Despite a tradition of weak enforcement some companies do get delisted.  That occurred in the case of Fog Cutter Capital Group Inc. v. SEC, No. 3-11934, 2007 WL 148833 (DC Cir. Jan. 23, 2007).   The DC Circuit affirmed the decision by the Commission to uphold a delisting by the NASD of a company traded in Nasdaq.  The Commission amicus brief contains a succinct description of the process involved in delisting a company. 

The NASD’s decision to delist Fog Cutter was based on a guilty plea by Andrew Wiederhorn, the CEO and Chairman of Fog Cutter Capital, for payment of illegal gratuities to an employee-benefit-plan investment advisor and for filing false personal tax returns, and the board's reaction to it.  Among other things, Fog Cutter’s board amended Wiederhorn’s employment agreement to eliminate automatic termination for a felony conviction, agreed to pay Wiederhorn his salary and other benefits while incarcerated, granted a $2 million "leave of absence payment" that would be used to pay court ordered restitution, and allowed Widerhorn, while in prison, to retain his position as an executive and as a director.  A succinct statement of the NASD findings are here. 

The NASD argued that delisting Fog Cutter was required for the protection of public interest, as well as “the integrity of, and public confidence in, Nasdaq.” Id. at 2.  Among other things, Fog Cutter noted other examples of companies that  retained relationships with convicted CEOs yet were not delisted.  Additional primary material for this case may be found on the DU Corporate Governance website.