Nasdaq Delists Comparator in Fallout From Stock Run-Up

Comparator Systems Corp. was removed from the Nasdaq stock market Tuesday, after company executives failed to appear before a Nasdaq panel that was to consider whether the controversial maker of fingerprint scanning devices deserved to keep its listing.

Comparator was delisted at the company’s request, although Nasdaq executives pointed out that the company’s stock would have been removed from the market by the end of the day anyway because it failed to provide adequate answers to regulators’ questions about the Newport Beach company’s finances.

“It’s kind of a case of ‘You can’t quit, you’re fired,’ ” one regulatory source said.

The delisting was the latest fallout in a bizarre case that began early last month, when Comparator’s long-dormant stock set three trading records on the Nasdaq market and soared in value from 6 cents to as high as $1.88 per share before regulators halted trading.

In the wake of that spectacle, the Securities and Exchange Commission filed a civil suit last month accusing Comparator of lying about its finances, stealing its key product and bilking investors by selling stock that was virtually worthless. The company has denied the charges.

In a news release issued Tuesday, Comparator said it had asked for the delisting because it could not meet “impossible” and “arbitrary” deadlines to supply information to the National Assn. of Securities Dealers, which regulates the Nasdaq market.

“Comparator feels that the NASD has demonstrated a strong predisposition toward delisting,” the release said. And because of “unfounded adverse publicity,” the release said, “the company has reluctantly concluded that a fair and complete hearing is not going to be possible at this time.”

But Nasdaq representatives said the company has been treated fairly and had more than a month to answer questions about its finances. In fact, the representatives said, Comparator backed out of two hearings before the Nasdaq listing panel, including the one scheduled to take place in Washington on Tuesday.

“The company’s been given ample time to get its information to us,” said Marc Beauchamp, a spokesman for Nasdaq. “We postponed one hearing date to give them more time, and they didn’t show. We could only conclude they didn’t have much of a case to make.”

The delisting means Comparator has lost an attractive stock market address that the company had gone to great lengths to protect over the last five years. In its suit against Comparator, the SEC alleges that the company vastly overstated the value of its patents and other assets to comply with Nasdaq listing requirements.

Nasdaq, a market in which stocks are traded over a vast computer network, is home to such well-known companies as Microsoft Corp.

Comparator may later apply to be readmitted to Nasdaq, but it would have to meet the stiffer listing requirements that have been imposed since it first joined the market. Comparator’s stock, for instance, would have to be valued at more than $3 per share, a price it appears to have never reached.

Comparator’s stock traded for pennies throughout most of the company’s history and has been frozen at 56 cents per share since May 8, when trading was halted by Nasdaq.

The company may apply to have its stock traded on the OTC bulletin board or the so-called pink sheets. Those markets do not have listing requirements, but neither do they have the visibility of Nasdaq, whose stocks are listed in daily newspapers across the country.

Comparator also said it hopes to hire a new auditor that is “acceptable to the SEC” to review the company’s finances. Comparator’s longtime auditor, Eli Buchalter Accountancy Corp. of Los Angeles, “continues to stand behind the company’s audited statements,” the release said.

Eli Buchalter did endorse the company’s fiscal 1995 financial records in a letter submitted to the SEC in September, but he also raised a number of questions about Comparator.

“Because of significant operating losses, the company’s ability to continue in existence is dependent upon the attainment of future profitable operations and obtaining adequate financing,” he wrote.

Reached at his office Tuesday, Buchalter declined to comment. Comparator representatives were also unavailable for comment. Nasdaq said its investigation of Comparator will continue.