This article details the Supreme Court petition in Xeriant, Inc. v. Auctus Fund, LLC, which challenges a Second Circuit opinion regarding Section 15(a) of the Securities Exchange Act of 1934. The core issue is whether an unregistered dealer violates the Act merely by purchasing a convertible note, which is a security. The petition argues the Second Circuit’s ruling, which held that the note agreement must obligate the lender to act as a dealer, conflicts with the statute’s plain text, established precedent, and decisions of other federal courts, creating a circuit split. If the Second Circuit’s decision stands, the petitioner argues, it could undermine years of SEC enforcement and a private right of rescission under Section 29(b), thereby protecting toxic lenders engaged in predatory financing schemes targeting small public companies.
Initial listing requirements are the gatekeepers of the public markets. They calibrate who may access exchange‑based liquidity by aligning financial strength, shareholder distribution, and governance maturity with the expectations of institutional and retail investors. Although every issuer’s profile… Read More
The critical role of OTC Markets in facilitating secondary offerings and resales of restricted and control securities under SEC Rule 144. This article emphasizes that for an issuer’s securities to be eligible for resale under Rule 144, particularly for non-reporting companies, the issuer must maintain “adequate current public information” status. This is primarily achieved by publishing disclosures on the OTCIQ Market platform, which satisfies the informational requirements of Rule 15c2-11. Losing this current information status (e.g., due to delinquent filings) halts resales, requiring the issuer to restore compliance, typically with a lawyer’s opinion, to maintain liquidity and quotation eligibility
This question-and-answer guide covers the legal and regulatory requirements for Nasdaq-listed companies holding their annual stockholder meetings. The article focuses on the interrelation of three major regulatory regimes: Nasdaq Listing Rule 5620 (Exchange rule), SEC Regulations 14A and 14C (Federal disclosure rules) and State Corporate Law (e.g., Nevada/Delaware statutes).
The article explains the OTC Markets Group’s multi-tiered disclosure framework, which categorizes companies traded on the over-the-counter (OTC) electronic quotation system. The three primary tiers, as of 2025, are OTCQX (The Premier Market) for established, transparent issuers; OTCQB (The Venture Market) for growing, transparent companies; and OTCID (The OTC Information Designation Market), which replaced the former Pink Market to enhance accountability and signal an issuer’s disclosure reliability. This structure allows investors to use the tiers—OTCQX, OTCQB, and the varied OTCID designations—as a disclosure spectrum to assess a company’s transparency, financial health, and associated risk before trading.
This article discusses reverse mergers and the crucial need for post-merger compliance to ensure trading eligibility on OTC Markets. A reverse merger, where a private company acquires a public shell, provides a quicker path to public trading, but the combined entity must satisfy requirements under SEC Rule 15c2-11 and OTC Markets’ current-information standards before quotations can resume. Key steps for compliance include updating financials and disclosures, filing corporate actions, submitting a Supplemental Disclosure for Change of Control Events, and providing an Attorney Letter with Respect to Current Information to avoid trading being limited and to maintain current-information status. The document also notes that the company remains ineligible for Rule 144 resales for at least 12 months until the conditions are met.
For many retail investors, trading or depositing shares of OTC-traded companies is challenging. A significant number of brokerage firms impose restrictions—driven by federal securities laws, FINRA rules, clearing-firm limitations, and internal risk controls—that block electronic transfers, refuse certificate deposits, or prohibit trading altogether in OTC Markets securities and penny stocks. These limitations exist because OTC securities are associated with higher rates of manipulation, thin liquidity, and high compliance costs, especially after amendments to SEC Rule 15c2-11. When few brokers accept a security, it leads to constrained liquidity, wider bid-ask spreads, and frustrated investors and issuers. To improve market access and liquidity, investors must pre-clear deposits and trading , while issuers should maintain current disclosure, ensure DTC eligibility, and target higher OTC tiers like OTCQB or OTCQX. The difficulty for brokers in complying with penny-stock regulations, such as Rule 15g-9 suitability requirements and extensive AML checks, often makes the compliance burden outweigh the minimal revenue, leading most large retail firms to simply prohibit deposits. Ultimately, broker acceptance equals market access, which is the foundation of liquidity and better valuation.
SEC Rule 12g3-2(b) offers a streamlined exemption for foreign private issuers to gain U.S. market visibility and access U.S. investors by qualifying for OTC Quotation on the OTCQX International or OTCQB Markets without full SEC registration. This exemption allows non-U.S. companies with a primary listing on a qualified foreign exchange to use their existing home-market filings for compliance, provided they publish comparable, English-language disclosures on their corporate website or a public platform. By satisfying these requirements, the issuer meets public-information standards under Rule 15c2-11, enabling quotation and trading liquidity in the U.S. while avoiding duplicative Exchange Act reporting.
This article provides a comprehensive guide to due diligence for investors interested in OTC IPOs and Pre-IPO Shares, emphasizing the high-risk nature of these opportunities versus the potential for early-stage growth. It explains the pathways to an OTC IPO (like Reg A+ and Reg D offerings) and the regulatory framework involving FINRA’s Rule 15c2-11 and the OTC Markets Group tiers (OTCQX, OTCQB, OTCID). The summary highlights critical red flags to identify, such as unaudited financials, toxic convertible debt, aggressive promotional campaigns, and poor corporate governance , concluding that disciplined analysis of disclosure, capital structure, and legal compliance is essential to distinguish credible ventures from speculation.
A Direct Public Offering (DPO) on the OTC Markets allows private companies to achieve public tradability and liquidity for existing shareholders without the expense and complexity of a traditional IPO or reverse merger. The process involves filing disclosures and securing a quotation on one of the OTC Markets’ three tiers (OTCQX, OTCQB, or OTCID), which reflect varying disclosure requirements. While a market maker typically submits FINRA Form 211 for new issuers under SEC Rule 15c2-11, the OTC Markets Group, as a Qualified Interdealer Quotation System (QIQS), can bypass this step for compliant companies with current, accurate, and publicly available information, accelerating market access. The DPO has become a faster, more predictable, and mainstream route for microcap companies seeking public market credibility and visibility.
The article explains how public companies quoted on OTC Markets must handle corporate actions—such as name or symbol changes, stock splits, mergers, and share restructures—under FINRA Rule 6490. It outlines the required documents, submission steps through the FINRA Corporate Actions Portal, associated fees, and the need to coordinate with OTC Markets via the OTCIQ portal to update issuer profiles. The piece highlights typical actions, timelines, and common pitfalls. It emphasizes timely, accurate filings to preserve market transparency and advises issuers to work with experienced securities counsel for compliance and post-approval updates.
This article explains how issuers are downgraded to the OTC Markets Expert Market after losing quotation eligibility under SEC Rule 15c2-11, how the Expert Market functions, and the steps necessary to regain public quotation.
This article from Hamilton & Associates Law Group explores liquidity and price discovery on the OTC Markets, highlighting their unique operations compared to national exchanges. It details how broker-dealers post bid and ask prices, the significance of Level 2 data for market transparency, and the impact of bid-ask spreads on liquidity. Issuers can enhance liquidity by maintaining timely disclosures, engaging multiple market makers, and ensuring transparent share structures, while avoiding frequent corporate actions. The article also outlines OTC Markets’ tools like Level 2 Data Feeds and OTC Link ATS, emphasizing the importance of Rule 15c2-11 compliance to maintain quotation eligibility and support trading efficiency.
On July 1, 2025, OTC Markets Group replaced its Pink Current Information tier with the OTCID Market, a modernized disclosure platform aligned with SEC Rule 15c2-11 to enhance transparency for non-SEC reporting issuers. The OTCID Market ensures standardized filings, automated data integrity, and improved investor trust through consistent reporting. Issuers must file Material Event Reports via OTCIQ for significant developments like changes in control, mergers, or financings, ideally within four business days, to maintain quotation eligibility. Non-compliance risks downgrades to Limited or No Information status or Expert Market placement. The platform supports future SEC filings and uplisting efforts, with Hamilton & Associates Law Group aiding issuers in compliance.
Learn the 2025 website requirements and best practices for SEC-reporting OTC Markets issuers (OTCQX, OTCQB, OTCID). Ensure compliance with Regulation FD, SEC disclosure rules, and OTC guidelines through a transparent, accessible investor relations website.
Canadian public companies can reach U.S. investors by dual listing on OTC Markets through the Multijurisdictional Disclosure System (MJDS). Eligible issuers may rely on Canadian disclosure to satisfy SEC requirements and choose between OTCQX for established TSX/TSXV companies or OTCQB for growth-stage issuers. Benefits include increased visibility, liquidity, and access to U.S. capital, with Hamilton & Associates guiding compliance and listing under Rule 15c2-11 and cross-border standards.
Crypto and blockchain issuers seeking OTC Markets quotation must comply with SEC Rule 15c2-11 by providing transparent disclosures on token operations, financials, custody, cybersecurity, and regulatory oversight. OTCQB standards require audited GAAP financials, minimum shareholders, public float, and current information filings via OTCIQ, along with timely material event reporting and attorney letters verifying compliance.
This article discusses the risks and consequences of toxic convertible financing, also known as “death spiral financing,” for small and emerging companies trading on the OTC Markets. These financings typically involve convertible promissory notes that convert into stock at deep discounts to the market price. The core issue is the floating conversion rate tied to the lowest trading price, which leads to catastrophic shareholder dilution as the stock price falls, creating a negative feedback loop.
The article emphasizes that this dilution can devastate OTC issuers, depress prices, and destroy shareholder value, potentially leading to OTC Markets downgrades. Both the SEC and OTC Markets have increased scrutiny, targeting lenders for unregistered dealer activity and issuers for failing to disclose the dilutive terms. Issuers are advised to avoid deeply discounted structures, promptly disclose all note terms, and model dilution scenarios to maintain compliance and market integrity.
This article from Hamilton & Associates Law Group compares the three main tiers of the OTC Markets Group—OTCQX, OTCQB, and OTCID (formerly OTC Pink)—to help companies choose the right one based on growth stage, compliance, and goals.
Form S-1 vs. Form S-3 — Eligibility, Disclosure Items & Incorporation by Reference (2025 Guide). Compare SEC Forms S-1 and S-3: who qualifies, what each form must include, and how incorporation by reference works (including SRC forward incorporation on S-1). Includes practical checklists and links.
SEC Confidential Treatment Requests — How to Protect Sensitive Business Information (2025 Guide)
Learn when and how to request confidential treatment from the SEC for contracts and exhibits filed under the Securities Act and Exchange Act. Includes eligibility, process, and redaction rules under Rule 406 and 24b-2.
The ultimate guide to uplisting from OTC Markets to Nasdaq or NYSE. Learn the strategic path, compliance milestones, and ‘Corporate Cleanup’ necessary to meet heightened quantitative and qualitative standards. Discover how successful uplisting unlocks institutional credibility, enhanced liquidity, higher valuation multiples, and transforms a speculative microcap into a sustainable, exchange-listed public enterprise.
For many retail investors, buying or depositing shares of OTC-traded companies is far harder than it appears. Even when a security displays quotes on OTCQX, OTCQB, or the OTC Information Distribution (“OTCID”) platform, a surprising number of brokerage firms refuse customer deposits of certificates, block electronic transfers (DWAC / DRS / ACATS), or prohibit trading altogether.
These restrictions—driven by federal securities laws, FINRA and exchange rules, clearing-firm limitations, and internal risk controls—make investing in OTC companies far more complicated than trading exchange-listed securities. The result is constrained liquidity, wider spreads, and frustration for both investors and issuers.
This article explains why these limitations exist, how broker acceptance directly affects liquidity, and what issuers and investors can do to improve market access.
The OTC Markets can serve as either a launchpad to major exchanges or a dead end, depending on issuer transparency, governance, and compliance. Success stories like Roku, Planet 13, and Tencent Music highlight how disclosure and discipline drive uplisting, while cases involving toxic financing, reverse mergers, and poor reporting reveal the risks. The article outlines lessons, recovery paths, and guidance for both issuers and investors navigating the OTC landscape.
The document outlines common disclosure deficiencies that lead to OTC Markets suspending or downgrading issuers under Rule 15c2-11, which requires current, publicly available information for broker-dealer quotations. Compliance with OTC Markets’ standards ensures transparency, liquidity, and investor trust, while non-compliance risks suspension or downgrade to the Expert Market. Hamilton & Associates Law Group offers assistance with compliance and mitigation.
The OTC Markets Alternative Reporting Standard outlines disclosure requirements for non-SEC-reporting issuers on OTCIQ, including annual and quarterly reports, officer certifications, and Manager’s Certifications. Learn about compliance, common reporting mistakes, and maintaining Current Information status to avoid downgrades or suspension.
The SEC’s Rule 15c2-11 “Current Information” standard is the foundation of OTC Markets compliance. It requires that broker-dealers may publish or maintain quotations for OTC securities only if the issuer’s disclosures are accurate, complete, and publicly available. This rule protects investors by ensuring transparency and accountability in the microcap markets.
Issuers must post timely financials, management and share-structure data, and a verified Attorney Letter with Respect to Current Information via the OTCIQ Portal or EDGAR. Non-compliance can trigger a downgrade to the Expert Market, suspending public quotations and limiting liquidity.
Hamilton & Associates Law Group, P.A., a leading securities-law firm in Boca Raton, Florida, assists issuers and market participants in maintaining Rule 15c2-11 compliance, avoiding downgrades, and preserving continuous quotation eligibility on the OTC Markets.
The OTC Markets Expert Market is a restricted trading tier created under the SEC’s 2021 Rule 15c2-11 amendments, allowing only broker-dealers and institutional investors to trade securities of issuers lacking current public information. This article explains how issuers are downgraded, who can trade, and how to restore current-information status through OTC Markets’ Information Review Process. It also outlines common compliance pitfalls, restoration steps, and best practices to maintain public quotation eligibility and investor confidence.
Hamilton & Associates Law Group, P.A. assists issuers with Rule 15c2-11 compliance, Expert Market restoration, and OTC Markets tier upgrades, ensuring continuous access to investors and trading liquidity through transparent disclosure practices.
The have intensified enforcement in the OTC Markets. The focus has shifted sharply toward broker-dealer gatekeeper obligations, fraudulent stock promotions, and manipulative trading.
OTC Markets’ Stock Promotion Policy governs any public communication—press releases, newsletters, videos, email blasts, or social-media posts—that could influence trading activity or investor perception of an OTC-traded security. The policy applies to issuers, third-party promoters, investor-relations firms, and consultants engaged by an issuer, directly or indirectly.
