I have had many arguments with the regulators and NASDAQ as well as brokerage firms regarding the one dollar delisting rule. I have long stated there needs to be consideration for the market capitalization of the companies involved. There is the 35 million dollar minimum market capitalization that is required by NASDAQ to prevent delisting. There is also the one dollar requirement, if the share price falls below one dollar, the company faces delisting. There should be consideration given to a company whose market cap is substantially greater than the 35 million dollar minimum and it should be allowed to trade below a dollar without the risk of delisting. Sirius XM is a perfect example. Even at pennies on the dollar, the company maintains a market cap of roughly five hundred million dollars.
One of the factors that contributed to the death spiral of the stock, apart from management's obvious malfeasance, was that there were millions of dollars in XM shares that were being held in margin accounts. The day after the merger was consummated, XM shareholders received 4.6 shares of Sirius stock for every 1 share of XM which caused non-compliance in their margin accounts and created forced sales. So, one day, you could have a million dollars in XM stock and 500,000 dollars on margin, to find out the very next day after consummation of the merger you receive a 500,000 dollar margin call although your equity position in the account is the same. In my opinion, this needs to be fixed.
This is one of the reasons I have insisted there must be consideration given for the market cap of the company not just its share price.
I thought I would post the correspondence below as it is from a credible source. I believe the NASDAQ will address the market cap issue as well as the delisting rules for shares under one dollar.
If you’ll note, at the bottom of this correspondence, it states “Be advised that this plan has been in the works over the past several years with records we obtained from (IT personnel and inside sources) where emails were obtained along with wire tapped conversations between Karmazin and Leon Black.” Please note I have not been able to confirm this but believe the source is credible and should be of interest to all shareholders.
Michael, You need to post this on Sirius.org. I spoke at great length today with Randy Ganau who is head of compliance at the NASDAQ One Liberty Plaza office in Manhattan.
He clearly stated that in fact Sirius has not been sent a delisting and compliance letter as of today December 15th 2008’ and if the NASDAQ were it would not be until the January 20th 2009’ extension deadline, which by the way he feels will be extended once again due to the unprecedented amount of stocks under a $1.00 He also clearly stated that Sirius would have to by SEC and NASDAQ rules and regulations “announce publicly” with receipt of a compliance letter from NASDAQ at which time (if) and when they receive this letter they would by law have 180 days from that point to become compliant.
In addition Sirius could also appeal the notice at the end of the 180 day deadline. Plus keep in mind that they may very well extend the extension deadline well beyond the Jan 20th deadline as there is an unprecedented amount of stocks on the NASDAQ below 1.00, which could easily put us into 2010. While providing plenty of time for management to perform their fiduciary duties and make a substantial effort to increase the share price and shareholder value. However many including Sirius have market caps well above the 35 million threshold, which by the way the SEC and NASDAQ is looking at modifying the listing requirements including the $1.00 per share threshold.
Thereby making the market cap the (prevailing criteria) and in Sirius case even at .10 cents we are at a whopping 350 million market cap well above the threshold. So clearly there is no legal justification for Mel and management to reverse split the stock. In light of this Sirius’s -Mel Karmazin and Management must: · First and by law publicly announce receipt of a compliance letter from the NASDAQ at which time they have 180 days and can file extension as well.·
This then “derails” management whole fraudulent scheme with the need to Reverse split the stock as this was the (only legal) justification to reverse split the stock.·
Management already “publicly” acknowledged and announced that there is plenty of liquidity and accessibility to trading Sirius common stock so there is then no legal justification to split the stock.· If they attempt to do so they are only doing it in attempt for there fraudulent scheme to play out. Karmazin and Leon Black’s fraudulent scheme:
· Why he “Permitted” bond holders in August 2008 to short the 300 million shares we’ll this was in order to manipulate and push the stock below a 1.00, why you ask see below… ·
That way the possible delisting could occur.·
This would then provide an illegitimate excuse for Mel to reverse split the stock. ·
That way “new stock” could be issued with the upcoming Feb -09 debt due to the bond holders, which they could once again be permitted to short the reverse split adjusted stock.· Thereby driving the stock to pennies once again and with then only 70 Million plus shares the company could then be bought out for next to nothing compared to its value prior to the merger ·
Therefore common shareholders would then be wiped out. We’ll that was there plan and from what we learned today with the NASDAQ compliance dept that fraudulent scheme has just been seriously “de-railed”. · And don’t be fooled by Karmazins purchase of 2 million shares in the open market in August of 09’. That was planned long ago to suck in more investors. Believe me he stands to make hundreds of millions along with Leon Black if they were to bring the company private only to go public once gain years later under a newly formed company, new name and IPO…..·
Be advised that this plan has been in the works over the past several years with records we obtained from (IT personnel and inside sources) where emails were obtained along with wire tapped conversations between Karmazin and Leon Black.