Digital Media Solutions faces delisting as NY law firm launches investigation

Digital Media Solutions has told shareholders it faces being delisted from the New York Stock Exchange after falling out of compliance — news that came a day after a prominent New York law firm specializing in class action lawsuits announced it was investigating the company for violations of undisclosed state laws.

This is the second time since March the Clearwater company has been warned it faced delisting. That first violation in March was for trading for less than $1 for 30 consecutive days.

In the most recent note to investors, issued Thursday, May 4, the company says it received a letter from the exchange in late April saying it “is not in compliance with NYSE's continued listing standards which require it to maintain an average global market capitalization of at least $50 million over a consecutive 30-day trading period and, at the same time, a total stockholders’ equity equal to or greater than $50 million.”

Digital Media Solutions has 45 days from the day it received the letter, April 28, to submit a plan to the exchange laying out how it intends to get back into compliance within 18 months of the notice. In the note, the company says it is “evaluating its available options and developing a plan to regain compliance with the minimum global market capitalization requirement.”

The note does not say how far off the company is from meeting the minimum amount needed to be in compliance. The company did not respond to an email seeking a response to that question.

Digital Media Solutions shares trade on the NYSE under the symbol DMS. At close of business Friday, May 5, shares were trading at $0.61. That’s down nearly $2 from close of business on May 6, 2022, when shares were trading at $2.55.

The company was notified in the first violation that it has 60 days from March 30 to get its shares back to the minimum stock price listing requirement.

As the company is dealing with the threat of being delisted, the New York law firm Glancy Prongay & Murray issued a press release May 3 announcing “its investigation of Digital Media Solutions Inc. concerning the company and its directors’ and officers’ possible violations of state laws.”

The law firm did not go into detail of what laws may have been broken and did not respond to a request for more information.

Digital Media Solutions was founded in 2012 by Marinucci, Borghese, Luis Ruelas, Matt Goodman and David Shteif. According to its website, the company is a “provider of technology-enabled digital performance advertising solutions connecting consumers and advertisers.”

In March, the company announced it was backing out of an agreement to sell itself and that it would undergo a restructuring that would include laying off 14% of its workforce. On the same day, Digital Media Solutions announced it had agreed to purchase another technology company, HomeQuote.io for $35 million.

And on March 31, the day after it received the first delisting notice from the NYSE, it announced revenue for the fourth quarter was down 15.3% from the previous year, to $100.8 million. Annual revenue was down 8.6% to $391.1 million.