Subject: File No. 4-639
From: Michael Potter

October 17, 2011

What I dont like is what seems to be the randomness of the DTCC choices on what stocks will be removed from trading. It may not be random, I have no idea, but it appears as soon as a company doesnt provide a report in a timely manner it is immediately removed from the trading list. The otcmarket system has instituted multiple tiers in which pinks can trade, to include Pink Current, Pink Limited, the type with a stop sign and the other which has skull and crossbones. I think the otcmarket system provides a much better warning system on which stocks can be trusted or not. The DTCC just puts out a semi random notice with an immediate effect to the common trader. They only mention the CUSIP and the Company Name (I pretty much search for things my ticker symbol), and you pretty much have to discover it by accident. You can tell the DTCC only wants to deal with the brokers, they are not geared for the common trader.
Then the brokers seem to have different approaches on how to deal with these notices. Some, such has Zecco immediately stop trading in these companies and cause of the lack of notifications to the customers slam them with outrageous fees for paper trading. You have to understand, one day it was electronic, plus the lack of notifications, then the next day its paper? This isnt a chill list, its an instant freeze list. TDA, Etrade, etc, seem to trade in stocks just fine till some random point in the future they through detection systems decide to stop allowing purchasing of stocks (but you can sell) in the best interest of their clients. I dont mind that as much as others do. Personally, it should be my choice, and if they choose to flag something with a warning like This stock has been consider a risk, are you sure you want to take a position on it.
Ive seen larger impacts to the stocks from the DTC Chill than bankrupt notices and SEC halts. If something becomes paper tradable there is practicly no way for the common investor in a losing position to even back out of the stock. There is no stop loss order which can be executed, which would require outrageous fees. It becomes dead money, which is effectively trapped in what is supposed to be a bad company. Who often starts providing reports as soon as the otcmarket marks them limited.
I have yet been able to find a way if the stock has came off the chill list. Without having to submit a buy or sell order and wonder if it will go through.
In summary, it all seems too random. How the stocks appear on the chill list (where is the warning to the common person), how the brokers handle it (is it really paper, zecco says it is but other brokers trade just fine), how do the companies get off the list, how do you discover who is valid again?