THERE IS A PUBLIC INTEREST CONCERN ASSOCIATED WITH THE COMPANY, WHICH MAY INCLUDE A SPAM CAMPAIGN, QUESTIONABLE STOCK PROMOTION,
KNOWN INVESTIGATION OF FRAUDULENT ACTIVITY COMMITTED BY COMPANY OR INSIDERS, REUGLATORY SUSPENSIONS, OR DISRUPTIVE CORPORATE ACTIONS
The level of uncertainty displayed on 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.
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.
INVESTORS BEING BURNED CONTINUOUSLY BY OTCM's "AGENDA"
OTCM is not obligated to vet any of the stocks they quote. And only FINRA and the SEC can legally halt all brokers from trading in a company's shares.
In Cynk's case, OTCM flagged the stock with a "caveat emptor" skull and crossbones symbol on July 9, after Cynk's shares had more than doubled. Cynk shares thus traded another day, rising as high as $21.50; they'd traded as low as $0.08 last year.
The SEC issued its halt order July 11. "I Tweeted on Thursday saying it was not a question of if the SEC halts this, it's when," Coulson said. "It was going to trade at some ludicrous level for some amount of time — which was a day —
the SEC was going to halt it, and everyone involved in that stock are going wish they weren’t involved."
"If you point to the people who were buying Cynk and told them, You really should buy [a community bank], this great bank that pays dividends, that's close to you, you might even be a depositor there — they’d tell you that’s boring."
OTC Markets Group Acquires theOTC.today to "Help Investors"
"Manipulative stock promotion harms all public markets. This acquisition continues our strategy of increasing the quality and availability of unique market data to help investors, broker-dealers and regulators make better informed decisions," said R. Cromwell Coulson, President and CEO of OTC Markets Group
OTCM GETS ACCESS TO A "PROMOTERS" LIST SO THEY CAN USE IT TO LABEL STOCKS AS "CAVEAT EMPTOR."
THEY CLAIM TO BE INVOLVED IN THE BUSINESS OF VERIFICATION, BUT WHO IS VERYIFYING THEIR ACTIONS?
Murky Corner of U.S. Stock Market Takes Step to Clean Up Fraud
November 7, 2017, 2:10 PM EST
OTC Markets Group Inc., which runs markets for over-the-counter trading in more than 10,000 securities, released a new policy on Tuesday to stem fraudulent stock promotion --
or ginning up positive attention for a security, while being compensated in secret by the company itself.
Companies were reminded they need to make timely disclosures about important developments, which includes dispelling anything misleading spread by promoters.
Earlier this year, the U.S. Securities and Exchange Commission went after 27 individuals and groups that promoted stocks, including on investing websites like SeekingAlpha.com.
The SEC said the fraudulent promoters gave the impression they were providing independent analysis while secretly taking payments for their work.
The SEC agreed to several settlements, including one of almost $3 million.
“This is a problem, so for us to show leadership on improving transparency is a good thing,” Cromwell Coulson, president and chief executive officer of OTC Markets, said in an interview.
To address the issue, OTC Markets says it will start flagging dubious securities that are being promoted in the first quarter of 2018.
It will also start asking some companies that are the subject of stock promotions to notify investors.
If OTC Markets deems them a threat, they’ll be labeled with a skull-and-crossbones icon on its website.
(That buyer-beware signal is already used on the site, but this broadens the use.)
The Caveat Emptor Designation is Assigned When OTC Markets Becomes Aware of:
- 1. Promotion/Spam without Adequate Current Information — The security is being promoted to the public, but adequate current information about the company has not been made available to the public. Promotional activities may include spam email, unsolicited faxes or news releases, whether published by the company or a third party. See OTC Markets Group's Policy on Stock Promotion below.
2. Investigation of Fraud or Other Criminal Activities — There is an investigation or other indication of fraudulent or other criminal activity involving the company, its securities or insiders.
3. Suspension/Halt — A regulatory authority or an exchange has halted or suspended trading for public interest concerns (i.e. not a news or earnings halt).
4. Undisclosed Corporate Actions — The security or company is the subject of a corporate action, such as a reverse merger, stock split, or name change, without adequate current information being publicly available.
5. Unsolicited Quotes — The security has only been quoted on an unsolicited basis since it entered the public markets and the company has not made adequate current information available to the public.
6. Other Public Interest Concern — OTC Markets Group may determine that there is a public interest concern regarding the security. Such concerns may include but are not limited to promotion, spam or disruptive corporate actions even when adequate current information is available.
When Does Caveat Emptor Get Removed?
Facts and circumstances may differ, however generally, OTC Markets Group will remove the Caveat Emptor designation once the company meets the qualifications for Pink Current Information, has verified the information on its company profile on www.otcmarkets.com, and demonstrates that there is no longer a public interest concern. The Caveat Emptor designation is typically not removed within the first 30 days. During the time it is labeled Caveat Emptor, any stock that is not in Pink Current Information will also have its quotes blocked on www.otcmarkets.com.
OTC Markets Group Policy on Stock Promotion
OTC Markets Group monitors for potential promotional activity relating to securities trading on our markets.
We review for anonymous paid promotions, possible connections to bad actors, and evaluate the promotions potential impact on trading.
A company whose security is being promoted may not be directly involved or even aware of a promotion campaign for their securities,
however all public companies have an obligation to provide accurate disclosure to investors and quickly address any misleading information that could affect the trading market for their securities.
ARE INVESTORS SUPPOSED TO GUESS WHY THEIR STOCKS HAVE BEEN LABELED AS "CAVEAT EMPTOR?"
IF "FACTS AND CIRCUMSTANCES MAY DIFFER" WHO DECIDES ONE WHAT IS FAIR, AND WHY?
"DESIGNATION IS TYPICALLY NOT REMOVED WITHIN THE FIRST 30 DAYS"
WHICH IS ENOUGH TIME TO DESTROY A COMPANIES REPUTATION AND STOCK PRICE, LEAVING INVESTORS BURNED.
AFTER A STOCK IS LABELED AS "CAVEAT EMPTOR" THE PUBLIC BASHING CAMPAIGN BEGINS ON THE OTCMARKETS TWITTER PAGE:
AND OFTEN INVESTORS SUFFER LOSSES IMMEDIATELY. https://twitter.com/OTCMarkets WHEN WILL THIS ISSUE BE FAIRLY ADDRESSED TO THE OTC COMMUNITY?
WHEN WILL INVESTORS IN OVER THE COUNTER STOCKS HAVE NON-MISLEADING INFORMATION?
WHEN WILL COMPANIES AND INVESTORS STOP SUFFERING LOSSES BECAUSE OF INNACURATE AND NON-FACTUAL INFORMATION?
WHEN WILL THE HIDDEN AGENDA'S OF OTCM BE EXPOSED? WHEN? Very Soon...