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Question:
One
of the stocks I own stopped trading but now it's trading
again. Can you explain what happened?
A
BuyandHolder
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Answer:
Dear
BuyandHolder,
Without
knowing the specific name of the stock, I can only
give you a general answer. I recommend that you call
the company's Investor Relations division for additional
information. Or, go to the company's Web site and
check for recent news or announcements.
Anticipated
News...
It's
very likely your stock was involved in what is called
suspended trading. This is simply a temporary
stoppage of trading. Often, but not always, suspended
trading lasts for 30 minutes.
Suspended
trading usually takes place for a specific reason
-- very often in anticipation of a major news announcement.
News items that can lead to suspended trading include:
a merger announcement; a huge swing in earnings; an
important finding, discovery or development; indictments
against a company's officers.
In
the case of anticipated news, a listed company will
notify the exchange on which it trades and the exchange
officials in turn will determine if trading in the
security should be suspended temporarily.
Suspension
of trading gives the market time for an "orderly assimilation"
of the news and thus prevents an unhealthy imbalance
in buy and sell orders. In other words, this temporary
halt in trading provides the financial community time
to hear and take in the news.
Unanticipated
News...
Sometimes
major news stories, of course, break without advance
warning. In these instances, the exchange has no time
to act and instead, the specialist in the stock may
suspend trading until the stock's price is stabilized.
Tip:
For more information on the role of the specialist,
CLICK
HERE to read a previous column on the topic.
SEC
Suspensions...
In
addition to stock exchanges around the world suspending
trading when deemed necessary, the SEC can also suspend
trading -- often for longer periods of time. The Commission,
in fact, can suspend trading for up to ten days when
it believes doing so is in the public interest. It
makes such a move when it determines that public information
about a company is not accurate, adequate or current.
MORE INFO:
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