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February 1, 1999

SEC Approves NASD Bulletin-Board Rule

By Staff Reporters

The Securities and Exchange Commission has approved a new OTC Bulletin Board eligibility rule that will require all bulletin-board-listed companies to provide more information to regulators.

The rule, proposed by the National Association of Securities Dealers, allows only those companies that report their current financial information to SEC, banking or insurance regulators to be quoted on the OTC Bulletin Board, which is run by the NASD.

Under the new rule, a U.S. company that does not file periodic financial reports will be eliminated from the bulletin board after a 12-month phase-in period, which starts in July. By June of next year, the rule will apply to all companies on the bulletin board.

There are roughly 6,500 securities quoted on the bulletin board.

"By requiring the half of all OTC Bulletin Board companies that currently do not provide publicly-available financial reports to join the half that do, we will take a major step towards improving the quality of the micro-cap market," said Frank Zarb, chairman and chief executive of the NASD. "We are pleased that the SEC has approved our proposal to effectively eliminate non-reporting companies."

A separate SEC proposal, rule 15c-211, which similarly sought to tighten listing standards on the bulletin board, is rumored to be undergoing a re-evaluation by the SEC. According to well-placed sources, companies with minimum average daily trades valued at $100,000, and a minimum share value of $50, will be exempt under a new proposal pending at the SEC. A spokesman for the SEC declined to comment.