq has quietly filed with the SEC to change the way reverse mergersare listed—Chinese or otherwise.

The entire proposal can be read here.

Among the proposed changes:

—Prohibiting a company going public through the back-door from applying to list for at least six months after its audited financial statements have been submitted to the SEC.

—Requiring reverse mergers to maintain $4 bid price for at least 30 of the 60 trading days immediately prior to submitting the application.

Nasdaq says the six-month window will give FINRA more time to view trading patterns and uncover potentially manipulative trading.

My take: It’s unclear how effective this will be, but it’s better than nothing.

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