What happens next During the suspension, the

What happens next

During the suspension, the stock will be delisted to the Grey Market as a result of its non-compliance with SEC Rule 15c2-11. Usually that happens a day or two after the action is taken; shareholders can see the change at OTCMarkets. As noted above, that means the MMs won't be able to publish quotations or make a market. They can facilitate trades for brokers, but they are not obliged to fill any orders they may receive. Trades will be matched, though several smaller orders may be set off against a single larger one.

Often hopeful shareholders caught in a suspension tell each other that trading may resume before the ten days have ended. That never happens. Sometimes they convince themselves that it was just a “mistake” on the part of the SEC. It was not. The agency is aware that suspensions are a death sentence, and does not invoke them lightly. Angry investors may rail against Shorty and “bashers,” but the truth is that although the SEC may have originally received tips about problems with the company, they always conduct their own investigation before taking any action.

Some companies issue a press release immediately, usually saying they're “cooperating fully” with the SEC, and are hoping to resolve the problem quickly. Others say nothing at all, or make an announcement when trading resumes. Either way, there is no quick resolution; most of the time there's resolution at all. The SEC will not comment, but warns shareholders that an investigation may be ongoing.

In order to resume trading normally, on the Pinks or OTCMarkets' OTCQB tier, the company must find a market maker willing to file a Form 211 to enable it to regain compliance with Rule 15c2-11. The form looks simple enough, but it is not. And there's a special section asking whether the issue has been subject to a trading suspension. When an MM files a 211, it assumes liability. For that reason, they are not generally willing to sponsor a company that's been suspended unless they have very good reason to believe the SEC will not be bringing a further enforcement action. Usually the agency is unwilling to offer such guarantees, and so the stock is left in limbo