Posted inRegulation

Nasdaq halts China listings

US bourse operator looks into recent market swings for newly-listed Chinese companies.

Nasdaq has put the breaks on at least four small Chinese companies listing, Reuters reported, citing lawyers and bankers who were working on these IPOs, as the bourse operator investigates stock rallies of similar companies that recently listed.

Nasdaq began questioning the advisers on these IPO candidates last month regarding the identity of existing shareholders and whether they were offered interest-free loans in order to participate in the listing among other things, according to one banker cited by Reuters.

The action takes place after several small Chinese companies with market caps of $50m or less saw their share prices rise as much as 2,000% before crashing down later.

Nasdaq has rules in place already to try to prevent pump-and-dump schemes including that for small IPOs a company going public must have at least 300 investors holding at least 100 shares, totalling a minimum of $2,500.

The Securities and Exchange Commission has so far not prosecuted anyone for conducing pump-and-dump schemes regarding these recent IPOs of Chinese companies.

Nasdaq’s actions also take place against a backdrop of increasing tension regarding the listing of Chinese companies in the US, although fears of a mass delisting recently eased after the two superpowers reached a truce in August regarding US oversight of companies using auditors in Hong Kong and mainland China.

Part of the Bonhill Group.