Replies to post #272 on Best OTC Brokers (BROKER)

[bman17]

As I understand it, this 25% illiquidity policy has already been in effect, and perhaps due to Penson's severe financial status, they are now passing on the additional costs required to cover unsettled trades to the brokerages, and now Zecco is passing these costs on to the customers.

If all firms will be government-mandated to go the same route Penson/Zecco is taking, this would hurt all of the legitimate small businesses that use the OTC/pinks to start and grow their businesses and, of course, eliminate the OTC/Pinksheet market. Scary...

Class action against Penson:

http://www.securitiestechnologymonitor.com/news/penson-faces-flurry-lawsuits-class-action-28751-1.html

An e-mail response I received from Choicetrade (clears through Penson) when I questioned them on the Penson matter:

"Regarding the recent Penson policies for illiquid stocks, it is important to understand that the underlying NSCC rules pertaining to illiquid, low priced stocks is not new. Clearing firms are required to post additional capital when the net shares sold on a low priced (under $1) stock, exceeds 25% of the average daily trading volume during the period such net sales transactions remain unsettled. The extremely low illiquidity of the violating trades coupled with the sub-penny nature of such securities creates a disproportionate capital requirement on the part of the clearing firm. Currently, there is a regulatory mandate by FINRA and the SEC to curtail aggressive trading in such securities thereby creating the need to establish these policies and, in some cases halt trading in them. You should know that trading in low priced, illiquid stocks is quite risky from an investment perspective in any event. If your trading strategies are geared toward these types of stocks, you should familiarize yourself with the average daily trading volume traded in a particular security (over a rolling 30 day period) and limit the number of shares you sell during any three day period to less than 10% of this volume figure in order to mitigate this concern."

so I guess I have to get rid of Zecco as well as they have halted trading on some of my stocks, now Zecco explained the problem as a government requirment that will effect all brokers within a few months. Are they telling me the truth that in a few months most otc stocks will be restricted, or just telling me a bunch of bs?

[$hellKing]

I heard that too. It went all the way up with the government or something like that. Someone told me that months ago. And I did believe it would be broker wide to some degree on some of the issues. But will see, I think Etrade, Ameritrade, and Fidelity might be ok to buy pennies for the next few years.