Firms worth less than US$5 million for 30 straight days face immediate suspension and delisting under the stricter standard
Published Thu, Jul 23, 2026 · 09:46 AM
[WASHINGTON] Nasdaq will change its rules to make it easier to kick off flailing businesses as regulators zero in on wild market swings and allegations of manipulation that have plagued trading in so-called microcap stocks.
A Nasdaq-listed company worth less than US$5 million for 30 straight days, based on the value of its listed securities, would face immediate suspension and delisting with limited opportunities to appeal under a plan the US Securities and Exchange Commission (SEC) approved on Wednesday (Jul 22).
The stricter standard is expected to sweep through the microcap and pennystock world, where watchdogs have issued warnings about fraud perpetuated through high-tech pump-and-dump stock schemes.
Cheap stocks with low market value have a greater chance of being manipulated or experiencing trading volatility because fraudsters need less capital to influence share prices, the SEC said in its order.
The rule, proposed by the exchange operator in January, has drawn support from Wall Street mainstays like Citadel Securities, Charles Schwab and the securities trade group Sifma.
But it has drawn fierce opposition from small companies, attorneys and advisers, many of whom argued the attempt to curb alleged bad behaviour would punish legitimate startups.
“This rule will severely impact small businesses, will impair capital formation, and will create perverse incentives for short-selling in smaller companies,” said Marc Indeglia, president of the Small Public Company Coalition, which represents investors in the small and microcap markets.
“It’s not consistent with the commission’s current mantra to ‘make IPOs great again’ and increase capital formation.”
Nearly 180 Nasdaq-listed companies currently have a market capitalisation of less than US$5 million. Market cap is roughly equivalent to the exchange’s threshold, according to Bloomberg data.
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About a third of these companies are based in Asia, the data shows.
Some were identified in an earlier Bloomberg analysis as showing patterns of being targeted for apparent pump-and-dump manipulation schemes on social media.
In approving the Nasdaq rule, the SEC estimated that hundreds of microcap companies over the years would have failed the new continuous listing standards.
In 2023, the SEC said, 140 companies listed on the exchange had a market value lower than US$5 million for 30 consecutive days.
“The imprimatur of listing on a particular exchange derives from investors’ expectations that the listed issuer meets certain standards set by the exchange and that a listing exchange will use its judgment regarding the level at which to set those standards,” the SEC said.
Regulatory scrutiny and tighter rules to go public have made microcap initial public offerings plunge in 2026 compared to a year earlier, Bloomberg reported in July. BLOOMBERG
