Thursday December 11, 2:15 pm Eastern Time
NASD board okays tighter small-cap listing rules
WASHINGTON, Dec 11 (Reuters) - The National Association of Securities Dealers said on Thursday its board of directors approved a plan requiring more disclosure from small-cap stocks that are traded on its Electronic Bulletin Board, a trading forum maintined by the Nasdaq but loosely regulated.
The principal changes, which are subject to approval by the Securities and Exchange Commission, would enhance investor protection by
significantly increasing the amount of timely and accurate information about the companies that are quoted on the Bulletin Board.
Brokers would also be required to take additional steps prior to recommending or conducting a transaction in an over-the-counter security.
''There has been a dramatic increase in the number of micro-cap securities in the public market place. These measures are designed to ensure that the level of integrity that exists in other parts of the market is achieved in the smaller-capitalized section as well,'' said Frank Zarb, chairman, chief executive officer and president.
Currently, more than 6,800 securities are quoted on the bulletin board, of which about 50 percent currently report their financial information to the SEC.
Under the new proposals, and after a phase-in period for existing bulletin board stocks, all companies that do not report to the SEC, bank, or insurance regulators would be eliminated from the bulletin board.
''These companies would be eligible to be quoted in other mediums, such as the pink sheets,'' the NASD said.
Under the proposals, dealers must provide investors a standard disclosure statement, emphasizing the difference between over-the-counter securities and other market-listed securities. |
