Resolving a NASDAQ Trading Halt Due to a Lack of DTC Eligibility

Resolving a NASDAQ Trading Halt Due to a Lack of DTC Eligibility

It is a common misperception that if a company applies for an exchange listing that it is automatically DTC Eligible upon approval for trading the exchange.  This is not the case.  A Company needs to apply for DTC Eligibility independent of its exchange application.  In certain circumstances, a Company may look like it is DTC Eligible, when it actually is not.  That is exactly what happened to a Canadian company that was listed on the Toronto Stock Exchange, and applied for trading on the NASDAQ Exchange, only to find its shares subject to a trading halt a couple of weeks later. .

The Canadian company applied for trading on the NASDAQ Stock Exchange.  As part of the application process, the Company’s US transfer agent was required to provide verification that the Company’s shares would be included in the DTC DRS/DWAC Fast system, which it did.  Because the shares were eligible for DTC Custody Only services, there already were a significant number of shares held at DTC.  However, “Custody Only” is not the same as fully eligible.  After approximately two (2) weeks it was discovered the Company’s shares were not DTC Eligible,  and NASDAQ halted trading.

A couple of days later, Coral Capital Partners was contacted after hours on a Friday afternoon to help out with the situation.  Our task was two (2) fold.  The 1st being to get the Company DTC Eligible, and the 2nd to assist with the NASDAQ trading halt. We started the DTC Eligibility application on Tuesday of the next week, and received approval of DTC Eligibility by 5:00pm on Thursday.  We worked through the weekend with the US transfer agent, the Company, and representatives of NASDAQ to address the trading halt. Our efforts were successful.  During a Sunday night conference call, representatives of NASDAQ informed us that they would allow trading to resume at 12:30pm Monday.

Essentially, we were able to obtain DTC Eligibility for the Company, and trading halt within seven (7) days.  Additional details on our efforts can be found in our Case Study # 8:  NASDAQ Trading Halt Due to Lack of DTC Eligibility: detailing our efforts.

If you have any questions about the above blog post, please feel free to visit our web site, and check out what we have to offer.  Feel free to contact us if you have any questions.  We can be reached at 404-816-9220 and are always willing to speak with you.

About Coral Capital Partners

Coral Capital Partners is an independent consulting and advisory firm focused on companies and participants in the lower and middle markets. We partner with our clients to provide cost effective solutions to real world issues and situations. Our experienced team brings a diverse set of skills that allows us to service a wide variety of needs. Our area of services and expertise focuses on bringing services and solutions to our clients that are normally only available to much larger firms. Coral Capital Partners, Inc. provides services to Investment Banks, Private Equity Funds, investors, and both privately held and publicly traded companies, as well as various stakeholders in those organizations. This has included international public companies with operations on three (3) continents to smaller privately held domestic companies. Our experience in the areas of corporate advisory, due diligence reviews, and regulatory compliance allows for a cost effective and efficient solution to the issues at hand. Please feel free to contact our offices to see how we may be of assistance.