NASD Toughens Standards for Nasdaq

The National Assn. of Securities Dealers Inc. toughened the financial listing standards for stocks that trade on the Nasdaq national and small-capitalization markets. The new standards require final approval of the Securities and Exchange Commission before they go into effect. If approved, they could mean removal of 400 Nasdaq companies from the small-cap market and 175 from Nasdaq’s national market, the NASD said. The increased listing standards come after several high-profile investigations of small-cap companies in 1996, such as the rapid rise and fall of a California technology company, Comparator Systems Corp. The SEC last year charged that Comparator issued false and misleading financial statements for its 1994 and 1995 fiscal years, as well as its first three quarters of 1996. The proposal also says that a company with a stock trading at less than $1 for more than 30 days could be delisted after an additional 90-day period if the price doesn’t bounce back above $1. The proposal would require small-cap companies to have the same corporate governance requirements as the national market stocks. Separately, the NASD named Frank Zarb, former chairman of New York insurance firm Alexander & Alexander Services Inc., its chief executive and president, effective Feb. 24.