Booted from the OTCBB?

By Cydney Posner

Last week, thecorporatecounsel.net blog reported on the mysterious ejection of a number of companies from the OTCBB. Apparently, this unceremonious exit was a consequence of an increase in the fees charged to market makers to quote stocks on the OTCBB to $6.00 per security per month. Accordingly, a number of market makers switched to the OTCQB, which does not charge a fee. Because shares of companies are quoted on the OTCBB only if a market maker posts quotes for the stock there, a large number of companies – over 1,000 companies according to one report -- were ousted for lack of a market maker and insufficient quoting activity. According to this Small Cap Investors News Blog, when the stock is removed from the OTCBB under Rule 15c2-11, it "is usually quoted solely on the OTC Link system, rather than the typical dual BB/OTC Link quotation. The stock will trade on the OTCQB, the middle tier of the OTC marketplace reserved for fully reporting issuers that are quoted on one or both quotation platforms (Bulletin Board and OTC Link). The new OTC tier system classifies all OTC companies, whether quoted on the BB, OTC Link or both, into one of three tiers (OTCQX, OTCQB, or OTC Pink) based on the amount and quality of information they provide to investors. This tier system separates SEC-compliant issuers in the OTCQB tier from the speculative marketplace known as the ‘Pink Sheets' (now called ‘OTC Pink'), which is the bottom of the three tiers."

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