December 16, 2019
Honorable Commissioners:
I have followed OTC stocks and frauds for 15 years and I applaud you for this proposal to change rule 15c2-11. The proposed changes will address some important problems in microcap markets.
Of the proposed changes, I want to highlight the elimination of the piggyback exception for shell companies as one of the most important changes that should greatly reduce microcap fraud. The majority of the pump and dump frauds I have seen were done using companies that were shell companies at the time or had recently been shell companies prior to undergoing a reverse merger. Dormant and abandoned shell companies also frequently get hijacked through custodianship petitions and then get manipulated. By essentially preventing the quotation of all non-reporting shell companies, the rule change will make it more expensive and more time consuming to engage in multiple kinds of microcap fraud. And of course that will lead to less fraud.
Sincerely,
Michael Goode