Nasdaq Has Hundreds of Penny Stocks. Now It’s Trying to Purge Them.
Exchange comes under pressure for allowing risky companies to remain listed through reverse stock splits
Nasdaq NDAQ 0.67%increase; green up pointing triangle is taking steps to purge itself of dubious companies whose shares trade below $1 each, following criticism that the exchange has become home to hundreds of risky penny stocks.
Proposed rule changes released by Nasdaq on Thursday could accelerate the delisting of such companies as Bit Brother, a tiny Chinese blockchain company that became an embarrassment to the exchange during the past year.
Starting in 2020, Bit Brother carried out three reverse splits to keep its share price above $1, allowing it to maintain its Nasdaq listing, even as its share price sank more than 99% after adjusting for the splits. The stock drew attention in late December when it experienced a wild surge in trading volume, fueled by individual meme-stock investors and social-media buzz.
