Sullivan
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Sullivan's Regulatory Compliance Group is a unique interdisciplinary practice advising primarily smaller public issuers, broker dealers, investment funds and institutional investors on the challenges facing the small-cap, micro-cap and mid-market segments of the market.

The practice focuses on regulatory compliance, white-collar criminal defense, government investigations, corporate internal investigations, and investigations and proceedings before administrative, legislative, and self-regulatory agencies. The Group works closely with the Firm’s Special Investigations & Compliance Group and its Capital Markets practice areas to assure regulatory compliance, the foundation on which our clients operate.

Sullivan's transactional attorneys are experienced in assisting clients in a wide range of matters including: the acquisition or sale of businesses; banking and secured lending transactions; workouts; capital markets; financial services; and international or cross-border transactions. Sullivan's Capital Markets practice represents underwriters and issuers in public and private offerings of equity, equity-linked securities, and debt. We have particular experience in private investment in private offerings, initial public offerings, self-underwritings, registered direct offerings, and offerings of convertible and other hybrid securities. Our capabilities include the ability to represent clients large and small domestically or on cross-border matters. We represent many of the leading small to medium-sized investment banks, while maintaining a focus on our extensive base of corporate clients. Our lawyers regularly participate in transactions involving a wide variety of industries, including technology, manufacturing, media, telecommunications, energy/natural gas, biotech, and retail, as well as several other specialized financings. Significantly, we have experience in identifying emerging practice areas within the Capital Markets industry segment and counseling clients in understanding and navigating unchartered territories as they seek to advance their business, financial, and operational objectives. Our capital markets attorneys and litigators are routinely paired to effect compliance in the first instance and evaluate the merit of litigation claims and investigations if it comes to that.

Our success is predicated on our experience in conducting thorough and reliable internal investigations, using the investigative record effectively to persuade the government/enforcement agencies to decline prosecution or enforcement action against our clients where possible, and discreetly resolving government investigations on favorable terms for our clients. When these results are not possible, we use our extensive litigation and trial experience to defend our clients in court or the relevant agency forum. Our practice preference is to begin from a proactive position: we prefer to schedule a compliance session(s) to review our client’s policies, practices, and procedures and to work with our clients to anticipate and avoid regulatory traps and surprises. Similarly, with respect to our transactional practice, our special situations attorneys utilize our extensive regulatory and enforcement knowledge and experience to guide our clients throughout the entire transaction or process.

Unlike other firms, our transactional attorneys routinely work with our enforcement attorneys to better understand the compliance dynamic, develop oversight standards, and receive needed input about the workings of the Justice Department, Securities and Exchange Commission, and federal banking regulators, among others.

  • With our enforcement and subject matter attorneys routinely work together to advise and represent clients in internal investigations, grand jury investigations and trials involving allegations of securities fraud, bank fraud, insider trading, market manipulation, and other related violations.
  • Our experience in white-collar crime, complex civil litigation and regulatory enforcement makes us particularly suited to defending multifaceted cases involving parallel criminal, civil and regulatory actions arising out of the same events.
  • We regularly advise on the development and maintenance of compliance programs.
  • Additionally, we have experience in conducting investigations for large as well as small companies (public as well as private) and their boards into allegations of workplace harassment, as well as advising a variety of public and private clients on human resources best practices, including the implementation of policies relating to harassment, whistleblowers, employee relations, termination and conflict resolution.

Our practice is staffed by senior lawyers in New York, who provide experience and credibility with the federal and state governmental authorities across the country and around the world. Consistent with the firm’s client-centered approach, the team routinely draws upon the experience of many other partners, including transactional lawyers and commercial litigators as well as subject-matter experts who enable our team to understand the nuances associated with transactions and structures that are the subject of governmental scrutiny.

Viewpoints
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SEC Approves NYSE and NYSE American $0.25 Minimum Trading Price as Continued Listing Requirement
On August 14, 2026, the Securities and Exchange Commission (SEC) approved proposed rule changes by the New York Stock Exchange LLC (NYSE) and NYSE American LLC (NYSE American) to adopt a new continued listing requirement imposing a minimum trading price of $0.25 per share. This approval follows the SEC’s recent approval of Nasdaq’s new $5 million Market Value of Listed Securities continued listing requirement and reflects a broader trend by the national securities exchanges to tighten continued listing standards for very low-priced and low-market-capitalization issuers.1 Effective July 1, 2027, the new rules are expected to have a particularly significant impact on micro-cap, small-cap and development-stage public companies. Beginning on that date, a NYSE or NYSE American listed security that closes below $0.25 per share on any trading day will be subject to immediate trading suspension and delisting. Overview of the New Requirement Under the approved rules, NYSE and NYSE American will be required to take immediate delisting action if a listed security closes below $0.25 per share on any trading day. This represents a significant change from the exchanges’ historical approach to low-price continued listing deficiencies. For NYSE issuers, the rule amends Section 802.01C of the NYSE Listed Company Manual. For NYSE American issuers, the rule amends Section 1003 of the NYSE American Company Guide. If a security closes below $0.25 per share: the applicable exchange will immediately suspend trading; the exchange will commence delisting proceedings; the issuer will not be eligible to submit a compliance plan or receive a cure period for that deficiency; and the issuer may appeal the delisting determination in accordance with the applicable exchange rules. This represents a significant departure from the traditional approach to many continued listing deficiencies, which often provide issuers with a period to regain compliance while remaining listed. SEC’s Rationale for Approval The SEC approved the rules on an accelerated basis after considering comments from market participants and the exchanges’ stated concerns regarding very low-priced securities. The exchanges argued that securities trading at extremely low prices may be more susceptible to volatility and market manipulation and may raise concerns regarding the maintenance of fair and orderly markets. The SEC agreed that the rules are reasonably designed to address investor protection and market integrity concerns. In its analysis, the SEC noted that securities falling below the $0.25 threshold historically showed a significant likelihood of continuing to trade below that level and, in many cases, were later delisted for other quantitative continued listing deficiencies. At the same time, the SEC acknowledged comments raising concerns that an automatic suspension and delisting trigger could affect issuers experiencing temporary market dislocation or short-term trading pressure. The SEC nevertheless concluded that the delayed effective date and the exchanges’ continuing appeal procedures supported approval. Practical Impact for Listed Companies The new minimum trading price requirement creates a material compliance consideration for NYSE and NYSE American issuers, particularly micro-cap, small-cap, development-stage and capital-intensive companies whose securities trade near or below $1.00 per share. Unlike NYSE’s existing $1.00 average closing price requirement and Nasdaq’s existing $1.00 minimum bid price requirement, both of which generally provide issuers with a period to regain compliance, the new NYSE and NYSE American $0.25 threshold provides no cure period before suspension and delisting proceedings are initiated. NYSE or NYSE American listed issuers should also consider the rule together with other exchange requirements and limitations, including rules relating to reverse stock splits, market capitalization, stockholders’ equity, market value of publicly held shares, public float and shareholder approval requirements. For many smaller issuers, addressing minimum trading price concerns may require advance planning and should not be left until the issuer is already approaching the $0.25 threshold. What Public Companies Should Do Now NYSE and NYSE American listed issuers whose securities trade at low prices should evaluate the potential impact of the new rule before the effective date. Companies should consider: monitoring closing trading prices on an ongoing basis, and reviewing exchange compliance holistically, including market capitalization, equity, and public float requirements; assessing whether the company may be at risk of approaching the $0.25 threshold; evaluating timing and corporate approvals for a potential reverse stock split; considering capital raising or strategic alternatives where appropriate; and developing contingency plans in the event the company’s trading price deteriorates, including considering the potential consequences of a trading suspension, delisting and a possible transition to the OTC market. The delayed effective date of July 1, 2027 is intended to provide affected issuers with time to take proactive steps, including by seeking shareholder approval for a reverse stock split where required. Once effective, however, the rule will not provide for a traditional compliance plan or cure period. * * * * * * * * If you would like further information regarding the new listing standards discussed in this Client Alert or related exchange compliance matters, please contact the lawyer at Sullivan & Worcester LLP with whom you regularly consult, or any of the lawyers listed above. This Client Alert is provided for general informational purposes only and does not constitute legal advice. 1 The SEC’s July 22, 2026 approval of Nasdaq’s $5 million Market Value of Listed Securities continued listing requirement is currently stayed pending further Commission review. For additional information, see Sullivan & Worcester LLP, SEC Stays Approval of Nasdaq’s $5 Million MVLS Continued Listing Requirement Pending Commission Review (August 3, 2026).
SEC Stays Approval of Nasdaq’s $5 Million MVLS Continued Listing Requirement Pending Commission Review
On July 29, 2026, the Securities and Exchange Commission (the "SEC") notified Nasdaq that it had received notices of intention to petition for review of the SEC's July 22, 2026 order approving Nasdaq's proposed rule change requiring listed companies to maintain a minimum Market Value of Listed Securities ("MVLS") of $5 million. Pursuant to Rule 431(e) of the SEC's Rules of Practice, the July 22, 2026 approval order has been stayed pending further review. As discussed in our July 23, 2026 client alert, the approved rule established a new continued listing standard applicable to companies listed on the Nasdaq Capital Market, Nasdaq Global Market and Nasdaq Global Select Market. Under the approved rule, issuers that failed to maintain an MVLS of at least $5 million for 30 consecutive business days would become subject to immediate delisting procedures without the benefit of a traditional cure period. The Effect of the Stay The SEC's July 29, 2026 letter does not reverse or vacate the July 22, 2026 approval of the rule. Rather, it temporarily suspends the effectiveness of that order. According to the SEC, the stay will remain in effect "until the Commission orders otherwise." As a result, the implementation of Nasdaq's new $5 million MVLS continued listing requirement is currently on hold. Until the SEC takes further action, market participants should monitor developments regarding the review process and any subsequent order. Practical Considerations for Nasdaq Issuers Despite the stay, Nasdaq-listed companies that may be affected by the proposed MVLS requirement should continue to evaluate their compliance position and consider the potential impact of the rule should it ultimately become effective. In particular, issuers that may be at risk of falling below the proposed $5 million MVLS requirement should closely monitor whether, if the stay is lifted, any period following the July 22, 2026 approval order will count toward the rule's 30 consecutive business day requirement. We will continue to monitor developments and provide updates as additional information becomes available. For More Information If you would like additional information regarding the SEC's stay of Nasdaq's proposed $5 million MVLS continued listing requirement, the ongoing review process, Nasdaq listing standards generally, or the implications of these developments for your company, please contact the Sullivan & Worcester lawyer with whom you regularly work or any of the attorneys listed below. David Danovitch, Partner (New York) | +1 (212) 660-3060 | ddanovitch@sullivanlaw.com Oded Har-Even, Partner (New York and Tel-Aviv) | +1 (212) 660-3063 | ohareven@sullivanlaw.com Howard Berkenblit, Partner (Boston) | +1 (617) 338-2979 | hberkenblit@sullivanlaw.com Angela Gomes, Partner (Boston) | +1 (617) 338-2957 | agomes@sullivanlaw.com Joseph Segilia, Partner (New York) | +1 (212) 660-3027 | jsegilia@sullivanlaw.com Ron Ben-Bassat, Partner (New York) | +1 (212) 660-5003 | rbenbassat@sullivanlaw.com Eric Victorson, Partner (New York) | +1 (212) 660-3092 | evictorson@sullivanlaw.com Brendan O'Brien, Partner (New York) | +1 (212) 660-3013 | bobrien@sullivanlaw.com Phillip Carnevale, Associate (New York) | +1 (212) 660-3002 | pcarnevale@sullivanlaw.com Elizabeth Johnson, Associate (New York) | +1 (212) 660-3006 | ejohnson@sullivanlaw.com This Client Alert is provided for general informational purposes only and does not constitute legal advice.
SEC Turns the Spotlight On Nasdaq Delisting Standards
David Danovitch was quoted in the article "SEC Turns the Spotlight on Nasdaq Delisting Standards," published by Law360 [sub. req'd] on May 1, 2026. The article discusses the U.S. Securities and Exchange Commission’s decision to delay implementation of proposed Nasdaq delisting standards to allow for additional public comment, following concerns that the changes could expose smaller companies to market abuse and limit their ability to appeal delisting decisions. “It’s not the norm,” David says, referring to the SEC’s decision to pause its review. “And I think it reflects the fact that the comments, particularly the comments in opposition or expressing concern about the proposal’s implementation, gave the SEC quite a lot to think about,” he adds.
Atkins Calls for Leaner Corporate Risk Disclosures, Says Filings Have Become Litigation Shields
Howard Berkenblit was quoted in the article "Atkins Calls for Leaner Corporate Risk Disclosures, Says Filings Have Become Litigation Shields" published by Law.com [sub. req'd] on February 19, 2026. The article discusses U.S. Securities and Exchange Commission Chair Paul Atkins’ call for more streamlined corporate risk disclosures and a potential safe harbor for certain nondisclosures. In the article, Howard noted that risk disclosures often serve as “cheap insurance” against litigation but emphasized that "[i]t's a balance—not only about warning investors about the material risk, but making sure that it’s a complete disclosure as well." "It's well and good for the SEC to say this is safe harbor but, if companies are still going to get sued by plaintiffs' lawyers or class actions, it's going to take a while for companies to get comfortable until it's tested and shown to work," said Howard.

Regulatory Compliance

Regulatory Compliance