RL Commercial REIT [RCR 5.21 ?0.2%; 46% avgVol] [link] was halted for one hour, from 9:30 a.m. to 10:30 a.m,, as per Section 5 of the Additional Listing Rule. Section 5 of this rule calls for the halting of a stock when any transaction results in a listed company (in this case, RCR) issuing new voting shares to any party (in this case, Robinsons Land [RLC 15.50 ?1.5%; 16% avgVol]), amounting to at least 10% (but not more than 35%) of its total issued and outstanding stock. In this case, RCR will issue 4.987 billion shares to RLC, which will amount to approximately 31.7% of RCR’s issued and outstanding shares when the transaction is given effectivity upon the approval of the SEC.
MB BOTTOM-LINE: Maybe this is only interesting to lawyers and rules geeks (like me), but I had a few readers write in to ask why this was halted yesterday when other share-swap transactions weren’t, and this is the reason. But what about if the transaction were only a few billion larger? What would have happened if the number of shares to be issued caused the swap shares to amount to more than 35% of RCR’s post-transaction outstanding shares? I know that rule sounds ominous, but the result is just not as thrilling: according to Section V, Part A, Section 5, a one-day trading halt (instead of a one-hour trading halt) is appropriate. Ok, but then why is the halt implemented after the board’s approval of the transaction, but not when the transaction becomes effective after the SEC’s approval? Isn’t it too early? No, because the purpose of the rule is to allow investors to absorb and react to the news, not to the technical effect of the news. The point is to avoid that spicy hour of delicious chaos as traders wake up and login to discover that something massive has happened to the shares. “The storm provides” (yes, that’s a The Good Dinosaur quote), but regulators don’t want those with better access to timely information to have too much of an edge. I mean, of course, they still have an edge, but not too much of an edge, you know? Well, now you know!