What happens when the SEC suspends trading or FINRA halts trading in a security?
When a security is suspended or halted, OTC Markets Group removes all quotes from the system and displays a "Halted/Suspended" message.
SEC suspensions for OTCQX, OTCQB and OTC Pink securities have a duration of 10 business days. After the suspension ends, broker-dealers may re-enter their quotes if they comply with Rule 15c2-11. This rule requires the filing, with FINRA, of a new Form 211 which must include the company’s current financial information.
Do financial statements have to be audited?
Current FINRA rules do not require the financial statements of non-SEC reporting issuers to be audited in order for them to clear a Form 211, but they should be prepared in accordance with GAAP or, for foreign issuers, in accordance with their home country's accounting standards. Audited financials must be available for companies in the OTCQX and OTCQB marketplaces. To qualify for OTC Pink Current Information, companies that do not file with the SEC and do not publish audited financials must provide an Attorney Letter with Respect to Current Information. Audited financials are not required for OTC Pink Limited Information companies. Companies in OTC Pink No Information may not have recent financial information available.
What is the Alternative Reporting Standard (ARS)?
When SEC registration is not required, companies must generally still make information publicly available pursuant to Rule 10b-5 under the Exchange Act and pursuant to Rule 144(c)(2) under the Securities Act. OTC Markets Group offers the Alternative Reporting Standard for companies who choose to make material information publicly available to investors. To qualify for OTCQX U.S., companies not registered and reporting to the SEC can follow the Alternative Reporting Standard. These companies submit information pursuant to the OTCQX U.S. Disclosure Guidelines and are subject to the eligibility requirements and terms of the OTCQX Rules for U.S. Companies. OTCQX companies provide current and potential investors with all "material" information - the information necessary for the investor to make a sound investment decision. OTCQX company disclosure enables an investor to understand the company’s business operations and prospects.
Can SEC Reporting companies follow the Alternative Reporting Standard (ARS) to upgrade their marketplace designation?
No. The company must file a Form 15 with the SEC before they can use the Alternative Reporting Standard to upgrade their marketplace. The marketplace for SEC-Reporting issuers is tied directly to the timeliness of their filings through the EDGAR system. The OTC Disclosure & News Service should not be considered an alternative to a reporting company’s SEC filing requirements. When a company deregisters via a Form 15 filing, their marketplace is then determined by prior SEC filings and/or filings through the OTC Disclosure & News Service.
