OTC Market tiers OTC Markets Group established a

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Feb 5, 2013 at 9:16 AM

OTC Market tiers

OTC Markets Group established a categorization system to indicate the level of financial and corporate disclosure provided by the companies using its quotation system. Apart from the OTCQX tier, the disclosure categories do not signify issuer quality or merit of any security. Categorization is based on the level and timeliness of a company's disclosure and OTCQB and any of the OTC Pink categories can include both high quality as well as speculative, distressed, or questionable companies. Investors are encouraged to use caution when considering many these companies for investment[10].

OTCQX

The OTCQX tier includes both large cap multinational and domestic growth companies. OTCQX companies are required to have the highest financial and operational standards in the over-the-counter equity market[12] . To be traded on this tier, companies undergo a qualitative review by OTC Markets Group[13]. Companies are not required to be registered with or reporting to the U.S. Securities and Exchange Commission (SEC), but must post financial information with OTC Markets Group. In addition, US companies must be ongoing operations (no shells etc) and may not be in bankruptcy, while foreign issuers must meet the requirements of qualified Non-US exchanges. [9][14]. Additional oversight of OTCQX securities is provided by requiring every issuer to be sponsored by approved third-party investment banks or law firms, called Principal American Liaison (PAL) for non-US issuers and Designated Advisors For Disclosure (DADs) for US issuers[12][9][14].

OTCQB

OTCQB companies must be registered with and reporting to the SEC or a U.S. regulatory agency. There are no financial or qualitative standards to be in this tier.

OTC Pink

OTC Pink is an open marketplace that has no financial standards or reporting requirements. The stock of companies in the OTC Pink tier are not required to be registered with the SEC. Companies in this category are further categorized by the level and timeliness of information they provide to investors and may have current, limited or no public disclosure. OTC Pink securities range from shells and highly speculative development stage companies to international names.

OTC Pink Current Information

Companies that have submitted information no older than six months to the OTC Markets data and news service or have made a filing on the SEC's EDGAR system in the previous six months are rated as having current information. This category includes shell companies or development stage companies with little or no operations as well as companies without audited financial statements.

OTC Pink Limited Information

Companies that are unwilling or unable to meet OTC Markets' Guidelines for Providing Adequate Current Information but have submitted some but not all of current information required are rated as having limited information. These are often companies with financial reporting problems, economic distress, or in bankruptcy.

OTC Pink No Information

This tier indicates companies that are unwilling or unable to provide disclosure to the public markets. Companies in this category do not make current information available via OTC Markets disclosure and news service, or if they do, the available information is older than six months. This category includes defunct companies that have ceased operations as well as 'dark' companies with questionable management and market disclosure practices. Securities of publicly traded companies that are not willing to provide information to investors are considered highly risky.

Caveat emptor - buyer beware

There is a public interest concern associated with the company. This may include a spam campaign, stock promotion or known investigation of fraudulent activity committed by the company or insiders. During a spam campaign, any stock that is not in the Current Information category will also have its quotes blocked on otcmarkets.com.

Link to view footnotes..

http://en.wikipedia.org/wiki/OTC_Markets_Grou...anadian-11

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