Nasdaq Proposes New Discretionary Delisting Rule Tied to SEC Suspensions
Thursday, February 20, 2026, The Nasdaq Stock Market LLC (“Nasdaq”) filed a proposed rule change with the Securities and Exchange Commission (“SEC”) seeking approval to adopt new Listing Rule IM-5101-4, which would permit Nasdaq to delist a security following an SEC trading suspension under Exchange Act Section 12(k), where Nasdaq determines delisting is appropriate and in the public interest.
Under the proposal, Nasdaq would be authorized to delist a company even if it otherwise satisfies all applicable listing standards, where the SEC has suspended trading due to concerns about potentially manipulative activity, including trading driven by third-party social media promotion. Nasdaq states that the ability of unaffiliated third parties to manipulate a security’s price may indicate insufficient liquidity or market interest for continued listing.
A Commission trading suspension would be a prerequisite, but Nasdaq would apply the rule on a case-by-case basis, considering factors such as the issuer’s public float and trading patterns, jurisdiction and regulatory transparency, recent capital raises and resale dynamics, the adequacy of issuer disclosures, and the regulatory history of the company’s advisors.
Notably, Nasdaq could exercise this authority even where no connection between the issuer and the trading activity can be established, and even where the issuer has not engaged in misconduct. If Nasdaq determines to delist, it would issue a Staff Delisting Determination, subject to appeal under existing Nasdaq rules.
The SEC will now review the proposal, which may be approved, disapproved, or otherwise subject to further regulatory action before taking effect.