One of the Securities and Exchange Commission’s priorities under Chair Clayton’s leadership has been protection of retail investors, including through rigorous enforcement of microcap fraud. Consistent with that focus, yesterday, the Commission released proposed amendments to Securities Exchange Act Rule 15c2-11. This rule requires that certain issuer information be made available to and be reviewed by broker-dealers before broker-dealers publish quotes for the issuer’s securities on the OTC market. The proposed changes would update the rule and impose stricter requirements by removing certain exemptions that are currently available. The proposed rule would require that broker-dealers receive and review issuer information that is current and that is publicly available. A broker-dealer would not be able to continue to provide quotes on a security (such as under the current “piggyback exemption”) if the issuer information is not current and not publicly available. Under the proposed rule, broker-dealers would not be permitted to continuously quote prices for the securities of shell companies. New exceptions would be made available under the proposed rule to broker-dealers in instances where there is current public information available about an issuer and there is less risk of potential market manipulation. The Commission also solicits comments on “information repositories.”
Chair Clayton’s public statements are available here.
The fact sheet is available here.
The proposed rule and concept release is available here.