SEC Penny Stock Filing Requirements
SEC Penny Stock Rules
In general, the federal securities laws require all but the smallest of public companies to file reports with the SEC. A company can become “public” in one of two ways:
- By issuing securities in an offering or transaction that’s registered with the SEC.
- By registering the company and its outstanding securities with the SEC.
Both types of registration trigger ongoing reporting obligations, meaning the company must file periodic reports that disclose important information to investors about its business, financial condition, and management.
This information is a treasure trove for investors: it tells you whether a company is making money or losing money and why. You’ll find this information in the company’s quarterly reports on Form 10-Q, annual reports (with audited financial statements) on Form 10-K, and periodic reports of significant events on Form 8-K.
A Company Must File Reports with the SEC if:
- It has 500 or more investors and $10 million or more in assets; or
- It lists its securities on the following stock markets:
- American Stock Exchange
- Boston Stock Exchange
- Chicago Stock Exchange
- Cincinnati Stock Exchange
- International Securities Exchange
- NASDAQ Stock Market
- New York Stock Exchange
- Pacific Exchange
- Philadelphia Stock Exchange; or
- Its securities are quoted on the OTCBB
OTCBB Penny Stock Tip:
When an OTCBB company fails to file its reports on time, the FINRA will add a fifth letter “E” to its four-letter stock symbol. The company then has 30 days to file with the SEC or 60 days to file with its banking or insurance regulator. If it’s still delinquent after the grace period, the company will be removed from the OTCBB.
With few exceptions, companies that file reports with the SEC must do so electronically using the SEC’s EDGAR system. EDGAR stands for Electronic Data Gathering and Retrieval. The EDGAR database is available on the SEC’s website at www.sec.gov.
You’ll find many corporate filings in the EDGAR database, including annual and quarterly reports and registration statements. Any investor can access and download this information for free from the SEC’s website.
Caution:
By law, the reports that companies file with the SEC must be truthful and complete, presenting the facts investors find important in making decisions to buy, hold, or sell a security. But the SEC cannot guarantee the accuracy of the reports companies file. If a company files a false report, or fails to provide important information to investors, the SEC brings enforcement actions against these companies.
Buying Penny Stocks
