Nasdaq proposed a rule change on Friday that would give the exchange limited discretion to deny initial public offerings (IPOs) even when applicants meet all formal listing requirements, according to filings with the Securities and Exchange Commission (SEC).
The move aims to curb a growing number of suspected “pump-and-dump” schemes involving small, foreign-based companies—many with ties to China—that have gone public in the United States in recent years and inflicted heavy losses on U.S. investors.
“Pump-and-dump” schemes refer to situations where stock prices are artificially driven high before selling, leaving investors with steep losses.
Under the proposal, Nasdaq would be allowed to deny an IPO even if a company meets all formal listing requirements, provided the exchange identifies warning signs that the stock could be easily manipulated or subject to extreme volatility….