DTC Eligibility

The process of obtaining DTC eligibility or clearing a DTC chill is often viewed as mysterious by OTC Market’s Pink Sheet Issuers.

However, for securities lawyers who regularly represent over-the-counter public companies in DTC eligibility legal matters, the reality is that the process is straightforward when the Issuer can document its history.

We Can Help Document Reasons for Eligibility

Rather than “fight” a DTC chill, most OTC Bulletin Board or OTC Markets Pink Sheets would do well to consider the criteria for DTC eligibility, and, with their OTC securities lawyer’s help, to document how their company meets these requirements.

Even when an Issuer has undergone a recent name change, reverse stock split, or reverse merger, it is possible to request DTC eligibility when the underlying story and facts support becoming DTC eligible.

OTC Securities Lawyers Can Confirm a DTC Chill

Sometimes OTC Issuers do not receive a letter from DTC, but still believe there is a chill on their stock.   When an OTCBB or Pink Sheet public company hears through a market maker that their securities have a DTC chill, there are some steps the Issuer can take to confirm their DTC eligibility status:

1.  Have their securities attorney contact DTC with the correct CUSIP to ask if there is a chill.  Many times, even when a market maker believes a Pink Sheet issuer to “have a DTC chill” they are working off of outdated information, even though DTC provides regular lists of securities which are DTC chilled.   All it takes is an email exchange with the proper parties at DTC to confirm, in writing, that no chill exists.  This documentation then can be provided by the Issuer’s securities attorney to the market maker so that the trade can be processed.

2.  If there is a confirmed DTC chill, and it is not related to some specific bad actor who is currently connected to the Issuer, the next step is for the Issuer’s securities attorney to contact DTC to start a dialogue.

We Can Work With a Market Maker That Will Sponsor for DTC Eligibility Using 15c2-11

Even where a DTC chill exists, it most often makes sense to treat the DTC eligibility question with a fresh look, so that filing a new Form 211 that is clearly documented, will have a better and faster result for the Issuer than trying to argue with DTC that the chill was “undeserved.”

We Can Help Document the Issuer’s History and Support the Case for DTC Eligibility

As is the case with many areas of life, rather than fighting the process, sometimes just demonstrating that the Issuer is qualified to be awarded DTC eligibility is all it takes to earn it.

Throughout the 15c2-11 process, the Issuer’s securities lawyer and market maker can work together to compile all of the supporting documentation and paperwork that will assist DTC in making the decision to make the Issuer DTC eligible.

OTC public companies seeking more information or guidance in the DTC eligibility process, or a DTC legal opinion, can contact Matt Stout, securities attorney, at (410) 429-7076 or mstout@otclawyers.com