Solarbrook Water and Power Corp. (fka SLRW)

[GOLDENBOLLOX]

Speaking of DTC eligible, those companies that have lost DTC eligibility are going to get weeded out too. Why?

Stocks that are not DTC eligible run a strong risk of having trading of their stock suspended by trading firms because of the expensive administrative nightmare it causes. What makes this even more painful is if the stock suddenly gets good volume. That volume will dry up as trading firms suspend trading in that security.

When a stock is not DTC eligible, all the week’s trades have to be settled through PAPER CERTIFICATES; it is expensive and time consuming and most trading firms do not have adequate resources to handle this especially on high volume stocks. To compound the problem, the traders of that stock receive an unpleasant statement the following month because the costs of the administration of non-DTC eligible stocks are passed on to the people who bought and sold the security. This can amount to several hundred dollars for each trader/investor.

If a stock is DTC eligible all transactions are handled automatically and electronically.

More on DTC eligibility…

One of the best ways to lose DTC eligibility is to register stock in any other form than an S-1. Many Pink Sheet and OTCBB companies are still doing things like 504s which is severely frowned upon by the DTC.

Many companies that have done a reverse split over the last year or so have had their stock “chilled” (non-DTC eligible) by the DTC. The reason they are getting chilled is because right after the reverse split takes place, the company registers more shares (usually through a 504) for sale. This pisses the DTC off and they chill the stock and no matter how many resources the affected company throws at the DTC, they continue to be chilled and the DTC becomes less responsive.

So the conclusion I have drawn is simple:

If you want the stock of your company to keep trading, become a fully reporting company and register new stock the way the DTC wants it done.

While these issues have caused much grief lately, I think for the marketplace overall it is going to be of great benefit to both the surviving companies, investors and traders.

We all know that many if not most of the Pink Sheet and some OTCBB companies out there are nothing more than ATM machines for the management team and their “investors”. Those companies that have no money and no business will be left in “no man’s land”. Those companies that do clean up their act and become transparent will stand a much better chance of succeeding in business and in the marketplace. The pool of investors and traders will remain the same or grow while the companies to select from will be far fewer in number.

There will always be sub dime and sub penny stocks to trade and invest in, there will just be fewer and the companies will be more transparent.

http://www.hotstockchat.com/micro-cap-stock-crisis-and-what-you-can-to-avoid-it/