December 1, 2019
From what I understand in my research, the SEC seems to be attempting to prevent fraudulent activities
by limiting, or completely eliminating the trading of securities in companies who do not publish present day financials. For the record, I would like to state that eliminating penny stock fraud is a worthy cause,
and of a benefit to all.
However, I believe the proposed to be a misguided approach. The planned change could destroy what is
a fair and orderly OTC market, if price quotes are no longer available. The majority of the businesses
that fall under the SEC's rule change umbrella are legitimate, well run, family owned and have a long
standing history of success.
The complexities of OTC trading are many and I do not think that the broad proposal takes this into
account. If you are attempting to prevent penny stock fraud the proposal is not going to achieve this. If
this passes, you will reduce the liquidity and market value of stocks that are not shell-companies or
penny stock, but rather successful and valuable businesses.
An important point is to differentiate between what is a penny stock and what is a thinly traded closely
held security. Therein lies a solution to your issue. The differences between the two are vast.
I vote for rejection of this proposed rule because you can irreparably damage countless thousands of
individual investors. You can't stop those willing to commit fraud as they will still look to take advantage
of uninformed investors, regardless of the rule changes. Finally, the collateral damage to legitimate
companies and investors is not worth the risk, as your scope is too broad.