Dave or anyone else...Where does CSIN stand with regards to my post below. Are they at risk here?
Regards,
Terry
Phase-In Date Issue Symbol
July 1999 A - AD
August 1999 AE - AO
September 1999 AP - BI
October 1999 BJ - CT
November 1999 CU - FL
December 1999 FM - IG
January 2000 IH - MD
February 2000 ME - OR
March 2000 OS - R
April 2000 S - TN
May 2000 TO - Z
June 2000 All Banks & Insurance Companies
New Rules May Mean Trouble
For OTC Bulletin Board Firms
By JASON ANDERS
THE WALL STREET JOURNAL INTERACTIVE
EDITION
A move to clean up the OTC Bulletin Board
by requiring the small
companies quoted there to disclose basic
financial information has left the
companies scrambling to comply, and
investors in a bind.
The first phase of
the plan, which is being
implemented by the
National Association of
Securities Dealers
over the next year, begins
July 1. Companies
that fail to comply will be
dropped from the OTC Bulletin Board, and
the NASD says that so far,
two-thirds of the 94 companies facing the
first deadline don't meet the
eligibility requirements. By the time the
plan is fully implemented, half the
6,700 OTC Bulletin Board companies could
be booted. (The NASD also
operates the Nasdaq Stock Market.)
A place on the OTC Bulletin Board is
important because the service --
along with its updated stock quotes
readily available on the Internet -- has
helped many otherwise unknown companies
attract legions of shareholders
and achieve heavy trading volume. Without
the OTC Bulletin Board, price
quotes would be harder to find, and
volume -- and potentially stock prices
-- could drop dramatically.
Many OTC Bulletin Board companies find
themselves in a difficult
position: trying to calm investors
worried over the new eligibility rules,
while at the same time facing what
regulators say is an insurmountable
challenge to file the paperwork and win
approval before July 1.
Many investors didn't know American
Benefits Group was facing eligibility
trouble
until some postings on an Internet
message
board noted that an "E" had been appended
to the company's stock symbol -- a
designation used by the NASD to identify
companies that are within 30
days of being dropped.
The company, which was once involved in
viatical settlements but now
says it operates an Internet shopping
mall and several mining operations in
Madagascar, issued a press release June 4
assuring investors that it was
"committed to file the documents on June
11" and maintain its place on the
OTC Bulletin Board. (Viatical settlements
let terminally ill individuals
collect a portion of their life-insurance
benefits before they die.)
But as of Friday, the Deerfield Beach,
Fla., company still hadn't filed with
the U.S. Securities and Exchange
Commission. "Actually, we said the
soonest we could do it was June 11,"
Jerry G. Mikolajczyk, American's
chief executive, said in an interview.
"At this time we won't be able to
comment on the exact date. Our official
stance is no comment on
everything."
But even if American Benefits Group had
mailed the filings when promised,
it still would have been dropped from the
OTC Bulletin Board. That's
because the SEC gets a 60-day comment
period before the filings go into
effect, and a company's eligibility could
be delayed significantly if the SEC
has questions about the filing -- facts
that some OTC companies failed to
mention when they assured investors they
would meet the deadlines.
"It's not realistic to think that in 30
days or even 60 days these companies
could get the necessary filings
together," says Adena Friedman, director of
trading and market services for Nasdaq.
"If these companies didn't start
working on this several months ago,
there's no way they're going to make
it."
Ms. Friedman admits that investors could
have difficulty unloading stock in
companies that are dropped from the OTC
Bulletin Board. "We've been
telling people this was happening since
January, and I think the companies
bear the responsibility here for what
happens in the trading of their stock,"
she says.
Many of the companies that become
ineligible will likely move to the Pink
Sheets, a daily publication of quotations
distributed by National Quotation
Bureau Inc., New York. NQB plans to
launch an online, real-time version
of the Pink Sheets in mid-July, but those
quotes will be accessible only on
a subscription basis to brokers and
market makers, and won't be directly
available to investors.
Companies are being phased into the new
rules alphabetically by ticker
symbol. Only 94 securities are up for
review for July 1 (65 of those are
currently scheduled to drop off), but in
later months as many as 700
securities will be reviewed at once. The
new rules require companies to file
a Form 10 with the SEC that contains
audited financial information, and to
file quarterly financial statements.
The Internet has helped turn the OTC
Bulletin Board into a popular
playground for investors looking for big
returns. Lured by cheap prices --
many shares trade for less than $1 -- and
volatility that can send a
company soaring 500% in a single day,
investors have flocked to the
service, where average daily volume has
tripled since 1995 (volume on the
larger Nasdaq doubled over the same
period).
But because many of the most popular OTC
Bulletin Board stocks don't
report to the SEC, investors have been
left to get information on such
securities from often dubious sources,
including paid stock promoters.
And the OTC Bulletin Board has also
proved to be fertile ground for
investment scams -- almost all of the
Internet stock-fraud cases brought by
the SEC have involved companies quoted on
the OTC Bulletin Board.
"These are companies you never would have
heard of before the Internet,
and in many cases that would have been a
good thing," says William
McDonald, director of enforcement the
California Department of
Corporations, the state securities
regulator. "I hope the public understands
that these delisted securities create a
road map that we're going to use to
find fraudulent companies."
To be sure, SEC filings can be burdensome
for small companies. Access
Power, a Jacksonville, Fla., provider of
telephone service over the
Internet, is among the companies that
were certified "eligible" in this first
round.
The company began filing with the SEC
before the new rule went into
effect and estimates it spent about
$20,000 to complete its filings -- and
that was with minimal use of outside
accountants and lawyers. "It probably
took us four or five months to get things
together at first, including about
four weeks just to get the financials
audited," says Glenn Smith, Access
Power's chief executive.
The company now has one full-time
employee -- out of its staff of 10 --
who does nothing but deal with SEC
filings. "It's a strain, yes," says Mr.
Smith. "But if you're a public company,
you owe this to your investors,
period."
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