OTCM Corporate Actions; The Problem..
The level of uncertainty displayed on both of these situations is untenable. An investor cannot consume his time and mind resources caring about how his stocks will handle common corporate actions. He cannot consume his time and mind share worrying that the handling of corporate actions in his unsponsored ADRs will be anything buy perfectly in line with what happens on the underlying stock, or any other stock or ADR.
The result of this uncertainty is obvious: The investor will take his business elsewhere. He'll either take it to the underlying markets or to other stocks altogether.
For OTCM, the result also is obvious. These unsponsored ADRs, whose number of listings has been growing strongly, will fail to ultimately catch the fancy of investors. These stocks will turn into low-volume listings which will be prone for litigation, as investors are unjustly burned on them due to non-transparent handling of common corporate actions. As a result, adoption of their use will suffer.
Conclusion
The present handling of corporate actions on unsponsored ADRS quotes in OTCM's Pink Sheets segment (originally wrongly stated as the OCTQX segment) is wildly flawed. This handling of corporate actions will ultimately burn the segment.
While ultimately depositary banks are guilty of these flaws, for OTCM whoever is guilty is irrelevant. The fact is that an investor cannot spend his resources trying to understand if his stock will behave like the rest of the supposedly pari-passu stock on the same company. Mishandling of these corporate actions presents the risk of loss for investors dabbling in them, at no fault of their own.
I believe this is an underappreciated problem for OTCM, which will become a large obstacle to its continued growth. A strong stance on this issue, with the guarantee of transparent corporate events, is the only thing which can save this segment over time.
https://seekingalpha.com/article/4056605-otc-markets-group-wasting-good-opportunity
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