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Friday, August 02, 2024 6:32:41 PM
PENNY FOR THE LOT
#this was posted from Myself to Sandra over the years to answer the same question over and over, please make note this time:
This information is presented in the FINRA manual at Finra.org. Some firms facilitate the sale of positions held by their customers in low-value OTC equity securities, as defined in FINRA Rule 6420, that they or their customer may deem to be “worthless.” The firm purchases the shares to remove the position from the customer’s account and to enable the customer to claim a capital loss for tax purposes. The purchase price typically is nominal and set solely for purposes of liquidating the position. In some instances, it may not be a per share price, but may be sold, for example, for one penny or one dollar for the entire lot. Hence, these sales sometimes are referred to as ”PENNY FOR THE LOT” transactions. These sales are considered trades (i.e., there is a beneficial change in ownership) and are not expressly excluded from FINRA trade reporting rules. Accordingly, firms must report these sales to FINRA for public dissemination purposes as they would any other trade. Because many of these sales are effected at a per lot price, the per share price may extend beyond six decimal places. FINRA notes that the OTC Reporting Facility (ORF) can accommodate six decimal places for purposes of reporting a per share price. If the per share price is equal to or less than $.000001, firms should report a price of $.000001….
#this was posted from Myself to Sandra over the years to answer the same question over and over, please make note this time:
This information is presented in the FINRA manual at Finra.org. Some firms facilitate the sale of positions held by their customers in low-value OTC equity securities, as defined in FINRA Rule 6420, that they or their customer may deem to be “worthless.” The firm purchases the shares to remove the position from the customer’s account and to enable the customer to claim a capital loss for tax purposes. The purchase price typically is nominal and set solely for purposes of liquidating the position. In some instances, it may not be a per share price, but may be sold, for example, for one penny or one dollar for the entire lot. Hence, these sales sometimes are referred to as ”PENNY FOR THE LOT” transactions. These sales are considered trades (i.e., there is a beneficial change in ownership) and are not expressly excluded from FINRA trade reporting rules. Accordingly, firms must report these sales to FINRA for public dissemination purposes as they would any other trade. Because many of these sales are effected at a per lot price, the per share price may extend beyond six decimal places. FINRA notes that the OTC Reporting Facility (ORF) can accommodate six decimal places for purposes of reporting a per share price. If the per share price is equal to or less than $.000001, firms should report a price of $.000001….
