Wednesday, February 06, 2013 11:45:58 PM
Late night reading for sweet dreams
From sec.gov.
What happens when the ten-day suspension period ends?
The SEC will not comment publicly on the status
of a company when the ten-day suspension period ends because the company may still have serious legal problems. For instance, the SEC may continue to investigate a company to determine whether it has defrauded investors. The public would not know if the SEC is continuing its investigation unless the SEC publicly announces an enforcement action against the company.
Furthermore, when an SEC trading suspension ends, a broker-dealer generally may not solicit investors
to buy or sell the previously-suspended over-the- counter (“OTC”) stock until certain requirements are met. Before soliciting quotations or resuming quotations in an OTC stock that has been subject
to a trading suspension, a broker-dealer must file a Form 211 with the Financial Industry Regulatory Authority (“FINRA”) representing that it has satisfied all applicable requirements, including those of Rule 15c2-11 and FINRA Rule 6432.
Among other things, Rule 15c2-11 requires broker- dealers to review and maintain certain documents and information about the company, including in certain cases:
1. the company’s state of organization, business line, and names of certain control affiliates;
2. the title and class of the securities outstanding; and
3. the company’s most recent balance sheet and its profit and loss and retained earnings statement.
No broker-dealer may solicit or recommend that an investor buy an OTC stock that has been subject to a trading suspension unless and until FINRA
has approved a Form 211 relating to the stock. If there are continuing regulatory concerns about
the company, its disclosures, or other factors, such
as a pending regulatory investigation, a Form 211 application may not be approved.
However, limited or “unsolicited” trading can occur
in an OTC stock that has been subject to a trading suspension after the suspension ends but before a Form 211 is approved. This may allow investors to trade
the stock when a broker or adviser has not solicited or recommended such a transaction. Even though such trading is allowed, it can be very risky for investors without current and reliable information about the company.
Will trading automatically resume after ten days?
It depends on the market where the stock trades. Different rules apply in different markets.
For stocks that quote in the OTC market (which includes stocks quoted on the Bulletin Board and OTC Link (f/k/a Pink Sheets)), quoting does not automatically resume when a ten-day suspension
ends. Before OTC stock quoting can resume after a suspension period, SEC regulations require a broker- dealer to review specific information about the company in accordance with Exchange Act Rule 15c2-11 and FINRA Rule 6432. If a broker-dealer does not have confidence that a company’s financial statements are reasonably current and accurate in all material respects, especially in light of the questions that may have been raised by the SEC suspension action, then a broker-dealer may not publish a quote for the company’s stock. The OTC markets function through dealer systems where only broker-dealers may quote and facilitate trading in OTC stocks.
In contrast to stocks that trade in the OTC market, stocks that trade on an exchange resume trading as soon as an SEC suspension ends.
From sec.gov. What happens when the ten-day suspension period ends?
The SEC will not comment publicly on the status
of a company when the ten-day suspension period ends because the company may still have serious legal problems. For instance, the SEC may continue to investigate a company to determine whether it has defrauded investors. The public would not know if the SEC is continuing its investigation unless the SEC publicly announces an enforcement action against the company.
Furthermore, when an SEC trading suspension ends, a broker-dealer generally may not solicit investors
to buy or sell the previously-suspended over-the- counter (“OTC”) stock until certain requirements are met. Before soliciting quotations or resuming quotations in an OTC stock that has been subject
to a trading suspension, a broker-dealer must file a Form 211 with the Financial Industry Regulatory Authority (“FINRA”) representing that it has satisfied all applicable requirements, including those of Rule 15c2-11 and FINRA Rule 6432.
Among other things, Rule 15c2-11 requires broker- dealers to review and maintain certain documents and information about the company, including in certain cases:
1. the company’s state of organization, business line, and names of certain control affiliates;
2. the title and class of the securities outstanding; and
3. the company’s most recent balance sheet and its profit and loss and retained earnings statement.
No broker-dealer may solicit or recommend that an investor buy an OTC stock that has been subject to a trading suspension unless and until FINRA
has approved a Form 211 relating to the stock. If there are continuing regulatory concerns about
the company, its disclosures, or other factors, such
as a pending regulatory investigation, a Form 211 application may not be approved.
However, limited or “unsolicited” trading can occur
in an OTC stock that has been subject to a trading suspension after the suspension ends but before a Form 211 is approved. This may allow investors to trade
the stock when a broker or adviser has not solicited or recommended such a transaction. Even though such trading is allowed, it can be very risky for investors without current and reliable information about the company.
Will trading automatically resume after ten days?
It depends on the market where the stock trades. Different rules apply in different markets.
For stocks that quote in the OTC market (which includes stocks quoted on the Bulletin Board and OTC Link (f/k/a Pink Sheets)), quoting does not automatically resume when a ten-day suspension
ends. Before OTC stock quoting can resume after a suspension period, SEC regulations require a broker- dealer to review specific information about the company in accordance with Exchange Act Rule 15c2-11 and FINRA Rule 6432. If a broker-dealer does not have confidence that a company’s financial statements are reasonably current and accurate in all material respects, especially in light of the questions that may have been raised by the SEC suspension action, then a broker-dealer may not publish a quote for the company’s stock. The OTC markets function through dealer systems where only broker-dealers may quote and facilitate trading in OTC stocks.
In contrast to stocks that trade in the OTC market, stocks that trade on an exchange resume trading as soon as an SEC suspension ends.
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