Penny Stock Disclosure Requirements

What this video covers

• The exact definition of a true penny stock (generally under $5 and over-the-counter) and why a sub-$5 Nasdaq-listed stock does NOT trigger these rules
• The inside bid and ask quotation disclosure, including the number of shares to which the quotes apply, and why timing is before the trade for both new and existing customers
• The aggregate compensation disclosure covering both the broker-dealer firm's and the associated person's compensation, not just one or the other
• The OTC equity suitability review requirement to examine current issuer financial statements and material business information, document the basis for the recommendation, and supervise compliance
• Why the OTC equity suitability review is in addition to, not instead of, standard suitability rules: a double hurdle the rep must clear
• The domestic issuer currency windows (15 months for financial statements, 6 months for filing) versus foreign issuer windows (18 months and 9 months)
• The three exemptions from the OTC equity review: issuers with at least $50 million in assets and $10 million in equity, and securities with a bid price of at least $50