Why Chinese Small-Cap IPOs Are Being Halted By Nasdaq

Nasdaq Inc NDAQ is cracking down on small Chinese companies' initial public offerings (IPOs) by halting their listings. In addition, it is slowing down the IPO approvals and demanding more information related to various parties in the deals. 

What Happened: Nasdaq has informed lawyers about new listings of small-cap companies, and further approvals are suspended as they are subject to additional reviews, the Wall Street Journal reports Saturday. 

Nasdaq is also asking underwriters about the names and account details of the end investors in listings. 

The recent movements by certain Chinese and Hong Kong-based companies have caught attention across markets. According to the report, more than 20 newly listed companies have risen over 100% on their first day of trading. 

Also Read: Nasdaq To Provide Institutional Investors With Custody Services For Bitcoin, Ethereum

More than 30 companies, most of which are from China, have filed for U.S. IPOs that would raise less than $40 million each.

Why It's Important: With escalating tensions between the U.S. and China over trade and technology, Nasdaq's step would make things more challenging for small Chinese IPOs. 

The Journal quoted Mitchell Nussbaum, the vice chair of Loeb & Loeb LLP, saying that his clients have been frustrated by the lack of progress on their IPOs in recent weeks. Some have pulled out of deals because of the uncertainty over when they would get approved.

Andrew Tucker, a partner at Nelson Mullins Riley & Scarborough LLP, reportedly said: "Nasdaq has asked a variety of questions regarding share allocations and lockup agreements in recent weeks."

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