Search

OTC Markets Blog

Latest commentary on Market Structure, Compliance, Small Cap and Reg A+ issues, including insights on the news and trends that affect the public markets.

Tag

Regulation

ESOPs: The Importance of Small Company Employee Ownership

Employee Stock Ownership Plans (ESOPs) allow employees to participate in the economic performance of a company, share in corporate profits, and save for retirement.  Congress has long recognized the advantages of employee ownership by authorizing and encouraging ESOPs through favorable tax treatment.

However, current IRS regulations significantly restrict the ability of many small public companies not traded on a national securities exchange to offer ESOPs to their employees.  These outdated regulations negatively impact hundreds of qualified, U.S.-based companies on the OTCQX and OTCQB markets that collectively employ over 100,000 workers. Continue reading “ESOPs: The Importance of Small Company Employee Ownership”

Blue Sky Recognition Continues to Gain Traction

OTC Markets Group Garners Blue Sky Exemptions in 35 States

Since May 2016, we have fostered an active dialogue with constituents at the North American Securities Administrators Association (NASAA) and individual state regulators with the goal of providing investors, companies, brokers and other market participants with a defined regulatory structure that recognizes the transparent current disclosure provided by OTCQX and OTCQB companies.  We appreciate the hard work and diligence of NASAA members as we work to achieve important exemptions for our OTCQX and OTCQB markets under state Blue Sky laws governing secondary trading. Continue reading “Blue Sky Recognition Continues to Gain Traction”

Regulation A 2019 Progress Report

Born out of the 2012 JOBS Act, Regulation A (Reg A) was amended to provide a streamlined pathway for companies to raise up to $50 Million while benefiting from general solicitation, ‘testing the waters’ and state Blue Sky preemption.  SEC reporting companies were originally excluded from using Reg A; however, in January 2019, the SEC adopted new rules to expand Reg A to SEC-reporting companies, enabling public companies to raise capital in a similar manner to a traditional IPO via an S-1 registration or an S-3 shelf registration. Continue reading “Regulation A 2019 Progress Report”

CECL: Unpaved Road Ahead

The Genesis/Birth of CECL

After the 2008 financial crisis, much of the focus on the regulation of financial institutions shifted to mitigating systemic risk. This included an increased focus on stress testing and the recapitalization of institutions—both intended to help ensure solvency and insulate the global economy from further erosion. Continue reading “CECL: Unpaved Road Ahead”

Three Principles for Thriving Public Markets

Oscar Wilde once wrote that “Everything popular is wrong.” He was describing our natural tendency to find comfort with well-established people and widespread ideas. Regulators, faced with the opportunity to open markets to alternative choices, hear a chorus of respected voices resistant to change. The SEC took until the year 2000 to repeal Rule 390—the rule that gave the New York Stock Exchange a monopoly in trading Blue Chip securities. The principles of open, transparent and connected public markets prevailed.

We raise this as the old idea underlying Rule 390, centralization of trading, is now being pushed as a popular fix for small company liquidity and capital formation.   Of course, individual traders are determined to make trades in many different places, which means government intervention would be required to force stock trading back onto the largest stock exchanges[1]. Rent-seeking regulations are often cloaked in the language of “reform” and the public good.

Continue reading “Three Principles for Thriving Public Markets”

A Snapshot of the OTCQX Advisory Council

Since its inception in 2015, the OTCQX Advisory Council has provided valuable insight and support to the OTC Markets Group senior management team on key issues that impact OTCQX-traded issuers and the public markets. The Council is comprised of a ten-member board, with three members appointed in 2018 and seven new members appointed earlier this year.  Collectively, these Council members represent an impressive mix of U.S.-based CEOs and CFOs from a diverse range of geographic and industry sectors. Continue reading “A Snapshot of the OTCQX Advisory Council”

OTC Markets Group Establishes A Stock Promotion Policy

By Laura Anthony | Legal & Compliance, LLC

As OTC Markets Group continues to position itself as a respected venture trading platform, it has adopted a new stock promotion policy and best practices guidelines to improve investor transparency and address concerns over fraudulent or improper stock promotion campaigns. Continue reading “OTC Markets Group Establishes A Stock Promotion Policy”

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: Continue reading “Shell Game”

What it means to be a Venture Market

Public venture markets play a vital role in fostering capital formation and driving growth for early stage companies.  Just look at the London Stock Exchange’s AIM market, which since its launch has served over 3,600 venture stage companies, or the Toronto Stock Exchange’s TSX Venture Exchange that supports growing companies from the mining and energy sectors. Continue reading “What it means to be a Venture Market”

Up ↑