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What happens to Lehman shares now

By David K Randall, Forbes
September 16, 2008 11:38 IST
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Once mighty, Lehman Brothers shares now trade at less than a quarter. As the company shreds jobs and gets closer to reaching a stock price of zero, many are asking what's next for the stock that was once a bedrock of many 401(k)s.

For starters, Lehman's days on the New York Stock Exchange are numbered. It's already been moved from the Big Board to the NYSE Arca because it dropped below a dollar, according to NYSE officials. It will officially be below the exchange's compliance standards once the price remains below $1 for 30 consecutive days. Then the exchange will move to delist it for being out of compliance with its minimum standards.

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"There's no magic number or particular timing," for how long that will take for the exchange to remove the stock, said Rich Adamonis, a spokesman for the New York Stock Exchange.

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Once delisted, Lehman Brothers will immediately start trading on the electronic OTC markets, commonly known as the Pink Sheets. It will receive a new ticker, which will be issued by NASDAQ. Brokerage firms that bought Lehman stock from the NYSE will still use the same basic system for buying the stock under its new ticker on the OTC because the computer system and technology share a common backbone.

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The OTC hasn't received any word yet on when Lehman will start appearing on its market, according to R. Cromwell Coulson, OTC chairman. But he expects it to happen soon. "For the most part it's designed to throw them off very quickly," he said.

Investors in Lehman stock will retain ownership of their shares if they are unable to sell them (which is extremely likely) as the company moves to various exchanges. But don't look for any silver lining. When a company declares bankruptcy, common shareholders stand at the end of the line.

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David K Randall, Forbes
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