Delistings & going private

Delisting and going private corporate events can happen for a number of reasons. Generally, a delisting will occur when the security no longer meets exchange reporting requirements, or the exchange itself decides it no longer will facilitate trading in the security. On the other hand, a company that decides to go private may do so to reduce regulatory and reporting requirements that can help free time and money to support longer-term goals.

The difference between these two events is shareholder compensation. In the event a company delists to an OTC exchange, the shareholder is not entitled to any financial compensation from the company. The customer is still viewed as a shareholder, and will be subject to market price fluctuations. In the event of a company going private, the shareholder will be entitled to a per share dollar amount decided by the company.

Standard procedure—Delistings

When a security is delisted from an exchange the following actions are taken:

1. Partner is notified by DriveWealth’s Listing Committee along with all relevant information
2. The security is moved from open to inactive, meaning that no new orders can be placed

While DriveWealth can accept orders for OTC Instruments via API, not all OTC Instruments are eligible for trading on the platform, or, in other cases, a partner may not be authorized to trade OTC Instruments. In these cases, to close out a customer’s OTC positions: a partner can manually send the following details to [email protected]:

• Customer Account Number
• Symbol
• Number of Shares

Once DriveWealth is in possession of this data, positions will be closed during the following time schedules:

• Opening: All orders must be received by 8:15 AM EST for market opening
• Midday: All orders must be received 1:00 PM EST- orders will be entered at 2:30 PM

Standard procedure—Going private

In the event a company goes private, DriveWealth will take 2 actions to reflect the corporate event:

1. Once in receipt of the funds from the issuer, DriveWealth will create a transaction in the customer account to exchange stock for cash.
2. Next, there will be a position adjustment to remove the existing position
3. Finally, the symbol will be listed as inactive once all actions have been processed.