OTC Markets Likely to Drop Hundreds of Companies Into the Pinks

In an announcement reportedly emailed to all brokers, transfer agents and OTC Markets participants, the public was made aware of sweeping changes to the OTCQB beginning March 1, 2014.   Changes include:

• A one penny ($0.01) bid price requirement
• A $2,500 application fee.
• A $10,000 annual fee.
• Annual OTCQB Certification.

These changes are designed to "improve transparency and exclude companies that are most likely to be associated with stock promoters and other nefarious operators." 

Justification for the action cites a survey of OTCQB participating companies.  The reasons given are that "low priced shells and stock promoters make OTCQB a less attractive marketplace and hinder their ability to attract a wider group of potential shareholders."

"For companies that do not wish to be fully transparent or engage with their public market, we will continue to operate a marketplace for brokers to trade in these securities on the OTC Pink," the announcement read.

Phil Ray of Venturevest Capital says, "This move will significantly increase the cost to companies for raising capital though a public offering, once again hurting the small businessman."

Details of the changes can be found on the OTC Markets FAQ sheet.

The entire announcement can be had here.