bdelect, The DTC keeps changing what they require and ask for the same things over and over. Do some research on other stock that have had chills and got them removed. They all say it was a nasty grueling experience.
READ!!!!!!! DTC chills are very frustrating to small cap issuers: because the DTC provides a service to broker-dealers and “participants” in the DTC system and not to the companies themselves, the DTC is not obligated to inform issuers of the decision to chill stock! As a result, the company is often the last to know. More importantly, it is very difficult (if not sometimes impossible) to find out from the DTC why stock was chilled in the first place. Having the chill removed is a “case by case” battle and lacks a legal structure or process for companies to follow. The DTC has taken the position that it owes no particular duty to issuers to explain or review a chill decision despite the fact that a chill can be a death knell to the company.
Of course, like any market, there are some bad apples in the small cap population—some would say a disproportionately large number of such apples (that should be permanently frozen). And some would say that the SEC, FINRA, and the DTC are working in a pointed effort to eliminate those bad apples (and take everyone else with them). Some issuer stock is, of course, properly chilled by the DTC (without notice) — for fraud, lack of reliable SEC reporting, etc.
In light of this growing problem, the SEC has (finally) taken a step towards melting the impending small cap ice age. On March 15, 2012, the SEC issued an administrative opinion (In the Matter of the Application of International Power Group, Ltd. Admin. Proc. File No. 3-13687) stating that an issuer is entitled to some form of due process proceedings by the DTC before a chill is placed on a company’s securities. The SEC did not say what the standards should be to institute or lift a chill, but that issuers are entitled to “fair procedures” by the DTC. In addition, the opinion provides that an issuer that loses the fight with the DTC could appeal that loss through an SEC administrative proceeding. The DTC can continue to chill stocks without prior notice in “emergency situations” but must still provide an opportunity to have the chill reviewed.
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