Overview

The Securities and Exchange Commission ("Commission') is publishing for public comment proposed amendments to Rule 15c2-11 ("Rule') under the Securities Exchange Act of 1934 ("Exchange Act'). The Commission is publishing these proposals in response to increasing incidents of fraud and manipulation in the over-the-counter securities market involving thinly traded securities of thinly- capitalized issuers (i.e., "microcap securities'). Rule 15c2-11 governs the publication of quotations for securities that are traded in a quotation medium other than a national securities exchange or Nasdaq. The proposals would require all broker-dealers to review information about the issuer when they first publish or resume publishing a quotation for a security subject to the Rule, document that review, annually update the information if they publish priced quotations, and make the information available to other persons upon request. In addition, the proposals would enhance the Rule's information requirements for quotations for the securities of non-reporting issuers and ease the Rule's recordkeeping requirements when broker-dealers have electronic access to information about reporting issuers. The Commission also is proposing a number of textual and structural changes in an effort to simplify and streamline the Rule. Finally, the Commission is proposing an amendment to Rule 17a-4 under the Exchange Act that would incorporate the record retention requirements currently contained in Rule 15c2-11.