Investment Education | Trading Suspensions

Trading Suspensions

From time to time, the Securities and Exchanges Commission (SEC) will suspend trading on a security for up to 10 days. This can impact current shareholders and potential new investors alike, so it's important to understand what happens when a security is suspended.

According to the SEC, trading may be suspended on a security if the SEC lacks current information about the company (for example, the company is behind in filing periodic reports), if the SEC questions the accuracy of public information such as press releases, or if there are questions about trading, such as potential insider trading or market manipulation.

The SEC will not announce a trading suspension in advance because its investigations are confidential. Even after the 10-day suspension ends, the SEC will not comment on the status of the company unless an enforcement action is publicly announced.

After a security re-enters the market following a suspension, broker-dealers that provide advice can't recommend that customers trade the security until outstanding requirements are met, while self-directed investors like Scottrade customers are free to trade it.

However, keep in mind that there is a level of risk involved, as the SEC reminds investors: "Even though such trading is allowed, it can be very risky for investors without current and reliable information about the company."

For an up-to-date list of trading suspensions, visit the SEC's Trading Suspensions page. For more information, read the SEC's investor bulletin on trading suspensions or contact your local Scottrade team.

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