Thursday, September 26, 2019

SEC Proposes Amendments to Enhance Retail Investor Protections

The SEC has voted to propose amendments to Exchange Act Rule 15c2-11, which sets out certain requirements with which a broker-dealer must comply before it can publish quotations for securities in the securities in the over-the-counter (“OTC”) market. The proposed amendments are designed to modernize the Rule, which was last substantively amended in 1991, and to enhance investor protection by requiring that current and publicly available issuer information is accessible to investors. The proposed amendments would provide greater transparency to the investing public by requiring that information about the issuer and the security be current and publicly available before a broker-dealer can begin quoting that security.

Securities that trade on the OTC market are primarily owned by retail investors. Because broker-dealers play an integral role in facilitating investor access to OTC securities and serve an important gatekeeper function under Rule 15c2-11, the Rule requires that a broker-dealer review basic information about an issuer before quoting securities to investors in the OTC market. Certain of the Rule’s exceptions, however, permit broker-dealers to continue to publish quotations when there is no current information about the issuer available to the public or the broker-dealer. The Commission is concerned that, in today’s OTC market, market participants can take advantage of these exceptions to the detriment of retail investors.

Read the Full Press Release

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