Suspended Trading

Next up, this snazzy pair of lavender suspenders. We’ll start the bidding at $15. $15 in the back, can I get $20? $20 for the woman in the pink jacket...$25, do I hear $25?

Ok ok...so that's suspendered trading. What's suspended trading?

Trading in a security is...stopped. Suspended. As if in mid-air. Like, uh...those Chinese acrobats. Why was trading suspended? Could be one of many reasons. The company didn’t provide proper financial documentation in their quarterly report, so the auditors didn’t sign off. Yeah. Not normally bullish for a stock. Or a company is found guilty of fraud. Or the CEO was caught on tape holding squirrel-fighting matches in his basement.

The 1934 Act gave the SEC the right to suspend trading for 10 days, pretty much any time they reasonably thought it necessary to protect Irving Q. Investor…and when this happens, it's oh so not good. The suspension itself stops trading in the stock, usually causing at least gentle panic among the myriad Nervous Nelly penguins out there, just dying to sell their stock. But they can’t, because trading is suspended, and they get incrementally more nervous.

Generally, a standard form suspension lasts for 10 days. Then it’s done. The thought being that, if a company takes longer than 10 days to get its compliance act in order, then seriously worse things are involved, and other agencies will probably get involved. Think: FBI. The default 10-day lapse may happen and then the security is un-suspended, presumably with the company going on and on and on endlessly about what happened and why and how, knowing that a bunch of ambulance-chasing lawyers from New York will sue them for not having filed properly the form from the division in Somalia. And now the company, according to the lawyers, owes shareholders $18 billion.

Hopefully for the company, they're payable in Somalian dollars. Or the shareholders are willing to work out some kind of, uh…suspender trade.