Rule 4310(c)(14): The issuer shall file with NASDAQ all reports and other documents required to be filed with the Securities and Exchange Commission ("SEC"). Annual reports filed must contain audited financial statements.
Issue: After the company disclosed that it would delay filing its Form 10-K as a result of its audit committee’s investigation into accounting improprieties, the Panel delisted the company’s securities based on a filing deficiency. The
company subsequently filed its Forms10-K and 10-Q, which were deficient for a period of approximately 4 and 2 ½ months, respectively, as a result of accounting restatements related to revenue recognition adjustments.
Determination: The Panel’s decision was reversed because the company made the required filings and received an unqualified independent auditors’ opinion. However, there was insufficient record evidence to determine whether public interest
concerns existed, particularly given the extent of the restatements, an investigation being conducted by the SEC, and the result of an internal investigation, which concluded that the company had engaged in fraudulent accounting. Therefore, the matter was
remanded to the Panel with instructions to further remand to Staff for an investigation. Thereafter, the Panel was required to issue a decision making a determination as to whether public interest concerns existed. If the Panel determined that no public interest
concerns existed and there were no other deficiencies, the Panel was instructed to promptly relist the company’s securities.
* * *
Rule 4350(d)(2): An issuer must have an audit committee of at least three members, comprised solely of independent directors.
Issue: Two members of the audit committee served as interim presidents for approximately 45 days.
Determination: There was insufficient record evidence to determine whether the audit committee members were independent; therefore, the matter was remanded to the Panel. The company must provide the Panel with information as to whether
such members received compensation as defined in the Rule 10A-3(b)(1)(ii)(A) of the Securities Exchange Act of 1934 and whether such members otherwise comply with NASDAQ Marketplace Listing Rule 4350(d)(2). If the audit committee members do not meet the criteria
pursuant to the aforementioned rules, the company must submit a plan to the Panel to rectify the audit committee deficiency. If the Panel determines that the company’s only deficiency is the audit committee requirement, the Panel must provide the company an
opportunity to cure the deficiency.