Penny Stocks and Associated Rules

What this video covers

• The two-part penny stock definition (unlisted AND priced under $5) and why a $2 NYSE-listed stock is NOT a penny stock
• The issuer exemption thresholds: $2 million net tangible assets (3+ years operating), $5 million (under 3 years), and $6 million average revenue
• The four pre-transaction disclosures: risk disclosure document, current quotation, compensation, and suitability statement
• Why the compensation disclosure covers the associated person's (the rep's) pay, not the firm's overall fees
• Which two documents require the customer's physical signature before the trade can settle
• The two suitability-statement exemptions: established account over 1 year OR 3+ prior penny stock purchases
• Why the exemptions only waive the suitability statement and the risk disclosure document is required for every penny stock transaction, forever
• The ongoing requirement for monthly account statements showing estimated market value of each penny stock held