In a bulletin dated November 7th, 2017, OTC Markets Group announced a new stock promotion policy. The goal of the new policy implementation is to improve overall market transparency for investors while addressing the problems associated with a fraudulent stock promotion. OTC Markets will reach this goal through procedural changes and the creation of Best Practices for Issuers. The new stock promotion policy further reinforces the disclosure-based philosophy of OTC Markets Group and the OTCQX and OTCQB Rules.
The “Best Practices for Issuers” provides requirements and suggestions to enhance stock promotion and investor relations. Key aspects of the policy include: performing due diligence on Investor Relations firms when promoting stock; content and language of Investor Materials; and useful information regarding financing and financiers. Additionally, should your company be the subject of improper promotion, OTC Markets has provided suggested actions which an issuer should take.
As part of OTC Markets ongoing effort to improve overall market transparency, beginning in Q1 of 2018, OTC Markets will start publicly identifying securities that are the subject of stock promotion by placing a “promotion” risk flag next to the stock symbol on their websites. Promotion risk flags will be in addition to OTC Market’s current “Caveat Emptor” policy, in which a skull and crossbones icon is displayed next to a stock symbol. The skull and crossbones symbol indicates to investors that there may be a reason to exercise additional care and due diligence before investing in the security.
Provided are additional links regarding the new stock promotion policy and other related topics. Please see:
OTC Markets “Best Practices for Issuers”
OTC Markets Group Policy on Stock Promotion
OTC Markets Group “Caveat Emptor” Policy
If you have any questions regarding the new stock promotion policy, please feel free to contact us.
Foley Shechter LLP
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