# SECURITIES AND EXCHANGE COMMISSION

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URL: https://www.frixlaw.com/law-library/documents/agency%3Asec%3Adbccd1870bbc023a

## Record

- **Collection:** Agency decision
- **Document type:** Agency decision

## Text

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
SECURITIES EXCHANGE ACT OF 1934
Release No. 106159 / August 19, 2026
Admin. Proc. File No. 3-22553
In the Matter of the Application of
SHINECO, INC.
For Review of Action Taken by
THE NASDAQ STOCK MARKET LLC
OPINION OF THE COMMISSION
REGISTERED SECURITIES EXCHANGE – REVIEW OF DELISTING
Applicant challenged The Nasdaq Stock Market LLC’s action suspending trading in, and
then delisting, the applicant’s stock. Held, application for review is dismissed.
APPEARANCES:
Jacob S. Frenkel, Gregory L. Ewing, and Brian S. Yu of Dickinson Wright PLLC for
Shineco, Inc.
Amir C. Tayrani, David Salant, and Alex Gesch of Gibson, Dunn & Crutcher LLP for
The Nasdaq Stock Market LLC.
Appeal filed:
Last brief received:

October 17, 2025
January 14, 2026

2
Shineco, Inc., seeks review of The Nasdaq Stock Market LLC’s action suspending
trading in, and then delisting, Shineco’s common stock. Because the record supports Nasdaq’s
determination, we sustain Nasdaq’s action and dismiss Shineco’s application for review.
I.

Background

Nasdaq’s Rule 5101 grants Nasdaq discretionary authority to suspend or delist securities
when an “event, condition, or circumstance” makes continued listing “inadvisable or
unwarranted”—even when a company’s securities otherwise meet all enumerated listing
criteria. 1 Nasdaq exercised that authority here based on Shineco’s repeated violations of
Nasdaq’s listing requirements and a finding that the company’s compliance history and financial
condition made sustained future compliance unlikely despite Shineco’s claims of a business
turnaround.
Shineco’s compliance problems began in September 2022, when Nasdaq first notified the
company that it had violated Nasdaq’s “Bid Price Rule” because the company’s securities had
closed below $1 per share for 30 consecutive business days. 2 Over the next three years, Nasdaq
issued five such notices to Shineco. After each of the first four, Shineco regained compliance
within the 180-day cure periods that Nasdaq’s rules generally provide, including twice by
conducting reverse stock splits—a 1:10 split in February 2024 and a 1:24 split in
November 2024. 3
When Shineco violated the Bid Price Rule for a fifth time in June 2025, Nasdaq staff
informed the company that it was ineligible for the standard 180-day cure period. Under the
“Excessive Split Rule”—adopted in January 2025—a company that has conducted a reverse
stock split within the prior year is not entitled to that cure period, and the Nasdaq staff must
initiate the process for delisting the security at issue. 4 Nasdaq staff therefore notified Shineco
that its securities would be suspended and delisted.

1

Nasdaq Rule 5101.

2

See Nasdaq Rules 5550(a)(2) (requiring companies listed on the Nasdaq Capital Market
to maintain a minimum bid price of $1.00 per share), 5810(c)(3)(A) (providing that a failure to
meet the minimum bid price requirement exists if the deficiency continues for 30 consecutive
business days).
3

See Nasdaq Rule 5810(c)(3)(A) (providing issuers a 180-calendar-day grace period in
which to come back within compliance). If an issuer listed on the Nasdaq Capital Market does
not regain compliance within the initial 180-day compliance period, the rules provide the issuer
an additional 180-day cure period if certain criteria are met. Nasdaq Rule 5810(c)(3)(A)(ii).
Nasdaq applied this rule by affording Shineco an additional 180-day grace period after it failed
to regain compliance within the initial cure period.
4

Nasdaq Rule 5810(c)(3)(A)(iv) (providing that companies that effected a reverse stock
split in the past year are ineligible for the standard 180-day cure period and Nasdaq staff shall
issue a Staff Delisting Determination under Rule 5810 with respect to that security).

3
Shineco appealed the staff’s decision to a Nasdaq Hearings Panel. 5 In its written
submission, Shineco admitted that the Excessive Split Rule rendered it “not eligible” for an
automatic 180-day cure period but requested that the panel afford discretionary relief by granting
the company “a short exception within which to demonstrate compliance with” Nasdaq’s listing
criteria. 6
After holding a hearing, the panel denied Shineco’s request. The panel did not
specifically invoke the Excessive Split Rule in its decision. Rather, it addressed the relief that
Shineco requested: whether to exercise discretion to grant the company additional time to cure its
deficiency. In denying Shineco’s request, the panel found “no reason to believe” that allowing
the company time to conduct another reverse stock split would enable long-term compliance
with Nasdaq’s listing standards—noting that Shineco’s latest deficiency was its fifth in three
years and that two previous stock splits had achieved only temporary compliance. The panel
recognized that Shineco had begun executing a transformation plan, but found “no proof” that
the new operations would allow Shineco to continue as a “functioning operating company.” The
panel therefore concluded that Shineco’s “dramatic pivot in business model” did not “inspire
confidence” and did not “justify yet another exception.”
Shineco requested that Nasdaq’s Listing and Hearing Review Council call the Hearings
Panel’s decision for review, and the council did so. 7 Although Shineco had previously admitted
that the Excessive Split Rule rendered the company ineligible for the automatic 180-day cure
period, the company reversed course before the council and argued that applying the rule was
impermissibly retroactive—contending that a rule adopted in January 2025 could not properly be
applied to take into consideration a reverse stock split that occurred in November 2024, before
the rule’s adoption. Shineco also argued that the Hearings Panel had failed to adequately
consider the company’s transformation plan.
On October 1, 2025, after full briefing from the parties, the council affirmed the Hearings
Panel’s decision. The council began by finding that the Hearings Panel “had ample authority to
act based solely upon the Company’s latest Bid Price Rule violation”—without applying the
Excessive Split Rule. As the council explained, the Excessive Split Rule’s “only practical
effect” was to eliminate an automatic 180-day cure period, leaving the question of whether the
company should have more time in which to cure in the Hearings Panel’s discretion. Shineco
understood this, asking the panel only to afford the company “a short exception” to regain
compliance. The council found that, given Shineco’s repeated noncompliance with the Bid Price
Rule, the Hearings Panel reasonably exercised its discretion not to grant Shineco’s request.

5

The suspension and delisting were stayed pending the panel’s review. See Nasdaq Rule
5815(a)(1)(B) (providing that, if an issuer timely appeals a delisting determination to a Nasdaq
hearings panel, the suspension and delisting will ordinarily be stayed pending the panel’s
review).
6

See Nasdaq Rule 5815(c)(1)(A) (providing that a hearings panel may, in its discretion,
provide the issuer up to 180 days to cure its deficiency).
7

In ordering review, the council stayed the suspension pending that review.

4
The Listing Council then found that, even if the Excessive Split Rule did not apply—and
Shineco was potentially eligible for an additional 180-day cure period—delisting was
nonetheless warranted. The panel had discretion under Rule 5101 to immediately suspend
trading and proceed with delisting notwithstanding any automatic cure period. As discussed
above, Rule 5101 authorizes Nasdaq to suspend or delist securities when an “event, condition, or
circumstance” makes continued listing “inadvisable or unwarranted,” even when a company’s
securities otherwise “meet all enumerated criteria for” continued listing, such as being eligible
for additional time to cure a deficiency.
The council found that standard satisfied here. According to the council, Shineco’s
“repeated cycles” of Bid Price Rule violations and multiple reverse stock splits that did “not
result in sustained compliance” raised significant concerns. The Listing Council recognized that
Shineco’s claims about its transformation plan “may prove to be true,” but expressed caution
given Shineco’s history of violations and the council’s finding—which Shineco does not
dispute—that the company had “misrepresented its quarterly financial position to hide continued
losses, even after it had begun executing its transformation plan.” Shineco cited its revenue
figures for two previous quarters—during which, it claims, it had begun a successful
turnaround—without noting that its reports filed with the Commission for those quarters showed
net losses from continuing operations of over $2 million, and its most recent quarterly report
reflected a net loss from continuing operations of approximately $4 million.
Nasdaq suspended trading in Shineco’s securities on October 7, 2025, and Shineco’s
securities were delisted from Nasdaq on December 1, 2025. Shineco subsequently filed this
appeal challenging the Listing Council’s decision and sought an interim stay of Nasdaq’s actions
while the Commission reviewed Shineco’s appeal. The Commission denied Shineco’s stay
request because, among other things, the company failed to show a likelihood of success or raise
a serious legal question on the merits. 8 We now turn to the merits of Shineco’s appeal.
II.

Analysis

We review Nasdaq’s action under Exchange Act Section 19(f), which requires us to
conduct an independent review of the record to determine whether (1) the specific grounds on
which Nasdaq based an action prohibiting or limiting access to its services exist in fact; (2) the
action was in accordance with Nasdaq’s rules; and (3) Nasdaq’s rules are, and were applied in a
manner, consistent with the Exchange Act’s purposes. 9
In conducting that review, we conclude that Rule 5101 provides an appropriate basis for
Nasdaq’s delisting determination. Shineco argues that the Excessive Split Rule was improperly
applied to it retroactively. But we need not address that argument because, even if that rule did
8
9

Shineco, Inc., Exchange Act Release No. 104272, 2025 WL 3303830 (Nov. 26, 2025).

15 U.S.C. § 78s(f); see also SmartHeat Inc., Exchange Act Release No. 73555, 2014 WL
5768703, at *10 (Nov. 6, 2014) (applying Section 19(f) when reviewing Nasdaq delisting
decision). Section 19(f) also requires us to set aside Nasdaq’s action if we find that the action
imposes an undue burden on competition. Id. Shineco does not argue, and we do not find, that
Nasdaq’s action imposes such a burden here.

5
not apply to Shineco, the record supports Nasdaq’s exercise of its Rule 5101 authority. And
Shineco does not challenge Rule 5101 as a basis for Nasdaq’s decision or contend that Nasdaq
misapplied the rule’s standards. Shineco’s arguments about Nasdaq’s discretion instead go to
process: that the Hearings Panel reached its decision too quickly and inadequately considered its
transformation plan. We address and reject those arguments below.
A.

The specific grounds exist in fact, and Nasdaq’s action was in accordance with its
rules.

The record establishes the facts on which Nasdaq based its decision. And Shineco does
not dispute them. Those facts in turn amply establish that Nasdaq’s action accorded with
Rule 5101. That rule authorizes Nasdaq to act when an “event, condition, or circumstance”
makes continued listing “inadvisable or unwarranted”—even when a company otherwise meets
all enumerated criteria. That was the case here.
Shineco violated the Bid Price Rule five times between September 2022 and June 2025,
including two instances—in February and November 2024—in which Shineco conducted reverse
stock splits to cure its deficiencies, only for its securities to fall below $1 per share again within
months. These circumstances established a pattern of Shineco’s, repeatedly and over an
extended period, not sustaining compliance with a fundamental listing standard. That
compliance history was also combined with a transformation plan that, at the time of the
delisting decision, was undermined by the company’s own conduct, as the Listing Council
found—and Shineco does not dispute—that the company misrepresented its quarterly financial
position to hide continued losses, with its own quarterly reports showing net losses from
continuing operations of over $2 million, and its most recent quarterly report reflecting a net loss
of approximately $4 million from continuing operations. 10 Taken together, these
“circumstances” established that continued listing was “inadvisable” and “unwarranted”—not
because any single factor was dispositive, but because the overall pattern demonstrated that it
was highly unlikely that Shineco could maintain compliance with listing standards.
We reject Shineco’s suggestion that its prior compliance—curing its first four Bid Price
Rule deficiencies within the applicable periods—entitled it to another opportunity. Those cures
did not demonstrate a company capable of maintaining compliance. Each reverse stock split
produced only temporary relief before the bid price fell below $1 again. That pattern is itself
part of the circumstance that made continued listing inadvisable. Rule 5101 does not require
prior failure to cure before Nasdaq may act. It requires examining whether the overall events,
conditions, or circumstances made continued listing inadvisable—and here, Shineco’s pattern of
repeated violations and temporary cures plainly met that standard.
Because Rule 5101 independently supports Nasdaq’s delisting determination, we need
not (and do not) reach Shineco’s arguments about the Excessive Split Rule, including whether
10

See Shineco’s Form 10-Q for the period ended March 31, 2025, available at
https://www.sec.gov/edgar/browse/?CIK=1300734 (Shineco’s public EDGAR page) (last visited
August 14, 2026); Rule of Practice 323, 17 C.F.R. § 201.323 (authorizing the Commission to
take official notice of any matter in its “public official records”).

6
Nasdaq applied it retroactively or whether Shineco forfeited that argument by not raising it
before the Hearings Panel.
B.

Nasdaq’s rules are, and were applied in a manner, consistent with the Exchange
Act’s purposes.

Nasdaq Rule 5101 is, and was applied in a manner, consistent with the Exchange Act’s
purposes. Exchange Act Section 12(d) provides that a security registered with a national
securities exchange “may be withdrawn or stricken from listing . . . in accordance with the rules
of the exchange.” 11 Section 6(b)(5) requires that national securities exchanges design their rules
to “perfect the mechanism of a free and open market . . . and . . . to protect investors and the
public interest.” 12 Nasdaq Rule 5101’s grant of discretionary authority for Nasdaq to suspend or
delist securities to maintain “public confidence in its market” and “protect investors and the
public interest” is consistent with these purposes. 13
Nasdaq also applied Rule 5101 in a manner consistent with the Exchange Act’s
purposes. The Commission has emphasized the importance of Nasdaq’s listing standards “given
investor expectations regarding the nature of securities that have achieved an exchange listing,
and the role of an exchange in overseeing its market and assuring compliance.” 14 By relying on
Rule 5101 to deny Shineco another cure period before suspending and delisting the company’s
securities, Nasdaq acted to preserve the integrity of Nasdaq’s listing standards given the
company’s financial condition and repeated inability to comply with listing requirements. This
action protected investors who rely on those standards when making investment decisions.
Shineco acknowledges Nasdaq’s “broad discretion” to suspend or delist an issuer’s
securities, but asserts that Nasdaq deprived Shineco of due process here by the Hearings Panel
issuing its decision less than a day after the hearing and Nasdaq giving “short shrift” to the
company’s compliance plan. For this case, we will assume but not decide that the constitutional
due process standard applies to self-regulatory organizations like Nasdaq. The constitutional
requirement is satisfied when two core elements are present: notice of the grounds for the action

11

15 U.S.C. § 78l(d).

12

Id. § 78f(b)(5).

13

See SmartHeat, 2014 WL 5768703, at *10 (finding that Rule 5101 is consistent with the
Exchange Act’s purposes).
14

E.g., Notice Of Filing Of Amend. No. 1 And Order Granting Accelerated Approval Of A
Proposed Rule Change, As Modified By Amend. No. 1, To Modify Certain Initial Listing
Liquidity Requirements, 90 Fed. Reg. 12608, 12609 & n.24 (Mar. 18, 2025); see also Tassaway,
Inc., Exchange Act Release No. 11291, 1975 WL 161326, at *2 (Mar. 13, 1975) (“[P]rospective
future investors . . . [are] entitled to assume that the securities in the system meet the system’s
standards. Hence the presence in NASDAQ of non-complying securities could have a serious
deceptive effect.”).

7
and a meaningful opportunity to be heard. 15 That standard was satisfied here. Shineco had
notice and opportunity to be heard, and both the Hearings Panel and the Listing Council engaged
in reasoned decision making—issuing written decisions that addressed Shineco’s compliance
history, its transformation plan, and each of its legal arguments. 16 The speed of Nasdaq’s
decision does not change this conclusion. The panel had Shineco’s written submissions for
weeks before the hearing and received Shineco’s presentation deck in advance of the hearing
itself. A prompt decision after a hearing at which the company had a full opportunity to be heard
is consistent with an efficient and fair proceeding.
Shineco further argues that Nasdaq violated New York law by breaching contractual
duties under the parties’ listing agreement. That claim falls outside the scope of this proceeding.
Exchange Act Section 19(f) limits our review to whether Nasdaq’s action was consistent with its
rules and the Exchange Act. 17 Questions of state law, including breach of contract and implied
covenant claims, must be pursued in the appropriate judicial forum. 18
Finally, Shineco’s suggestion that Nasdaq held it to a different standard than “non-Asia
based companies” is not supported by the record. Shineco identifies no similarly situated
company that received more favorable treatment, and the record contains no basis for concluding

15

See Mathews v. Eldridge, 424 U.S. 319, 333 (1976) (“The fundamental requirement of
due process is the opportunity to be heard ‘at a meaningful time and in a meaningful manner.”’
(quoting Armstrong v. Manzo, 380 U.S. 545, 552 (1965))); Kendall v. Baicerzak, 650 F.3d 515,
528-29 (4th Cir. 2011) (“Procedural due process provides merely a guarantee of fair
procedures—typically notice and an opportunity to be heard.” (cleaned up)).
16

See 15 U.S.C. § 78f(d)(2) (providing that in determining whether to prohibit or limit a
person’s access to services, an exchange must “notify such person of, and give him an
opportunity to be heard upon, the specific grounds for [the] prohibition or limitation,” and an
exchange’s determination to prohibit or limit a person’s access to services “shall be supported by
a statement setting forth the specific grounds on which the . . . prohibition or limitation is
based”).
17

See generally id. § 78s(f) (providing no mechanism for reviewing a claim that SRO
action breached a member agreement or implied covenant); cf. JJFN Servs., Inc., Exchange Act
Release No. 39343, 1997 WL 722029, at *4 (Nov. 21, 1997) (“[O]ur authority to order the
NASD to include an issuer’s securities is governed by Exchange Act Section 19(f), not by a
theory of promissory estoppel or quasi-contract.”).
18

See Blackbook Cap., Inc., Exchange Act Release No. 97027, 2023 WL 2351451, at *4
(Mar. 2, 2023) (explaining that state law claims such as whether FINRA libeled an applicant or
breached an implied contract are “outside the scope of a Commission proceeding” (cleaned up));
Keith Patrick Sequeira, Exchange Act Release No. 85231, 2019 WL 995508, at *8 (Mar. 1,
2019) (declining to consider defamation allegations as “outside the scope of this proceeding”),
aff’d, 816 F. App’x 703 (3d Cir. 2020); Beatrice J. Feins, Exchange Act Release No. 33374,
1993 WL 538913, at *3 n.14 (Dec. 23, 1993) (explaining that “redress, if any, under [state]
statutes must be pursued in other forums”).

8
that Nasdaq’s decision was motivated by anything other than Shineco’s documented history of
non-compliance.
issue.

19

Accordingly, we dismiss Shineco’s application for review. An appropriate order will
By the Commission (Chairman ATKINS and Commissioners PEIRCE and UYEDA).

Vanessa A. Countryman
Secretary

19

We deny Shineco’s request for oral argument, because our decisional process would not
be significantly aided by oral argument. See Rule of Practice 451(a), 17 C.F.R. § 201.451(a).
We have considered all of the parties’ contentions. We have rejected or sustained them to the
extent that they are inconsistent or in accord with the views expressed in this opinion.

UNITED STATES OF AMERICA
before the
SECURITIES AND EXCHANGE COMMISSION
SECURITIES EXCHANGE ACT OF 1934
Release No. 106159 / August 19, 2026
Admin. Proc. File No. 3-22553
In the Matter of the Application of
SHINECO, INC.
For Review of Action Taken by
THE NASDAQ STOCK MARKET LLC

ORDER DISMISSING APPLICATION FOR REVIEW OF ACTION TAKEN BY
REGISTERED SECURITIES EXCHANGE
On the basis of the Commission’s opinion issued this day, it is
ORDERED that the application for review filed by Shineco, Inc., is dismissed.
By the Commission.

Vanessa A. Countryman
Secretary

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/agency%3Asec%3Adbccd1870bbc023a. Public record. Not legal advice.