Going Public – OTC Markets OTCQB – Going Public Lawyers

Securities Lawyer 101 - Form S-1 Registration
Securities Lawyer 101 Blog

Many private companies seeking to go public are opting for going public transactions on the OTC Markets OTCQB.  The OTC Markets Group operates an electronic inter-dealer quotation system called OTC Link.  OTC Markets ranks issuers in tiers; each issuer’s rank depends upon the amount of disclosure provided. Issuers using registration statements followed by Rule 15c2-11 applications to go public qualify for the “OTCQB” tier.  The QTCQB tier is only available to issuers who file reports with the SEC.  These issuers are not required to provide additional disclosures to the OTC Markets.

In order for a private company to go public on the OTCQB, it must become an SEC reporting issuer.  Once the company is reporting, it can then obtain its ticker symbol assignment from the Financial Industry Regulatory Authority (“FINRA”) if it meets certain requirements.

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Funding Portal Registration And the JOBS Act


Securities Lawyer 101 Blog

On February 5, 2013, the SEC’s Division of Trading provided guidance on the exemption from broker-dealer registration in Title II of the Jumpstart Our Business Startups Act (“JOBS Act”). The SEC’s FAQs are not rules, regulations or statements of the SEC and the Commission has neither approved nor disapproved them. Section 201(c) of the JOBS Act adds new paragraph (b) to Section 4 which clarifies that a platform can rely on the exemption from broker-dealer registration in Securities Act Section 4(b) until the SEC’s rules permitting  general solicitation in Rule 506 offerings are adopted. Read More

Rule 5123 Requires the Filing of Private Placement Documents

Private Placement - Securities Lawyer 101
Securities Lawyer 101 Blog

The SEC recently approved Rule 5123 that any FINRA member firm selling an issuer’s securities in a non-public offering in reliance on an exemption from registration under the Securities Act is required to file copies of private placement materials such as memorandums, term sheets, or other offering documents with FINRA within 15 days after the first sale. INRA 5123 Notice Filing

Filings under FINRA Rule 5123 are treated as “notice” filings, and FINRA will not review or respond to the filing with a comment letter or provide a clearance letter.  FINRA will treat all documents filed as confidential. Read More

The OTC Markets “Face-to-Face” Meeting Requirement for Securities Lawyers

Securities Lawyer 101 - Smaller Reporting Companies

Securities Lawyer 101 Blog

The OTC Markets Group operates an electronic inter-dealer quotation system used by broker-dealers to trade securities not listed on a national securities exchange such as NASDAQ, NYSE or AMEX. OTC Markets assigns companies to tiers defined by the amount of disclosure provided. Read More

Shareholder Solicitations & the SEC’s Proxy Rules

Securities Lawyer 101 - Smaller Reporting Companies
Securities Lawyer 101 Blog

Most public companies hold a stockholders’ meeting annually and hold special meetings to vote on special corporate actions such as name changes and mergers.  Shareholder voting on takes place either in person or by proxy. Proxy solicitation is governed by a number of rules and regulations including: (i) state corporate law; (ii) stock exchange listing requirements; (iii) SEC proxy rules; and (iv) the issuers’ articles and bylaws. Issuers who have a class registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), are subject to the proxy rules. The SEC’s proxy rules are loccated in Section 14(a) of the Exchange Act.

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OTC Markets Rules of the Road

OTC Markets Rules
Securities Lawyer 101 Blog

The Financial Industry Regulatory Authority (“FINRA”) and the Securities and Exchange Commission (“SEC”) regulate trading of stocks quoted by the OTC Markets Group.

OTC Markets is not a regulator and is not affiliated with FINRA or the SEC.  Additionally, OTC Markets is not a stock exchange and it has no listing requirements.

FINRA and OTC Markets

FINRA establishes rules that impact OTC Markets in several ways.  These include FINRA rules regulating its broker-dealer members and setting qualification standards for securities industry professionals as well as rules governing compliance.

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OTC Markets OTC Pink Tiers

Pink Sheets

Securities Lawyer 101 Blog

The OTC Markets Group operates an electronic inter-dealer quotation system called OTC Link that broker-dealers use to trade securities not listed on a national securities-related exchange. OTC Markets has three OTC Pink tiers. Each issuer’s rank in the OTC Pink tiers depends upon the amount of disclosure provided. Issuers using SEC Rule 15c2-11 qualify for the “OTC Pink Current Information” tier.

OTC Pink Tiers – The Pink Current Tier Read More

The Frankfurt Stock Exchange & the Elimination of the First Quotation Board

First Quotation Board Attorney

Securities Lawyer 101 Blog

On December 20, 2011, Deutsche Börse AG suspended new listings from the First Quotation Board due to fraud and suspected market manipulation on the First Quotation Board. Deutsche Börse AG stated, “Prosecution according to criminal law and supervisory Read More

Dead Stock Walking | SEC Trading Suspensions of Dormant Issuers

 SEC Trading Suspension Attorney
In recent years, the SEC has issued trading suspensions and revoked the registration of numerous publicly traded companies.
These SEC enforcement proceedings were brought under Section 12(j) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Section 12(j) authorizes the SEC to suspend or revoke registration of an SEC reporting company if it fails to comply with its obligation to file quarterly and annual reports.This authority arises from the Exchange Act, if the SEC finds that a suspension or revocation is in the public interest or necessary for the protection of investors. Read More

Boca Raton Attorney William J. Reilly Indicted For Securities Fraud

William Reilly

Securities Lawyer 101 Blog

Lawyers Gone Wild Series

On October 24, 2012, Boca Raton securities lawyer William J. Reilly was arrested by the FBI for allegedly engaging in a scheme to fraudulently sell stock in a company called Caribbean Pacific Marketing.  In its S-1 registration statement filed with the Securities and Exchange Commission (“SEC”), Caribbean Pacific claimed it qualified as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act (the “JOBS Act”).  Once the S-1 was deemed effective by the SEC in August 2012, Reilly sold stock to, among others, a “confidential source” who was working with the FBI. Read More