FINRA Reminds Firms of Compliance Requirements during Transactions in OTC Equity Securities

FINRA reminded firms to be mindful of compliance requirements when initiating a quote in an OTC security and filing a Form 211.

FINRA Rule 6432 requires firms to file a Form 211 to demonstrate compliance with Exchange Act Rule 15c2-11, which generally prohibits a broker-dealer from publishing quotations for non-listed securities in a quotation medium unless it has gathered and reviewed certain required information about the issuer and such security, and has a reasonable basis for believing that such information is accurate.

In consultation with SEC staff, FINRA advises firms to remember:

• that Form 211 is not a substitute for reporting requirements under Securities Act Section 5;
• to check securities for a suspension or revocation before attempting to initiate or resume quotations in those securities; and
• to obtain the necessary information regarding a trading suspension before resuming quotations after a trading suspension.