AMC CEO Is In Touch With NYSE, FNRA About Stock Staying In 'Threshold List' For 'Failure-To-Deliver'

AMC Entertainment Holdings, Inc. AMC shares are currently trading at mid-single-digit level, a ways off from the highs of mid-August 2022.

The entertainment company's CEO, Adam Aron, took to Twitter Tuesday regarding the stock's inclusion in the “Threshold List” for over three weeks.

What Happened: AMC’s inclusion in the “Threshold List” reflected a number of "failure-to-deliver," or FTD, Aron tweeted.

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“Threshold Securities List” is made available by the exchange and it refers to equity securities that have an aggregate “fail to deliver position” for five consecutive settlement days, totaling 10,000 shares or more and equal to at least 0.5% of the total share outstanding, he explained.

FTD happens when one party in a trading contract doesn’t deliver on obligation or when a buyer doesn’t possess enough money to take delivery of the security and for settling the transaction. It could also mean a seller, the one who has a short position, does not have all or any of the underlying security required to be delivered at the time of the settlement.

The company has contracted both the NYSE, where AMC is listed, and the Financial Industry Regulatory Authority, which regulates member brokerage firms and exchange markets.

“Some of you may be pleased to learn that we have contacted both FINRA and the NYSE asking that they both look closely at the trading of our stock,” the executive said.

Why It’s Important: Regulation SHO, an SEC rule formulated in 2005 to regulate short selling, dictates that brokers/dealers should immediately purchase shares to close out threshold securities if the failures persist past 13 consecutive settlement days.

An FTD typically occurs in options trading or when resorting to naked short selling. Naked shorting is illegal and it refers to shorting shares that may be bigger than tradable shares in the market. It is often deemed as manipulation of the market.

Aron has reportedly been criticized for not taking steps to protect the interest of investors. In the past, Aron had denied knowledge of any naked shorting in AMC stock. "As to the existence of so-called fake or synthetic shares, or the naked short selling of AMC shares, we are unaware of any information validating these theories. Also, we are unable to make any comment on the considerable trading of puts/calls derivatives," he said in a July 2021 tweet.

In premarket trading on Wednesday, AMC shares were down 0.17% at $6, according to Benzinga Pro data.

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