OTC Markets, SEC’s DTC rulings, and politics as usual

26 Mar

With so much happening right now, I thought that I would try to bring a number of items into a single article.  First, I would like to run down some news items and my thoughts:

  • Romney is way ahead of the pack (Santorum, Gingrich, Paul) for the Republican nomination, but I get the distinct feeling that Romney is trying to buy the nomination with help from his Super PAC (these Super PACs offend me).
  • Apple, Inc. (APPL) got it right – if you don’t have anything better to do with your money, give it back to your shareholders as a dividend (USA Today’s article entitled “Apple investors get richer with big dividends..“)  What is sad, Apple doesn’t have anything better to do with its cash!  Notice there hasn’t been any clamoring for the break up of Apple (like there was for Microsoft)?  Read our earlier re-post about the Apple dividend.
  • The US Supreme Court hears arguments this week about Obamacare, or more correctly federal healthcare overhaul (read FOX News’ “First round of Supreme Court Health hearings not about health care“).  Like it or hate it, this Supreme Court decision is important in its far reaching implications about big government versus the libertarian (notice the little “L”, meaning not the party).  Watch this one with interest!

There is lots more global news that effects us in business (and in our every day life), but let’s look at some specifics…

OTC Markets’ release on their operating results

OTC Markets Group Inc., formerly Pink OTC Markets Inc. (and know as “the Pink Sheets“) announced some good financial operating results this morning.  Here are some highlights that we think are important:

  1. 155 companies were added to the OTCQX™ market place – there are some large companies here now, and it is gaining momentum as an alternate reporting location (SEC, take note).
  2. Their volume of quotes in OTC Link® trading system continue to increase.
  3. Revenue, net revenue, and net income all increased.

As OTC Markets continues to be successful as a business and the volume of its quotes continue to increase, I believe that the SEC will be forced to acknowledge the validity of this venue as an alternate reporting venue – hopefully, this will mean that more companies will use it and follow its reporting guidelines in order to make their investment vehicles more attractive and allow broker dealers to clear our certs (I know, this is just wishful thinking…)

Read the press release:

Crowd funding

Mike Stapleton and his PPM Logix website continue to follow the Crowd funding legislation winding its way through the U.S. Congress (here is more information from the New York Times).  This bill, passed by the U.S. Senate on March 22 (Thursday), promises to change a bunch related to how required reporting, disclosure, and regulation in the public markets comes down on micro-caps.

My take on this:

  1. Wow, depending upon the implementation, this might be a welcomed addition to the public markets for micro-cap companies.
  2. Fraud will increase, but it was already there.
  3. Broker dealers will not like it, the DTC will not like it, the SEC will pull its hair out, and the states will need to all review their Blue Sky Laws in light of this.

Will it pass, I will be following this intently!  Here are some great resources to follow:

SEC’s DTC Ruling

A number of companies I deal with have had “DTC chills” put on their publicly traded Common stock in the last 3 years, for various reasons.  The Depository Trust Clearing Corporation (“DTCC“, sometimes just “DTC” for short) is the industry clearing organization that clears stock transaction between broker dealers (“participants” in DTC terms).  The DTC is a private organization that controls all of our lives through its clearing services, but believes that it is only regulated by the U.S. Securities and Exchange Commission (“SEC”).

The process is simple for clearing the transactions – the DTC holds the share certificates in each publicly traded company and each participant holds shares in its name (“street name”), which is nothing more than an entry its its electronic books.  This process is simple, but there sometimes are imbalances between the publicly traded company’s transfer agent and the DTC – whenever this happens, the DTC stops clear the company’s stock pending its ability to clear this imbalance.

The problem – it seems (I am giving the DTC the benefit of doubt) to put these “chills” on stocks without telling anyone (sometimes), the issuers have no way to appeal these “chills”, and most importantly, individual retail investors are hurt considerably by the DTC.

In this case, the SEC stepped in a ruled in favor of an issuer.  Read more at:

Upcoming Rhodes Holdings LLC activities

We have a lot of upcoming activities that our clients, associates, and friends should be aware of:

Thanks for reading, and please comment as to what you would like to see in the future here at Rhodes Holdings LLC’s BLOG.

Robert C. Rhodes
Managing Member
Rhodes Holdings LLC


Posted by on March 26, 2012 in BLOG, Public markets


Tags: , , , , , , ,

3 responses to “OTC Markets, SEC’s DTC rulings, and politics as usual

  1. mike dillard’s wwn

    August 11, 2013 at 10:23 am

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