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December 18, 1998
Help! My Stock Was Delisted
QUESTION: I recently purchased shares of a Nasdaq stock. But after the purchase it was delisted, and I've taken a heavy loss. What other stocks have been delisted? How does one protect oneself from this situation?
-- Ellen Stahli
ANSWER: During the first 10 months of 1998, 475 stocks were delisted from Nasdaq for regulatory noncompliance. That's an increase of 64% over 1997. (The full list of delisted stocks is available on the Nasdaq Web site.) You're not the only one who will see some old friends on the list. Remember Boston Chicken (BOSTQ)?
The big increase in delistings this year is due in large part to Nasdaq's new, stricter listing requirements, which include a bid price greater than $1, net assets of $4 million or more and at least 400 shareholders. More information on these requirements is available on the Nasdaq Web site.
Of course, being delisted does not necessarily mean that you can't sell your stock any longer. If a broker is still making a market in your stock, it has probably moved to the over-the-counter (OTC) market, meaning the National Association of Securities Dealers bulletin board or the "pink sheets" produced by the National Quotation Bureau. Currently there are about 3,000 stocks listed on the pink sheets, 4,000 on the bulletin board and 2,500 on both, says Cromwell Coulson, chairman of the National Quotation Bureau. Finding information on OTC stocks shouldn't be all that hard. Many online quoting services (like Yahoo!) cover this type of stock.
But what if there's no market maker? Quite frankly, you're probably out of luck. Stocks without market makers pretty much disappear. That is, unless your broker can find a buyer for your shares.
Our advice? If the stock is still listed on the OTC market, you can sell your shares and take the tax loss. (You can offset your capital gains and write off up to $3,000 in regular income.) Stock prices listed in the bulletin board are updated in real time, but since prices on the pink sheets are not, your broker is legally required to check with at least three different brokers to make sure that you're getting the best price, says Mike Shokouhi, a Nasdaq spokesman.
If your stock is no longer traded, you can most likely take that as a loss as well. Talk to your accountant about how to deduct your loss on worthless securities.
smartmoney.com
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