DD Support Board and Research Team

[Renee]

Comments on the the brilliant SEC proposed Rule changes. For this post I only want to address 15c2-11 compliance, that outdated Rule that allows thousands of OTC stocks to obtain Market Maker representation and the piggyback exception that opens the doors for every Market Maker to quote those stocks. Many/most of those same stocks thereafter are derelict in providing current disclosures. Of course, even the disclosures are likely false but I have a thought on that later in this post.

On page 40 the SEC states "the proposed amendments are intended to reduce the occurrence of investors making investment decisions based on false or misleading statements spread by fraudsters."

It would be unfair to encapsulate 228 pages into a few paragraphs so everyone should read the most brilliant action the SEC has ever taken to prevent stocks that are bereft of any current or verifiable information or disclosures from keeping their 15c2-11 compliance.

We have seen a heightened commitment by the SEC to rout out SEC Registered/Registrant stocks that are severely delinquent in filing Financials. Since Jan 1, 2010 the SEC has suspended and the Admin. Law Judges have revoked 2,040 registrations, 235 in 2019. Since July 24,2019 the SEC has suspended 139 delinquent SEC Registered stocks and those registrations will also be revoked. This action takes minimal SEC resources because the Financials delinquencies are indefensible.

Now to address the 1,000's of OTC stocks that are not registered with the SEC, and hundreds of formerly registered stocks that filed FORM 15's to deregister from the SEC to avoid a Suspension and A.L.J. revocation of their registration(s). The SEC website warns ALL readers with reams of examples to avoid these stocks. The SEC knows many or most of the stocks that do not provide current or verifiable information are scams, BUT, to investigate and suspend those stocks would require enormous resources by the SEC....resources they prefer not to expend on stocks they have already warned investors not to buy.

So then, to adhere to their manifest principles to maintain integrity in the Markets and to protect investors in all markets, in this Rule Proposal instance the fraud-riddled OTC Markets, the SEC is now going to put pressure on Broker Dealers and Market Makers to re-evaluate 15c2-11 compliance for OTC stocks that are not current and likely not accurate in their disclosures.

The SEC has prosecuted several Brokers and Market Makers for failures of their gatekeeper responsibilities concerning OTC stocks that defrauded investors by not having current or verifiable information and disclosures. From the proposed Rule changes it should strike fear and trepidation into all Brokers/Dealers and Market Makers who approved OTC stocks for Market Maker representation according to 15c2-11 compliance when they should not have done so, or should not continue to do so.

Everyone should know that OTC companies can submit the biggest pile of horse hooie to appear to be current in their disclosures. It is reasonable to assume that Broker Dealers and Market Makers do not have the acumen or resources to vet OTC company disclosures to validate Rule 15c2-11 compliance.....but those gatekeepers do not want the wrath of the SEC either.

As I see it the Broker Dealers and Market Makers will deflect the responsibilities for Rule 15c2-11 compliance back to the companies, to require companies to submit current information and disclosures, and should there be doubt about the adequacy and accuracy of the disclosures to then require companies to audit their Financials and disclosures to current status or the Broker/Market Maker will withdraw their Form 211 certification to FINRA. This would apply to delinquent SEC Registered stocks as well as not-registered, Alternative Reporting OTC stocks.

If any of my perceptions hold merit there should be a few hundred and hopefully a few thousand OTC stocks that lose their 15c2-11 compliance and FINRA establishes a new section that relegates a non-compliant OTC stock to the Grey Market without an H-10 SEC Suspension.

It won't be as simple as written above but I'll wager an entire Tim Hortons enterprise that that is exactly the desired outcome by the SEC.

https://www.sec.gov/rules/proposed/2019/34-87115.pdf