Tag Archives: Form 211

What are Unsolicited Quotations in OTC Stock?

Unsolicited Quotations are bid and ask quotes that market makers post to reflect unsolicited orders by their customers.

Do Brokers Accept Deposits of Stock With Only Unsolicited Quotations?

Yes. Many OTC brokers which specialize in over-the-counter penny stocks trading on the OTC Markets or OTC Bulletin Board will readily assist customers with deposits of stock even when the only quotations are unsolicited.  This is especially true if the OTC Issuer is an SEC reporting company and current in its filings.

Why Would a Stock Only Have Unsolicited Quotations?

Sometimes OTC companies are subject to FINRA or SEC trading suspensions for unexplained volume caused by spam.  At other times, many companies from the same industry are subject to increased scrutiny and several of them will have their trading suspended while FINRA or the SEC investigates allegations of wrongoing.

After a Caveat Emptor Label Many Companies May Lose Market Makers

Many of those companies are able to clear themselves of any wrongdoing, and remove the Caveat Emptor or Skull and Crossbones label, and they are subsequently cleared to trade again, but at first, no market makers remain willing to take the risk.

These OTC Issuers may once have had a robust trading volume with many well known market makers, but following a Caveat Emptor designation they might temporarily remain without a market maker to file a new Form 211 to comply with SEC Rule 15c2-11.  This could happen after a trading suspension, which lasts more than 10 days, for example.  At that point, only unsolicited quotations would be shown.

How are Unsolicited Quotations Published for Penny Stocks?

A customer will call his broker asking to buy or sell a particular OTC stock.  The broker then posts a quotation demonstrating the brokerage customer’s interest in the stock, which was not solicited by the brokerage. These quotations are marked as “unsolicited” quotations on OTCMarkets.com or on the OTC Bulletin Board.

OTC Markets Securities Lawyer for Shareholders and Issuers

Shareholders and Management of OTC Markets or OTC Bulletin Board companies can contact OTC Markets lawyer Matt Stout at (410) 429-7076 or mstout@otclawyers.com with questions regarding trading suspensions, complying with SEC Rule 15c2-11, or clearing restricted stock.

 

What is the Piggy Back Rule?

The phrase “piggyback qualified” refers to a stock for a public company that has already had a Form 211 filed by a FINRA registered market maker, and meets the “frequency-of-quotation” requirement under SEC Rule 15c2-11(f)(3).

This frequency-of-quotation test is passed when a broker/dealer publishes quotations in the stock in the appropriate interdealer quotation system for a minimum of Twelve (12) Business days during the preceding Thirty (30) calendar days.   Also, during that time, there can be no greater than Four (4) consecutive business days without published quotations in the stock.

After this criteria has been satisfied, the stock is known as “piggyback qualified” and other market makers may publish quotations in the stock without filing their own Form 211.

What is the Role of a Market Maker Under Rule 15c2-11?

Market Makers File Form 211 With FINRA

If a private company is using Rule 15c2-11 to become public, the company first needs a relationship with a sponsoring Market Maker that can file the Form 211 application with FINRA.   An experienced securities attorney works with several Market Makers and can recommend one willing to offer sponsorship.

Just as the SEC can provide comments on an Issuer’s S-1 Registration Statement, FINRA may also have comments to the company’s Form 211 application.  When FINRA does have comments, the company’s securities lawyer and Market Maker must respond to them in a timely fashion.

Market Makers Obtain the Company’s Trading Symbol and Quote the Bid and Ask Price

After the question and answer process, if FINRA believes the company’s disclosures meet the requirements of Rule 15c2-11, FINRA assigns the company a “ticker” or trading symbol which will allow the sponsoring Market Maker to provide a bid and ask quote for the company’s stock.

Other Market Makers Can Piggyback to Quote the Company’s Stock After 30 Days

When the ticker symbol and initial quotations are in place, these will be found on  OTCMarkets.com.   After the company’s sponsoring Market Maker has published quotations for the company’s stock for 30 days, other market makers can “piggy back” in order to also publish quotations for the security without doing their own due diligence or submitting another Form 211.

Can Market Makers Charge Fees for 15c2-11?

Market Makers sponsoring companies by filing the Form 211 are technically not allowed to charge or accept a fee for work specific to 15c2-11.  As a practical matter, Issuers do pay fees for other services that are needed in connection with the Form 211, in the sense that Market Makers can refer the due diligence package to a securities lawyer of their choice, and Market Makers often also provide DTC eligibility consulting by working alongside a securities lawyer like Matt Stout in the process of helping companies become DTC eligible.

Matheau J. W. Stout works with Issuers seeking assistance in the 15c2-11 process and can help companies find Market Maker sponsorship for Form 211.  Companies with questions about the costs and timeline of going public by 15c2-11, or about the DTC eligibility process can reach Matt Stout at (410) 429-7076 or mstout@otclawyers.com.