Securities Lawyer 101 l Brenda Hamilton

Securities Lawyer 101 l Brenda Hamilton

Wednesday, November 27, 2013

FINRA Halts ALL OTC Equity Securities

On Thursday, November 7, 2013, the Financial Industry Regulatory Authority, Inc. (“FINRA”) halted trading in all OTC Equity Securities pursuant to FINRA Rule 6440(a)(3). FINRA determined to impose a temporary halt because of a lack of current quotation information.
The halt was imposed to protect investors and ensure a fair and orderly marketplace.  The regulator added that it would notify the market when trading will resume. Though FINRA didn’t call the halt until 11:25 a.m., according to the Wall Street Journal the problem was discovered around 6 a.m., when OTCMarkets, whose OTC Link handles the vast majority of over-the-counter transactions, realized it had what it later described as a “connectivity issue” that also paralyzed its websites.

A decision was made to delay the 9:30 opening, but OTCMarkets did not send a notice to issuers until shortly after 11:00.
Later in the day, CEO Cromwell Coulson told Bloomberg that the root problem was a “network provider issue.”  Whatever the nature of the issue, it was resolved in mid-afternoon.  FINRA issued a second notice, and trading resumed at 3 p.m.
While most OTC issues are not closely followed by Wall Street, Fannie Mae (FNMA) and Freddie Mac (FMCC) are fully-reporting over-the-counter stocks, and today was a major news day for them.  Although there was sporadic, extremely light trading in both issues throughout the session, it was not until OTCMarkets was up and running again that normal volume kicked in. FNMA closed up 3.48%; FMCC closed up 2.26%.
The OTCMarkets shutdown was the latest in a series of technical malfunctions that have affected the U.S. markets recently.  On August 22, the Nasdaq Stock Exchange went black for three hours due to a data feed problem; last week the Nasdaq OMX Group experienced several problems that affected trading.
Incidents like these have potential to erode confidence in the U.S. markets, as several officials have noted.  Speaking to Nasdaq’s August problem, Nasdaq OMX Group’s CEO Robert Greifield said:  “Our systems, and the industry’s, have to get to a higher level of robustness.”
SEC Chairman Mary Jo White commented that the Nasdaq shutdown “should reinforce our collective commitment to addressing technological vulnerabilities of exchanges and other marketplace participants.”
So far, unfortunately, the technical “glitches” seem to be more, not less, frequent.
This blog post about FINRA trading halts is provided as a general informational service to clients and friends of Hamilton & Associates Law Group and should not be construed as, and does not constitute, legal and compliance advice on any specific matter, nor does this message create an attorney-client relationship. For more information concerning the rules and regulations affecting SEC registration statements, Rule 144, Form 8K, FINRA Rule 6490, Rule 506 private placement offerings, Regulation A, Rule 504 offerings, Rule 144, SEC reporting requirements, 1933 Act registration statements on Form S-1, S-8 and 1934 Act registration statements on Form 10, OTC Pink Sheet listings, OTCBB and OTCMarkets disclosure requirements, DTC Chills, Global Locks, reverse mergers, public shells, go public direct transactions and direct public offerings please contact Hamilton and Associates at (561) 416-8956 or Please note that the prior results discussed herein do not guarantee similar outcomes.
Hamilton & Associates | Securities Lawyers
Brenda Hamilton, Securities Attorney
101 Plaza Real South, Suite 202 North
Boca Raton, Florida 33432
Telephone: (561) 416-8956
Facsimile: (561) 416-2855

No comments:

Post a Comment