Tag Archives: SEC trading halt lawyer

Defunct OTC Companies That Continue to Trade

What is a Defunct OTC Company?

Sometimes when a public company is no longer operating or in business, its stock can continue to trade on the OTC Markets even when its filings are delinquent. These OTC companies are shown as a Stop Sign on OTCMarkets.com, and they are often labeled as “Defunct” or “Dark.”

Why Does a Defunct Public Company’s Stock Continue Trading?

The common stock of Defunct public companies or Stop Signs can continue to trade as long as there are shares in its public float.  These shares may have been previously registered under an S-1 Registration Statement when the company’ s SEC filings were current, or they may have been deposited by long-time Shareholders using Rule 144 or Section 4(a)(1) as an exemption to registration.

When Does a Defunct OTC Company’s Stock Cease Trading?

The free trading stock in the OTC Company’s public float will continue to trade unless those shares are deregistered by the SEC, trading is suspended or halted, or the registration of the Defunct public company’s stock is revoked by the SEC.

When Does the SEC Halt or Suspend Trading in a Defunct Public Company?

Unless there is evidence of wrongdoing, the SEC generally does not like to prohibit trading of stock in a Defunct OTC public company because doing so would harm those Shareholders who are holding stock in Defunct Stop Signs and those willing buyers and sellers who want to trade the stock despite the risks involved.

SEC Will Suspend Trading if There is Manipulation or False and Misleading Information

The SEC will halt or suspend trading in the stock of a Defunct public company when either

  1. The Defunct OTC company’s stock price appears to be manipulated; or
  2. When the SEC believes that the OTC company’s public information posted in filings or press releases is false or misleading.

When a trading suspension occurs, OTCMarkets.com will label the stock with a Caveat Emptor or skull and cross bones symbol, indicating that there is a public interest concern and that investors should take special care.

When Does the SEC Deregister a Defunct Company’s Stock?

The SEC may also revoke the registration of a Defunct public company’s stock. Under Section 12(j) of the Securities Exchange Act of 1934, the SEC is authorized to revoke the registration of a security if the public company fails to comply with the federal securities laws.

The deregistration of a public company’s stock will also result in the Caveat Emptor label and skull and crossbones at OTCMarkets.com, and then the Company’s trading symbol or ticker will not be searchable at all.  The SEC prohibits broker-dealers from executing trades in stocks when a Defunct public company’s registration is revoked pursuant to Section 12(j).

Securities Attorney for Shareholders of Defunct Public Companies

Shareholders owning stock in OTC Markets Stop Signs, which are delinquent in their filings or marked Defunct can contact OTC securities lawyer Matt Stout for a no cost review of their certificate and supporting documents to see if Rule 144 or Section 4(a)(1) can be used to clear restricted stock.

Securities Lawyer to Bring Defunct Companies Current

Management of delinquent SEC filers marked as Stop Signs or Caveat Emptor often work with Matt Stout to bring their companies current under the Exchange Act, or file Form 15 with the SEC in order to begin reporting as a current Pink Sheet on OTCMarkets.com.

OTC Bulletin Board and OTC Markets Securities lawyer Matt Stout can be reached at (410) 429-7076 or mstout@otclawyers.com.