Recommendations of OTC Equity Securities

Overview

FINRA requires broker-dealers that make recommendations as to equity securities that are not listed on an exchange to be able to demonstrate that they have sufficient information in their files to justify the making of the recommendation. This requirement is intended to make it somewhat more difficult for a firm to justify pumping of a thinly-traded security without an adequate basis to do so. See also SEA Rule 15c2-11, which generally requires that broker-dealers have certain information in their files before posting quotes as to an unlisted equity security.

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