Premium

SEC CorpFin Head Urges ‘Principled’ Approach to Investor Verification

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For all the excitement among retail investors for the new investment options made available to them by the JOBS Act, professional investors and investment bankers have for the most part reacted coolly to the new opportunities to raise capital and make investments in a more open and broadly marketed manner. Part of this is due to the disintermediating effect of crowdsourced capital on the traditional investment banking model, as well as to the skepticism among professional investors that the investment wisdom of the crowd is anything but wise. But even among the finance professionals for whom the JOBS Act represents a true opportunity to expand and democratize capital formation for small businesses, there is significant doubt that the Act can effectuate the explosion of capital formation the crowdfunding evangelists postulate. Much of the doubt is a result of the “give with one hand and take away with the other” approach that Congress and the SEC have taken in the promulgation and implementation of the Act. In freeing up the public to more widely participate in direct corporate investments, the Feds also sought to strengthen investor protections.

Markets

OTC Markets Rolls Out New Requirements, Fees for QB and QX

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OTC Markets Group has introduced new listing requirements for its “QB” and “QX” listings in an attempt increase the speed and amount of disclosure to investors by companies listed in the two upper tiers of its stock quotation service. The changes, unveiled late last week, introduce minimum share price requirements and annual listing fees to the OTCQB tier, and create specific listing requirements on the OTCQX tier for publicly reporting bank holding companies. The biggest changes are aimed at the OTCQB, the alternative to the OTCBB operated by FINRA. Beginning May 1, 2014, all companies quoted on the “QB” will be subject to a minimum bid price of one cent ($.01), an annual management certification signed by the CEO or CFO confirming the company’s information in its profile at OTCMarkets.com is current and complete, and provide additional information on its officers, directors, and controlling shareholders. In addition, existing companies on the QB will be required to pay a listing fee of $7,500 a year, and newly listed companies $10,000 annually.