Commenters Offer Recommendations On OTC Securities Proposal

Trade associations and state regulators offered recommendations on the SEC proposal to "tighten" the requirements that broker-dealers must meet before being permitted to post public quotations on OTC securities.

As previously covered, under proposed amendments to Rule 15c2-11 ("Initiation or resumption of quotations without specific information"), the "piggybacking exemption" to the rule would be significantly reduced, and would be eliminated in the case of shell companies. (Currently, a broker-dealer either must (i) have access to specified information regarding the issuer or (ii) be able to rely on the fact that at least one other broker-dealer has been posting quotations (i.e., the "piggybacking exemption").)