THQ, the Agoura Hills-based videogame maker, and J2 Global, the L.A.-based fax/voicemail developer, announced today that they have received notices from Nasdaq about being subject to a possible delisting. Both are trying to sort out their stock option grants and as a result have had to delay filing their earnings reports. This does not mean they're being kicked out of the Nasdaq exchange - just that the companies are not in compliance and must go through some sort of hearing and appeal process. In the meantime, the stocks will still be traded.
In a worst-case scenario, a company that's actually delisted would have to trade its stock on the less desirable Over-the-Counter Bulletin Board or the even less-desirable Pink Sheets. There is next to no regulation in these trading venues, which means most big-name investors will bail. But such a drastic action rarely happens and it's very, very unlikely to happen to THQ or J2 - especially since so many other companies are faced with the same stock option problems. Of course, let's not forget the rash of shareholder lawsuits that have been filed against these companies. On Monday, a suit was filed against some of THQ’s executives and board directors because of the stock option grants.