Penny Stock Disclosures

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Chapters in this video

  1. 0:00 The two-part penny stock definition and exchange exemption
  2. 1:22 OTC current-information requirement before quoting
  3. 3:28 Exemptions and quotation identification
  4. 4:17 Pre-trade bid, ask, and compensation disclosures
  5. 5:48 Aggregate compensation and salesperson cut trap
  6. 6:23 Rapid-fire exam recap

What this video covers

  • The two-part penny stock definition: equity securities priced below $5 per share that do not trade on a national exchange, and why exchange-listed stocks are exempt regardless of price
  • The OTC current-information requirement and why it applies at the quotation stage, not the trading stage
  • The three exemptions from current-information review: current Exchange Act reporting, established quotation history, and unsolicited customer orders
  • Why published OTC quotations must identify the broker-dealer responsible, with no anonymous quoting permitted
  • The mandatory pre-trade disclosures: inside bid and ask quotations (or dealer's own bid/offer), number of shares, and compensation for both the firm and the salesperson
  • Why disclosing only the broker-dealer's aggregate compensation without the salesperson's cut is a hard rule violation
  • Where every pricing and compensation detail must appear in writing after execution: the customer confirmation

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