SEC Closing `Back Door' Registration for OTC Bulletin Board Washington, April 13 (Bloomberg) -- Regulators are attempting to close a legal loophole that may help companies on the Other-the-Counter Bulletin Board circumvent new financial disclosure requirements. Under rules enacted last year, companies must file periodic public financial reports if they want to trade on the OTC Bulletin
Board, which is run by the National Association of Securities
Dealers. The bulletin board is an electronic quote service for
companies that can't or don't want to meet requirements for
trading on the Nasdaq Stock Market.
Some companies that haven't filed could try to get around the
rule by buying up dormant ``shell' companies that have already
complied with the reporting standards, according to the Securities
and Exchange Commission.
For that reason, the SEC said it will require companies that
buy shell companies just to meet the rules to file audited
financial statements within 15 days. The 15-day requirement is
spelled out in a letter the SEC sent to the NASD earlier this
month. The letter was described in today's Wall Street Journal.
Information wasn't available about how many of the more than
4,500 companies that trade on the OTC Bulletin Board could be
affected by the SEC's determination.
Since last June, when the rule requiring bulletin board
companies to file disclosure reports first took effect, 2,065
companies have been removed from the OTC Bulletin Board for not
complying, said NASD spokesman Scott Peterson.
The rule was phased in over 12 months according to an
alphabetical schedule based on what each company's ticker symbol
was on Jan. 4, 1999.
``The rule has been effective in eliminating companies that
don't provide the financial information that is critical to
investors' making sound decisions,' Peterson said.
--Judy Mathewson in Washington (202) 624-1915, or
jmathewson@bloomberg.net /ba
Story Illustration: For a list of OTC Bulletin Board securities
and their eligibility status try: {http://www.otcbb.com} |
