Overview of the OTC Bulletin Board (OTCBB)

(OTCBB Bulletin Board Printable Version)

The OTCBB Bulletin Board® (OTCBB) is a regulated quotation service that displays real-time quotes, last-sale prices, and volume information in over-the-counter (OTC) equity securities. An OTC equity security generally is any equity that is not listed or traded on Nasdaq® or a national securities exchange. OTCBB securities include national, regional, and foreign equity issues, warrants, units, American Depositary Receipts (ADRs), and Direct Participation Programs (DPPs).

What Investors Should Know  About the OTCBB

The OTCBB is a quotation medium for subscribing members, not an issuer listing service, and should not be confused with The Nasdaq Stock MarketSM.

There are no minimum quantitative standards which must be met by an issuer for its securities to be quoted on the OTCBB; however, the new Eligibility Rule limits quotations on the OTCBB to the securities of issuers that are current in their reports filed with the SEC or other regulatory authority.

Issuers do not have any filing or reporting requirements with The Nasdaq Stock Market, Inc., or the NASD. Market Makers will be required to provide the periodic financial reports filed by OTCBB issuers with the SEC or other regulatory authorities pursuant to the Eligibility Rule.

Nasdaq has no business relationship with the issuers of securities quoted on the OTCBB.

Investors must contact a broker/dealer to trade OTCBB securities. Investors do not have direct access to the OTCBB service. The Securities and Exchange Commission's (SEC's) Order-Handling Rules which apply to Nasdaq-listed securities do not apply to OTCBB securities.

Contacting an OTCBB Issuer

OTCBB issuers are not required to maintain current address or contact information with The Nasdaq Stock Market, Inc. or the NASD; however, this information is available for many OTCBB issuers. The Stock Summaries, available on-line, contains the trading symbol, name, and annual summary trading statistics for every security quoted on the OTCBB as of December 31st of the year you select. The summary also includes address, phone number, and company contact information when it is available.

Obtaining Financial Information on an OTCBB Company

Quarterly and Annual financial information, as well as other company information is filed with the SEC by any OTCBB issuer whose securities began quotation on the OTCBB after January 4, 1999. Filings made with the SEC pursuant to Sections 13 or 15(d) of the Securities Exchange Act are available to the public through EDGAR, the SEC's on-line database of company filings. Not all OTCBB issuers are currently subject to these reporting requirements, however. For a detailed explanation of registration and reporting requirements and the exemptions available from those requirements, please see the SEC's Small Business Question and Answer . By July 2000, all OTCBB issuers will be subject to these reporting requirements. For more information on this topic, please check the Eligibility Rule section of OTCBB News.

Investor Protection

It is important to note that the NASD has no regulatory authority over OTC Bulletin Board issuers. The NASD's responsibilities include establishing rules governing its broker/dealer members' business conduct; setting qualification standards for securities industry professionals; examining members for their financial and operational condition as well as their compliance with appropriate rules and regulations; investigating alleged violations of securities laws; disciplining violators of applicable rules and regulations; and responding to inquiries and complaints from investors and members.

Due to the high level of risk involved in investing in Penny Stocks, the SEC created Rule 15g-2, which makes it "unlawful for a broker or dealer to effect a transaction in any penny stock for or with the account of a customer unless, prior to effecting such transaction, the broker or dealer has furnished to the customer a document containing the information set forth in Schedule 15G, Rule 15g-100, and has obtained from the customer a manually signed and dated written acknowledgement of receipt of the document." (SEC Rule 15g-2(a), Risk Disclosure Document Relating to the Penny Stock Market)

If you believe that you have been defrauded by an OTC Bulletin Board issuer, you may file a complaint with your State Securities Regulator or contact the SEC's Office of Investor Education and Assistance.

If you believe that you have been defrauded by a broker, securities firm, investment advisor, or other securities professional, you may choose to file a customer complaint or a regulatory tip with NASD Regulation.

We encourage you to ensure that you have a thorough understanding of the rights that you have as an investor and to investigate the background of the individual broker and brokerage firm before you invest. Please visit the links below for more information on how to protect yourself or to obtain backgound information on your broker or brokerage firm.

About Your Broker Information about the NASD RegulationSM Public Disclosure Program, which allows investors to request a report of all disclosable information regarding an individual broker or securities firm, including instructions on requesting a report (either online, by phone, by fax, or by mail) and an explanation of the types of information that are disclosable.

How To Avoid Problems Information on ways to prevent potential problems and steps to take to resolve a dispute with a broker, securities firm, investment advisor, or other securities professional.

Invest Wisely Information on selecting a broker, understanding a new account agreement, several factors to consider before making an investment decision, red flags to watch out for, and where to turn if you encounter a problem.

SEC Rule 15g-9 This rule established several sales practice requirements for broker/dealers transacting in "penny stocks".

What Every Investor Should Know General information provided by the SEC Office of Public Affairs, Policy Evaluation and Research.


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