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Sunday, January 29, 2012 8:31:55 AM
It would seem that the trading firms, transfer agents and more than anyone, the DTCC wants to purge all the micro cap companies out of the marketplace. Why would a company lose their DTC eligibility? There are several reasons that will clearly jeopardize your company’s DTC eligibility:
- Reverse Split
- Name Change
- 504 Financings
After your company is DTC chilled, the second shoe to drop (and the heaviest of the two shoes) is when the online trading firms like Ameritrade, ETrade, ScottTrade and several others stop letting their customers buy your stock. Rather than deal with all the paperwork and higher fees, these online trading firms simply stop letting their customers purchase your stock. Oh, they can pick up a phone and call an order in, but traders do not call orders in.
There are good companies on the micro caps but the good are being thrown in with the bad. What it boils down to is that if you have a barrel of mostly rotten apples, rather than dig through and try and find the few good ones, you just throw out the whole bunch. This is what the DTCC and Online trading firms are doing.
Many companies are trying to regain DTC eligibility which is a complex process and can be EXPENSIVE. One company I know of has spent $160,000 and has gotten nowhere because there are so many shysters out there claiming to be able to fix your company’s problems quickly. There is no quick fix. But, I assure you if you go about it the right way you will spend far less than $160K…
Here is what your company can do to BEGIN the process of returning to DTC eligible status:
Have an actual company with products/services and revenues
Have more than one person as the President, CEO, COO, CFO, janitor etc.
Have an actual board of directors consisting of real people
Become fully reporting
If you are DTC ineligible and want to return your company to eligibility, please contact us.
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