What is the Difference Between a Stop Sign and Caveat Emptor on OTCMarkets?

A Stop Sign Usually Means an Issuer is Simply Behind in its Quarterly and Annual Filings

Stop Sign       When a Pink Sheet Issuer falls behind on the filing of its OTCMarkets  financials and disclosures, it can be marked a stop sign (Pink No Information) on OTCMarkets.com.  This also happens when a former OTCQB, or bulletin board Issuer ceases to fulfill its SEC reporting obligations.  The bottom line here is that a Stop Sign is not in itself a “bad sign.”

Securities Attorneys Can Help Bring OTCMarkets Filings Current

If the only reason for the Stop Sign is that the Issuer is behind in its filing, and if those filings can be made current, then this presents an opportunity for new management.  A securities attorney can call the helpful staff at OTCMarkets.com to review the history of the Issuer and find out if there is another other substantive issue that caused the Stop Sign.  If not, then the matter is simple enough:  the Issuer needs to subscribe to OTCMarkets’ Disclosure and News Service, and bring its filings current.  The costs involved are easily quantifiable by securities lawyers like Matheau J. W. Stout, and it always makes sense to find out, even if an Issuer is not ready today to begin posting past due filings.

Issuers Marked Caveat Emptor Are Not Always Guilty of Wrongdoing

caveat-emptor       In contrast, Caveat Emptor (Skull and Crossbones) stocks are believed to have some negative element in their past history, which is significant enough for OTCMarkets.com to warn all prospective investors:  Buyer Beware.  In some cases, past management or promoters associated with the Issuer have become entangled in SEC problems unrelated to the Company, or are the subject of state inquiries.  Sometimes there were actual violations of securities law that are connected to the Issuer itself, and sometimes there is simply a misunderstanding that can be fixed by presenting evidence to the regulatory authorities involved.

Undocumented Press Releases and Violations of State Blue Sky Laws are the Reasons Why Many OTCMarkets Issuers are Marked Caveat Emptor

On many occasions, these inquiries stem from press releases that were deemed questionable by officials, and in others someone has inadvertently run afoul of state Blue Sky laws which govern the process of registering sales of stock in private placements.   In all cases, there is a process by which management can provide documentation and other evidence to clear the persons involved, and thus the Issuer, from any wrongdoing.   Sometimes the management and shareholders of an Issuer marked with the Skull and Crossbones decides its not worth the time and costs involved in “cleaning up” their vehicle.

Issuers Marked Caveat Emptor May Be Able to Clear Themselves of Any Wrongdoing with a Securities Lawyer’s Help

It makes sense for controlling shareholders to hire a qualified securities law firm, like the Law Office of Matheau J. W. Stout, Esq. to perform some due diligence into the matter, so that the costs and time frame can be quantified.  In many cases, it is easier to remove this stigma than shareholders of Caveat Emptor stocks might think, and it is nearly always worth a look.

More information regarding the differences between a Stop Sign and Skull and Crossbones Stock Can Be found on OTCMarkets.com here.