Quiero saber acerca de...

2316

Federal Register / Vol. 86, No. 7 / Tuesday, January 12, 2021 / Proposed Rules
khammond on DSKJM1Z7X2PROD with PROPOSALS

the general public from potential incidents of fraud and manipulation in the grey market and facilitate liquidity for such securities.
The second category captures securities issued in conjunction with a Chapter 11 bankruptcy plan that is confirmed pursuant to Section 1129 of the Code and are exempt from registration in accordance with Section 1145 of the Code, so long as quotations on the Expert Market commence within 90 calendar days from the date on which any such security is issued.34 A
bankruptcy proceeding is a significant event involving an issuer that a brokerdealer should carefully consider before it publishes or submits a quotation for the issuers security in a quotation medium.35 But, the Commission preliminarily believes that the inclusion of this category of securities as eligible to be the subject of Subscribers quotations published or submitted on the Expert Market is appropriate given that Qualified Experts are more likely than the general public to possess the ability to evaluate the merits and risks of a prospective investment opportunity and, therefore, it would provide an efficient means to liquidate positions acquired through a bankruptcy proceeding. The inclusion of this second category could help promote capital formation opportunities for certain companies in limited circumstances while ensuring, for investor protection, that the distribution of quotations for the securities of such companies is limited to investors that have a demonstrated ability to assess such an investment opportunity.
The Commission believes that it would be appropriate for OTC Link LLC
to remove from the Expert Market quotations published or submitted for any security of an issuer that is the subject of a registration revocation or trading suspension order issued by the Commission pursuant to Section 12j or 12k of the Exchange Act, respectively.
Pursuant to any such registration 34 This 90-calendar-day window is consistent with the Amended Rules requirement for the information of prospectus issuers i.e., issuers that filed a registration statement under the Securities Act to be current for broker-dealers to commence a quoted market in these issuers securities in a quotation medium. See Amended Rule 15c2
11b1. The Commission preliminarily believes that it is appropriate to use a measurement of time that is consistent with the Amended Rules requirement for prospectus issuers information because both requirements pertain to the commencement of a quoted market in securities of an issuer with which the market is unfamiliar and are designed to ensure that the Amended Rules specified information about the issuers of these securities is not stale or outdated with respect to such issuance.
35 See Adopting Release at 68171.

VerDate Sep<11>2014

16:31 Jan 11, 2021

Jkt 253001

revocation or trading suspension order and the Commissions finding that it is in the public interest and for the protection of investors,36 Subscribers would not be able to effect transactions in such securities. Therefore, such quotations must be removed.
In addition, the Commission preliminarily believes that it is appropriate for OTC Link LLC to remove from the Expert Market quotations published or submitted for any security of an issuer that OTC Link LLC has identified as defunct, to prevent the publication or submission of quotations for securities of issuers that have ceased operations, ceased to exist, or have failed to respond to inquiries by OTC
Link LLC. Furthermore, the issuer of such security may not have a transfer agent to allow investors to receive or transfer their stock certificates. Thus, the quotations for such securities should be removed from the Expert Market to help prevent such securities from becoming vehicles for fraud and manipulation.
Further, the Commission preliminarily believes that requiring OTC Link LLC to flag on its website any formerly suspended security for such period of time as set forth in OTC Link LLCs policies and procedures which would be for two years following the applicable trading suspension would help to promote investor protection.37
Such a flag would serve as a notice to market participants that there was, in the recent past, the presence of any number of factors such as uncertainty about the accuracy of publicly available issuer information or questions about trading in the issuers security that led the Commission to conclude that it was in the public interest and for the protection of investors to suspend trading in the security.38 Accordingly, the Commission preliminarily believes that this flag requirement would improve the overall mix of information about issuers and their securities and 36 See Exchange Act Section 12j The Commission is authorized, by order, as it deems necessary or appropriate for the protection of investors to . . . revoke the registration of a security, if the Commission finds . . . that the issuer of such security has failed to comply with any provision of this chapter or the rules and regulations thereunder.; Exchange Act Section 12k1A If in its opinion the public interest and the protection of investors so require, the Commission is authorized by ordersummarily to suspend trading in any security . . . for a period not exceeding 10 business days . . . ..
37 As discussed above in Part I.B.3, this period of time would be for two years following the applicable trading suspension, unless the trading suspension is successfully challenged.
38 See, e.g., Adopting Release at 68151.

PO 00000

Frm 00018

Fmt 4702

Sfmt 4702

would help investors make betterinformed investment decisions.39
C. Policies and Procedures The Commission is proposing to condition the exemptive relief upon OTC Link LLC establishing, maintaining, and enforcing reasonably designed written policies and procedures to operate the Expert Market in a manner that is consistent with how the Expert Market is described herein.
Such policies and procedures would account for the following: 1 The manner in which the distribution of real-time and delayed quotations on the Expert Market is limited, directly and indirectly, only to Qualified Experts and, as applicable, issuers of securities for which quotations are published or submitted on the Expert Market with respect to their own securities; 2
specific actions that will be taken if OTC Link LLC becomes aware that any Subscriber or market data distributor or user has violated the contractual obligations described above, and specific actions that will be taken if OTC Link LLC becomes aware that an issuer has violated its contractual obligation not to distribute, directly or indirectly, quotations published or submitted on the Expert Market for its security to any person that is not a current officer, director, or employee of the issuer; and 3 the regular surveillance of the Expert Market data feed and quotation activity on the Expert Market to determine whether a Subscriber or market data distributor or user has facilitated access, directly or indirectly, to quotations published or submitted on the Expert Market to any person that is not a Qualified Expert or, as applicable, an issuer of a security for which quotations are published or submitted on the Expert Market with respect to its own security.
The Commission preliminarily believes that the obligation to establish, maintain, and enforce such written policies and procedures as part of the proposed exemptive relief would help to prevent the general public from accessing quote information, promote the integrity of the Expert Market, and facilitate Commission oversight of the Expert Market. In particular, OTC Link LLCs reasonably designed written policies and procedures would provide transparency of, and set expectations for, the manner in which OTC Link LLC
operates the Expert Market; would encompass compliance considerations relevant to the operations of the Expert Market; and would assist Commission staff in examining the Expert Market.
39 See
E:FRFM12JAP1.SGM

id. at 68144.

12JAP1