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Compliance

Corporate Governance Rules of the Road

There is growing interest in the area of Corporate Governance and how companies can leverage best practices to attract investors and lower the cost of raising capital.  To provide companies with the “rules of the road” we recently hosted a webinar with Compass Investor Relations.   Continue reading “Corporate Governance Rules of the Road”

Stock Promotion – Context, Concerns & Potential Solutions

There is an adage that stocks need to be sold by having their stories widely told.  This is especially important for smaller companies looking to promote themselves to customers and build their visibility with the investment community.

Social networks and online media sites have created new ways for public companies to interact and connect with potential investors.  Digital marketing has made it easier for investor relations professionals to reach millions of investors with the click of a mouse, but it can also be abused by anonymous market manipulators for fraudulent promotional campaigns. Continue reading “Stock Promotion – Context, Concerns & Potential Solutions”

Shell Game

During conversations with compliance and risk departments over the past year, the topic of shell companies always comes up.  For diligent compliance officers the reason for this focus is obvious, shell companies and more specifically trading with their affiliates are noted specifically in key notices and regulations, including:

  • FINRA Regulatory Notice 09-05 – Unregistered Resales of Restricted Securities: Shell company status at the time of issuance is noted specifically as a red flag.
  • Office of Compliance Inspections and Examinations (OCIE) Alert October 2014 – Broker Dealer Controls Regarding Customer Sales of Microcap Securities: The alert noted that companies with nominal assets and low operating revenue should be a consideration when considering whether to file a Suspicious Activity Report (SAR).
  • Rule 144 – Specifically bars the use of the 144 safe harbor for securities issued by a shell company or former shell company[i].

Continue reading “Shell Game”

Quality Recommendations

At first look, FINRA Rule 2114, Recommendations to Customers in OTC Equity Securities (The OTC Rec Rule), seems onerous and vague – two of a Compliance Officer’s least favorite adjectives.  The initial requirement reads as follows:

“No member or person associated with a member shall recommend that a customer purchase or sell short any OTC Equity Security, unless the member has reviewed the current financial statements of the issuer, current material business information about the issuer, and made a determination that such information, and any other information available, provides a reasonable basis under the circumstances for making the recommendation.”
Continue reading “Quality Recommendations”

5 Get Smart Tips on OTC Markets Compliance

The OTC equity market can seem overwhelming – with so many securities and data points to track, many compliance professionals are at loss for where to start.  The good news is you are not alone.

Here are 5 tips to understanding the OTC Market

Continue reading “5 Get Smart Tips on OTC Markets Compliance”

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