Investor's wiki

Stuckholder

Stuckholder

What Is a Stuckholder?

A stuckholder is somebody who can't sell a stock, especially one that is losing value in light of the fact that the U.S. Securities Exchange Commission (SEC) has suspended trading on that stock.

Figuring out Stuckholders

Stuckholder, a portmanteau of the words "stuck" and "stockholder," alludes to a briefly unfit investor to liquidate a position in a stock due to an action taken by the SEC.

The SEC can suspend trading on a stock for up to 10 business days when it accepts a suspension is to the greatest advantage of investors or the public. During that time, anybody holding that stock is a stuckholder. On the off chance that a company falls behind in its filings, posts off base data about its current financial condition or recent transactions, or endeavors to control the market, it might draw a suspension, which the SEC might issue all of a sudden.

Assuming that the stock being referred to trades on an exchange, trading resumes naturally upon the finish of the suspension. If, then again, it trades over the counter (OTC), a broker-dealer must guarantee that the company is consistent with filing rules before citing the stock.

A suspension is a black mark on a stock, and the price is practically 100% to drop once trading resumes and stuckholders are again free to sell off their positions.

The Difference Between a Halt or Delay and a Suspension

Securities exchanges have the power to briefly halt, in the trading day, or deferral, toward the beginning of the trading day, trading on a stock. Instead of suspensions, which can last fourteen days, halts and postponements generally last short of what 60 minutes.

There are both regulatory and non-regulatory reasons a securities exchange might halt or defer trading on a stock. The most common regulatory halt is a "news pending" halt, which happens when the exchange stops trading on a stock while the company educates investors regarding news that might change the stock's price.

The halt permits investors to determine the impact of the news before concluding whether they ought to buy in or liquidate their positions. An exchange might impose a regulatory halt while it determines whether the stock actually meets the exchange's criteria.

A few exchanges impose a non-regulatory halt on a stock when there is a great difference between the numbers of pending buy and sell orders on the stock.

Since halts and postponements don't be guaranteed to ponder inadequately the stock, and in this way don't be guaranteed to forecast a price drop, investors holding halted or delayed stock are not as expected stuckholders.

Features

  • A stuckholder is an investor incapable to sell a stock, especially one losing value in light of the fact that the U.S. Securities Exchange Commission (SEC) has suspended trading on that stock.
  • The SEC can suspend trading on a stock for up to 10 business days when it accepts a suspension is to the greatest advantage of investors or the public, and anybody holding that stock during that time is a stuckholder.
  • The term stuckholder is a portmanteau of the words "stuck" and "stockholder."