OTC Markets: OTCQX Community Banks Virtual Investor Conference — republished by Ronald Woessner

Invitation to webcast by OTC Markets Group appears below:


OTC Markets Group invites you to join us Thursday, March 14, 2019 at VirtualInvestorConferences.com for a series of live webcast presentations featuring CEOs and senior executives of OTCQX Community Banks.

Register now to hear from some of our 2019 OTCQX® Best 50 OTCQX regional and community Banks. Tune in as these OTCQX banks speak to their future growth plans and engage with industry leaders during a live Q&A session.

Presentation Agenda:
March 14, 2019 (EST)

Register Here

Not able to Attend?

The event, including presentations, will be available for on-demand replay following the conclusion of the conference.

About Virtual Investor Conferences 
Virtual Investor Conferences is the leading proprietary investor conference series that provides an interactive forum for publicly-traded companies to meet and present directly with investors.

A real-time solution for investor engagement, Virtual Investor Conferences is part of OTC Market Group’s suite of investor relations services specifically designed for more efficient Investor Access.  Replicating the look and feel of on-site investor conferences, Virtual Investor Conferences combine leading-edge conferencing and investor communications capabilities with a comprehensive global investor audience network.

Questions, please contact:   

John M. Viglotti
SVP | Investor Access
T +1 (212) 220-2221


OTC Updated Pink Basic Disclosure Guidelines & Attorney Letter Guidelines — republished by Ronald Woessner

OTC Markets has updated the Pink Basic Disclosure Guidelines and the Attorney Letter Guidelines for companies and their attorneys that publish disclosure and financial information to the market through OTCIQ.com. See here for the information on the OTC website.

Federal securities laws, such as Rules 10b-5 and 15c2-11 of the Securities Exchange Act of 1934 (“Exchange Act”) as well as Rule 144 of the Securities Act of 1933 (“Securities Act”), and state Blue Sky laws, require issuers to provide adequate current information to the public markets. With a view to encouraging compliance with these laws, OTC Markets Group has created these Pink Basic Disclosure Guidelines (“Guidelines”).[1] These Guidelines set forth the disclosure obligations that make up the “Alternative Reporting Standard” for Pink companies. These Guidelines have not been reviewed by the U.S. Securities and Exchange Commission or any state securities regulator, although OTC Markets Group as a matter of policy welcomes comments from these and other regulators. We use information provided by companies under these Guidelines to designate the appropriate tier in the Pink Market: Current Information, Limited Information or No Information.[2] The information provided by companies under these Guidelines is subject to our Privacy Policy.

These Guidelines may be amended from time to time, in the sole and absolute discretion of OTC Markets Group, with or without notice.

Qualifications for the Pink Current Information Tier

Companies that make the information described below publicly available on a timely basis (90 days after fiscal year end for Annual Reports; 45 days after each fiscal quarter end for Quarterly Reports) may qualify for the Current Information Tier. Financial reports must be prepared according to U.S. GAAP or International Financial Reporting Standards (IFRS) but are not required to be audited.

Initial Qualification:

  1. Subscribe to the OTC Disclosure & News Service by submitting an OTCIQ Order Form.
  2. Create the following documents, save them in PDF format and upload them via OTCIQ.com (note financial statements may be included within a disclosure statement or included by reference):
  • Disclosure Statements: Disclosure information pursuant to these Guidelines for the company’s latest fiscal year end and each subsequent quarter for which reports are due. Disclosure statements should include all information in accordance with these Pink Basic Disclosure Guidelines (see the fillable form staring on Page 4).
  • Financial Statements: Annual and quarterly financial statements (including a balance sheet, income statement, statement of cash flows, and notes to financial statements) for the previous two completed fiscal years and each subsequent quarter. If the annual financial statements are audited, please attach the audit letter from the audit firm. Financial statements may be included within the disclosure statement for corresponding periods or posted separately and incorporated in the disclosure statement by reference.
  1. If financial statements are not audited by a PCAOB registered firm:
  • Attorney Letter Agreement: Submit a signed Attorney Letter Agreement (first two pages of the Attorney Letter Guidelines) to OTC Markets Group via email to issuers@otcmarkets.com or fax (212-652-5920).
  • Attorney Letter: After following the appropriate procedures with a qualified attorney, submit an Attorney Letter in accordance with the Attorney Letter Guidelines through OTCIQ.
  1. Allow OTC Markets Group to process the posted documents (typically three to five business days) and provide any comments.

Ongoing Qualification for the Pink Current Information Tier:

  1. For each Fiscal Quarter End, file a Quarterly Report through OTCIQ within 45 days of the quarter end. (A separate Quarterly Report is not required for the 4th) The Quarterly Report should include:
  • Disclosure Statement: Disclosure information pursuant to these Guidelines. Use the fillable form beginning on page 4.
  • Financial Statements: Quarterly financial statements (including a balance sheet, income statement, statement of cash flows, and notes to financial statements). 
  1. For each Fiscal Year End, file an Annual Report through OTCIQ within 90 days of the fiscal year end. The Annual Report should include:

 Disclosure Statement: Disclosure information pursuant to these Guidelines. Use the fillable form beginning on page 4.

  • Financial Statements: Annual financial statements (including a balance sheet, income statement, statement of cash flows, and notes to financial statements).
  • Attorney Letter: If the annual financial statements are not audited by a PCAOB registered firm, submit an Attorney Letter in accordance with the Attorney Letter Guidelines through OTCIQ within 120 days of the fiscal year end.

Qualifications for the Pink Limited Information Tier

Companies that make the information described below publicly available within the prior 6 months may qualify for the Limited Information Tier.

  1. Subscribe to the OTC Disclosure & News Service by submitting an OTCIQ Order Form.
  2. Create a Quarterly Report or Annual Report for a fiscal period ended within the previous 6 months, save it in PDF format and file through OTCIQ. The Quarterly Report or Annual Report must include:
  • Financial Statements: A balance sheet and income statement for a period within the previous 6 months. The financial statements must be prepared in accordance with US GAAP or IFRS but are not required to be audited.[3]
  • Outstanding Shares: The current number of outstanding shares from a period no later than the financial statements above.
  • A company in the Pink Limited Information tier may, but is not required to, include information in accordance with these Pink Basic Disclosure Guidelines using the fillable form beginning on page 4.

Current Reporting of Material Corporate Events

Companies are expected to release quickly to the public any news or information regarding corporate events that may be material to the issuer and its securities.  Persons with knowledge of such events would be considered to be in possession of material nonpublic information and may not buy or sell the issuer’s securities until or unless such information is made public. If not included in the issuer’s previous public disclosure documents or if any of the following events occur after the publication of such disclosure documents, the issuer shall publicly disclose such events by disseminating a news release within 4 business days following their occurrence and posting such news release through an Integrated Newswire or OTCIQ.[4]

Material corporate events include:

    • Entry into or termination of a material definitive agreement
    • Completion of an acquisition or disposition of assets, including but not limited to merger transactions
    • Creation of a direct financial obligation or an obligation under an off-balance sheet arrangement of an issuer
    • Triggering events that accelerate or increase a direct financial obligation or an obligation under an off-balance sheet arrangement
    • Costs associated with exit or disposal activities
    • Material impairments
    • Sales of equity securities
    • Material modification to rights of security holders
    • Changes in issuer’s certifying accountant
    • Non-reliance on previously issued financial statements or a related audit report or completed interim review
  • Changes in control of issuer
  • Departure of directors or principal officers; election of directors; appointment of principal officers
  • Amendments to articles of incorporation or bylaws; change in fiscal year
  • Amendments to the issuer’s code of ethics, or waiver of a provision of the code of ethics
  • Any changes to litigation the issuer may be involved in, or any new litigation surrounding the issuer
  • Officer, director, or insider transactions in the issuer’s securities
  • Disclosure regarding stock promotion campaigns deemed material by the issuer
  • Other events the issuer considers to be of importance



Understanding Short Sale Activity by Cromwell Coulson OTC Markets Group — republished by Ronald Woessner

See below for an article by Cromwell Coulson, President, CEO and Director of OTC Markets Group, regarding “Understanding Short Sale Activity.”

Quality data is essential to well-functioning markets. Improving the availability, relevance and usefulness of data aligns with OTC Market Group’s mission to create better informed, more efficient financial markets.  In our experience, short selling remains one of the most highly-debated topics among academics, companies, investors, market makers and broker-dealers. As a market operator and company CEO, I believe it’s critical to address the misconceptions that still exist around short sale data and the correlation to a stock’s fundamental value.

Short selling, the sale of a security that the seller does not own, has long been a controversial practice in public markets.  Advocates for short selling believe it builds price efficiency, enhances liquidity and helps improve the public markets, while critics are concerned that it can facilitate illegal market manipulation and is detrimental to investors and public companies.  Given the diverse range of opinions and opposing views, we believe the first step is to take a deeper dive into the data and help separate out the noise.

“The Reliable” – FINRA Equity Short Interest Data

The most accurate measure of short selling is the data reported by all broker-dealers to FINRA on a bi-weekly basis.   These numbers reflect the total number of shares in the security sold short, i.e. the sum of all firm and customer accounts that have short positions.

This information is available on www.otcmarkets.com on the company quote pages.  As an example, OTC Markets Group has a few hundred shares sold short on average, which represents a fraction of our daily trading volume and shares outstanding.


9/28/2018 97 11.49 5,551 1 No No
9/14/2018 87 8.75 4,423 1 No No
8/31/2018 80 100.00 6,818 1 No No
7/31/2018 103 -48.24 3,197 1 No No
7/13/2018 199 -27.64 2,124 1 No No
6/29/2018 275 166.99 3,239 1 No No
6/15/2018 103 24.10 2,739 1 No No
5/31/2018 83 -72.33 3,925 1 No No
5/15/2018 300 1.69 3,944 1 No No
4/30/2018 295 100.00 4,278 1 No No

FINRA Rule 4560 requires FINRA member firms to report their total short positions in all over-the-counter (“OTC”) equity securities that are reflected as short as of the settlement date. In 2012 FINRA clarified that firms must report short positions in each individual firm or customer account on a gross basis under FINRA Rule 4560. Therefore, firms that maintain positions in master/sub-accounts or parent/child accounts must calculate and report short interest based on the short position in each sub- or child account.

Since this data is part of a clearing firm’s books and records, it is of high quality and FINRA regularly inspects broker-dealer compliance with the rule.  Of course, it would be great if this data was collected and published daily (with an appropriate delay).

“The Misleading” – Daily Short Volume

In contrast, the most frequently misinterpreted data is the Daily Short Volume, sometimes referred to as Naked Short Interest.  This data shows the percentage of published trade reports (called media transactions in FINRA Rules) that were marked short.   As an example, the recent data for OTC Markets Group shows that up to 90% of the trading volume comes from short

selling on some days.   If we did not carefully track our bi-weekly Short Interest, we could easily be led to believe that short selling is rampant in our stock.

Historical Short Volume Data for OTC Markets Group (OTCQX: OTCM)

Oct 18 3,341 1,399 41.87
Oct 17 5,989 3,198 53.40
Oct 16 16,120 7,509 46.58
Oct 15 24,155 12,991 53.78
Oct 12 6,297 4,914 78.04
Oct 11 4,059 1,553 38.26
Oct 10 2,185 999 45.72
Oct 9 7,473 4,556 60.97
Oct 5 880 525 59.66
Oct 4 492 200 40.65
Oct 3 2,041 801 39.25
Oct 2 4,786 1,560 32.60
Oct 1 3,973 2,607 65.62
Sep 28 244 23 9.43
Sep 27 882 805 91.27
Sep 26 259 189 72.97
Sep 25 3,085 2,250 72.93
Sep 24 967 571 59.05
Sep 21 2,350 825 35.11
Sep 20 7,164 6,453 90.08
Sep 19 297 202 68.01


Seeing the above data can be alarming for public companies and their investors, until they understand the inner workings of how dealer markets function and broker trades are reported—which render the data virtually meaningless.

Since this data also comes from FINRA, what gives?  The daily short selling volume is misleading because market makers and principal trading firms report a large number of trades as short sales in positions that they quickly cover. For market makers with a customer order to sell, they will temporarily sell short (which gets published to the tape as a media transaction for public dissemination) and then immediately buy from their customer in a non-media transaction that is not publicly disseminated to avoid double counting share volumes.  SEC guidance also mandates that almost all principal trading firms that provide liquidity at multiple price levels, or arbitrage international securities, must mark orders they enter as short, even though those firms might also have strategies that tend to flatten by end of day. Since the trade reporting process for market makers and principal trades makes the Daily Short Volume easily misleading, we do not display it on www.otcmarkets.com.

Making daily short reporting data easily-digestible and relevant is not hard. On the contrary, it should be easy to aggregate all of the short selling that is reported as agency trades, as well as all of the net sum of buying and selling by each market maker and principal trading firm.  This would paint a clear picture for investors of overall daily short selling activity. Fixing the misleading daily short selling data would bring greater transparency and trust to the market.

 “The Missing Piece”– Short Position Reporting by Large Investors

There is ample evidence that short selling contributes to efficient price formation, enhances liquidity and facilitates risk management.  Experience shows that short sellers provide benefits to the overall market and investors in other important ways which include identifying and ferreting out instances of fraud and other misconduct taking place at public companies.  That said, we agree with the New York Stock Exchange and National Investor Relations Institute that there is a serious gap in the regulation of short sellers related to their disclosure obligations.   We understand that well-functioning markets rely on powerful players who cannot be allowed to hide in the shadows.  Since we require large investors, who accumulate long positions, to publicly disclose their holdings, why aren’t there disclosure obligations for large short sellers?   This asymmetry deprives companies of insights into their trading activity and limits their ability to engage with investors.  It also harms market functions and blocks investors from making meaningful investment decisions.

One point is clear, we all need to continue to work collaboratively with regulators to improve transparency, modernize regulations and provide investors with straightforward, understandable information about short selling activity.  We want good public data sources that bring greater transparency to legal short selling activity as well as shine a light on manipulative activities.  All while not restricting bona fide market makers from providing short-term trading liquidity that reduces volatility.

OTC Markets Participates in October 2018 SEC Roundtable – by Ronald Woessner


OTC Markets Group Participates in SEC Roundtable Sponsored by the Division of Trading and Markets
On September 26, OTC Markets Group was pleased to take part in the SEC’s Roundtable on Regulatory Approaches to Combating Retail Investor Fraud, hosted by the Division of Trading and Markets. OTC Markets Group CEO Cromwell Coulson participated in a panel discussion on Trading Halts and General Counsel Dan Zinn spoke on a panel focused on Rule 15c2-11 and enhancing public disclosure requirements.

“Fraudulent and manipulative promotion schemes corrupt the efficient market pricing process, hinder small company capital formation, and harm retail investors,” said Cromwell Coulson, CEO. “Because regulation alone cannot address all sources of fraud, we must empower individuals with the information they need to make better-informed investment decisions. Shining the electric light of data-driven markets that incentivize corporate disclosure, combined with common-sense regulation, are the most effective investor protection tools.”

In conjunction with their participation in the Roundtable, OTC Markets Group submitted a list of targeted Regulatory Recommendations that would help to combat retail investor fraud, improve market efficiency and bring greater transparency to our public markets.

OTC Markets Proposed OTCQX Listing Requirements by Ronald Woessner

OTC Markets Group has published a proposed amendment to the OTCQX Rules for U.S. Companies, and OTCQX Rules for U.S. Banks.

Proposed Amendment

 As of January 1, 2019, OTC Markets Group plans to require all U.S. companies and U.S. Banks trading on OTCQX to provide verified share data through a transfer agent that participates in the Transfer Agent Verified Shares Program. You may find a list of participating transfer agents at Transfer Agent Verified Shares Program.

Background for Proposed Amendment

OTC Markets Group launched the Transfer Agent Verified Shares Program to provide investors with current and reliable share data. The program enables eligible stock transfer agents to report their clients’ share information, including shares authorized and outstanding, to OTC Markets Group on a regular basis via a secure, electronic file transfer.

Share data provided by transfer agents is displayed on www.otcmarkets.com alongside a “Verified by Transfer Agent” logo. OTC Markets Group will use this data to confirm compliance with the OTCQX Rules. This data is also disseminated through OTC Markets Group’s market data feeds and is available to investors and broker-dealers.

OTCQX Rules for U.S. Companies:

  • All U.S. companies shall retain and maintain a transfer agent that participates in the Transfer Agent Verified Shares Program at all times. (see proposed rules OTCQX Rules for U.S. Companies)

 OTCQX Rules for U.S. Banks: 

  • All U.S. Banks shall retain and maintain a transfer agent that participates in the Transfer Agent Verified Shares Program at all times. (see proposed rules OTCQX Rules for U.S. Banks)

 Determine Compliance

 If a company profile on otcmarkets.com displays a “Verified by Transfer Agent” logo, then the company is already compliant with the proposed

  • If there is no logo displayed, but the company’s transfer agent’s name is on the list of participating transfer agents, then the issuer may contact its transfer agent to request that they send the company’s data to OTC Markets
  • If  the company’s transfer agent is not on the list of participating transfer agents or the list of those in the process of onboarding, then the issuer may contact its transfer agent to discuss their plans to participate.  Alternatively,  issuers may also contact Bob Power bob@otcmarkets.com (212) 896- 4406 at OTC Markets Group for further information.

Comments on the proposed rules were originally due OTC Markets Group by October 4, 2018.

Effective Date of Proposed Amendment:

The proposed rules are scheduled to become effective for all OTCQX U.S. companies and OTCQX U.S. Banks on January 1, 2019.

[This is a reprint of an article that appears in the blog ronaldwoessner.com here.]

Mr. Woessner’s bio appears here.