SEC moves to change broker-quote rule called susceptible to penny-stock fraud

10 March 2019 7:56pm
The US Securities and Exchange Commission has taken the first step to changing a longstanding broker-quote rule to try to protect individual investors without harming capital formation in the wake of numerous penny-stock trading suspensions.

SEC Chairman Jay Clayton said today he has asked staff to “promptly” recommend modifications of the so-called piggyback exception that lets multiple brokers provide quotes on a company that has no recent financial information.

The exception also applies to reverse mergers, in which a larger private company merges into a smaller public or shell firm with no relevant public data available.