How Does a Company become Quoted?
http://www.pinksheets.com/pink/otcguide/issuers_getquoted.jsp
To become a Pink Sheets Company, you need to find one market maker willing to quote your company's stock. Only SEC-registered broker-dealers (market makers) that are members of the Financial Industry Regulatory Authority (FINRA) can quote securities in the Pink Quote system.
There are three ways a market maker can initiate a quotation in a security that is not already quoted on the Pink Quote system:
•Form 211 - SEC Rule 15c2-11 requires that, before a broker or dealer publishes proprietary quotes on a quotation medium, it must gather, review, and retain certain information about the issuer. The market maker must file a Form 211 with the FINRA OTC Compliance Unit, along with two copies of the required issuer information. After a successful review, the FINRA Compliance Unit will notify the market maker that it may enter a quotation on the Pink Quote system. Issuers may contact a registered broker-dealer for sponsorship of a security on the Pink Quote system. For more information on the 211 process, see:
◦Quoting Pink Sheet Securities
◦SEC Rule 15c2-11
◦211 Q & A
•Unsolicited Quote - An exception to Rule 15c2-11 exists for Unsolicited Customer Orders. To avail itself of this exception, a FINRA member firm must ensure that the quotation published or submitted: (1) is solely on behalf of a customer; (2) represents the customer's indication of interest; and (3) does not involve the solicitation of the customer's interest. For more information, see:
◦Unsolicited Quotes below.
•Exemption to Rule 15c2-11 - If a market maker already quotes the security in another market center, the market maker may qualify for an exemption to Rule 15c2-11 and skip the review by the FINRA OTC Compliance Unit. In this case, the market maker can contact Pink OTC Markets and request to quote the security in the Pink Quote system immediately.
◦15c2-11 Exemptions
Finding A Market Maker to Sponsor Your Company
There are over 200 market makers that participate in the Pink Quote system. Only one market maker quotation is required to be considered a Pink Sheets security; however, not all market makers are willing to file a Form 211. Many market makers will begin to quote a security after it becomes "piggyback qualified" and they can do so without filing the Form 211.
Pink OTC Markets cannot recommend specific market makers. However, market makers listed in our Service Provider Directory welcome potential issuers to contact them to discuss making a market in their company's stock.
Listing Requirements and Fees
There are no listing requirements to be a Pink Sheets company. Current financial information must be submitted with the Form 211. Current FINRA rules do not require the financial statements of Pink Sheets issuers to be audited, but they should be prepared in accordance with GAAP or, for foreign issuers, in accordance with their home country's accounting standards.
While Pink OTC Markets Inc. does not have a requirement that the issuer continue to provide updated financial information to Pink OTC Markets; federal securities law requires that adequate current information must be publicly available when an issuer's securities are traded in the OTC market under the following circumstances:
•At the time of initial quotation in public markets;
•At any time corporate insiders or other affiliates of the issuer are offering, buying or selling the issuer's securities in the OTC market;
•During any period that the issuer or affiliates of the issuer are directly or indirectly engaged in promotional activities having the effect of encouraging trading of the issuer's securities in the OTC market; or
•At the time securities initially sold in a private placement become freely tradeable in the OTC market. If any of the four above situations are occurring, issuers subject to Section 13 or 15(d) of the Securities Exchange Act of 1934 must be current in their reporting obligations to the SEC and we provide the OTC Disclosure and News Service for non-SEC reporting issuers to make their information publicly available. For more information on these services, please see the OTC Disclosure and News Service section.
Issuers pay no fees to be quoted on the Pink Quote system. Market makers pay a monthly fee to quote a security.
How a Company Can Help a Market Maker Quote Its Stock
A company can help a market maker quote its stock by providing the market maker with information. SEC Rule 15c2-11 requires a broker/dealer to obtain and keep in its files certain information about an issuer before initiating a quote for the issuer. The market maker must have a reasonable basis for believing that the information is accurate and obtained from reliable sources. The required information includes a general business description, location and contact information, officers, total shares outstanding, transfer agent, recent prospectus or offering circular, balance sheet, retained earnings and profit and loss statements.
FINRA monitors compliance with this rule by requiring market makers to file a Form 211 at least 3 days prior to quotation in the Pink Quote system. FINRA review may take a considerable amount of time depending, among other things, on whether or not FINRA requests additional information from the market maker and the amount of time required to respond to requests for additional information.
•Form 211 (pdf)
Quotation of a Delisted Security on the Pink Quote system
Because the Pink Quote system is a quotation medium for subscribing members and not an issuer listing service, a delisted issuer cannot "list" themselves in the Pink Sheets.
Delisted from NASDAQ
If a security has been delisted from The NASDAQ Stock Market because the Issuer has not maintained NASDAQ's listing requirements and the security meets the following criteria, then the security will be available for immediate quotation in the Pink Quote system only for those market makers quoting in the security during the 30-day period preceding its removal:
•The security has been quoted continuously on NASDAQ during the 30 calendar days preceding its delisting, exclusive of any trading halt not exceeding one day to permit the dissemination of material news concerning the security's issuer.
•The issuer must not be the subject of bankruptcy proceedings.
•The issuer must be current in its filings with the SEC.
Upon delisting of a security meeting the above criteria, market makers that have quoted the security in NASDAQ during the 30-day period preceding its removal may contact Pink OTC Markets to enter a quote anytime prior to market close on the day of delisting, without submitting a Form 211. Generally, the security will become "piggyback qualified" in the Pink Quote system 30 days after delisting, at which time other market makers may enter a quote in the Pink Quote system without submitting a Form 211 to FINRA. A delisted NASDAQ issuer that wishes to be quoted in the Pink Quote system should contact their market makers to request that they register to quote the security in Pink Quote.
If the issuer does not meet all of the above criteria upon delisting, if it voluntarily delists from NASDAQ, or if no market maker entered a quote in the Pink Quote system on the day of delisting, then the usual Form 211 filing and review process will apply. However, many NASDAQ-listed securities already have published quotations on the Pink Quote system on an unpriced basis. This provides the market maker with an exemption to filing a Form 211 in the event the security is delisted from NASDAQ. In this case, any market maker that had been quoting the security in the Pink Quote system for the 30 days prior to delisting could continue to make a market in the Pink Quote system upon delisting. The security generally becomes "piggy-back qualified" the same day it is delisted and any other market maker can then enter its quotes in the Pink Quote system without first submitting a Form 211 to FINRA. To find out if a NASDAQ listed security is being quoted on the Pink Quote system concurrently, please call Pink OTC Markets' Issuer Services Department at 212-896-4420 or email us at issuerservices@pinkotc.com.
Delisted from an Exchange
If a security is delisted from The New York Stock Exchange or from the American Stock Exchange, then the usual Form 211 filing and review process will apply. However, some exchange-listed securities are already quoted in the Pink Quote system on an unpriced basis. This provides the market maker with an exemption to filing a Form 211 in the event the security is delisted from the Exchange. In this case, any market maker that had been quoting the security in the Pink Quote system for the 30 days prior to delisting could continue to make a market in the Pink Quote system upon delisting. The security generally becomes "piggy-back qualified" the same day it is delisted and any other market maker can then enter its quotes in the Pink Quote system without first submitting a Form 211 to FINRA. To find out if an Exchange-listed security is being quoted on the Pink Quote system concurrently, please call Pink OTC Markets' Issuer Services Department at 212-896-4420 or email us at issuerservices@pinkotc.com.
Unsolicited Quotes
SEC Rule 15c2-11 provides an exemption to filing a Form 211 with FINRA for brokers that wish to publish an unsolicited quote. An unsolicited quote represents a customer order and not a market maker's own position and must be removed from the system once the customer order is executed. Compliance with this rule is monitored by FINRA.
Federal securities laws require an issuer making a public offering of securities to file a registration statement with the SEC. Pink OTC Markets has become increasingly concerned that the unsolicited quote exception in Exchange Act Rule 15c2-11 is being abused by unscrupulous individuals to engage in questionable and possibly fraudulent activities in violation of the federal securities laws. Pink OTC Markets, as a matter of policy, does not believe that the Unsolicited Quote Exemption should be used to circumvent FINRA's 211 process. As a result, effective February 6, 2006, Pink OTC Markets is limiting the publication of unsolicited quotes to securities of seasoned issuers only. A seaoned security is generally defined as a security for which there has previously been a public market or a security of an issuer that has other seasoned securities.
Pink OTC Markets generally will publish unsolicited quotations in securities that meet one of the following five conditions:
1.The Issuer of the securities is subject to Section 13 or 15(d) of the Exchange Act, is current in its filing obligations and has other seasoned securities currently trading on the NYSE, AMEX, NASDAQ, OTCBB or the Pink Sheets.
2.The securities were recently delisted from NYSE, AMEX, NASDAQ or the OTCBB;
3.The Issuer is a bank, savings and loan, or insurance company;
4.The securities were issued as part of a bankruptcy plan of reorganization; or
5.The security being quoted is a foreign ordinary, which is listed on a foreign exchange, or an ADR representing such ordinaries
In order to publish an unsolicited quote for a security that meets one of the above conditions and is not already quoted on the Pink Quote system, a broker should submit this form to Pink OTC Markets:
•Broker/Dealer Unsolicited Quote Entry (pdf)
Issuers of previously unseasoned securities that originally entered the Pink Sheets prior to February 6, 2006 using the unsolicited quote exemption and continue to be quoted only on an unsolicited basis are required by Pink OTC Markets to continue to make periodic disclosure using the OTC Disclosure and News Service. If the Issuer ceases to provide current information, Pink OTC Markets may cease to allow broker/dealers to publish quotes in its securities.
For additional information on Pink OTC Markets' policy regarding the publication of unsolicited quotes, and for information on Pink OTC Markets' disclosure requirements for securities quoted on an unsolicited basis prior to February 6, 2006, click here.
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