On September 16, 2020, the SEC published a final rule amending SEC Rule 15c2-11, which imposes information review requirements before a broker-dealer may publish or submit a quotation for an OTC security.
The final rule (i) emphasizes that an issuer’s information be current and publicly available, (ii) extends the information review requirements to, and permits reliance upon, qualified interdealer quotation systems, (iii) limits the availability of certain existing exceptions to the information review requirements, including the “piggyback” exception, and (iv) adds additional exceptions for certain securities that are less susceptible to fraud. The final rule’s adopting release also updates existing SEC guidance regarding how a broker-dealer evaluates the reliability of information provided by an issuer and whether the information is accurate. However, the adopting release reinforces that a broker-dealer is not generally required to undertake an independent review of an issuer similar to an underwriter to fulfill its obligations under the final rule.
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