IFGX Blog

  A gypsy swap represents a way of raising capital that entails encouraging existing stockholders to swap their free trading common stock into restricted stock. This kind of transaction-gypsy swap, stock promoters have been using for a long period of time. Thus to the Securities and Exchange Commission, gypsy swaps are a method of evading the Securities Act of 1933, and violate Section 5 of the Securities Act. Both investors and issuers should be aware of transactions that seem to be legal on the surface but in effect are gypsy swap transactions that are illegal under securities regulations. The SEC has stated categorically that gypsy swaps are breaches of Section 5 of the Securities Act, and that all parties are subject to monetary and other civil penalties, which also include disgorgement.  It’s crucial for investors and issuers to note that a gypsy swap is only one approach to get around Section 5 of the Securities Act’s registration obligations. Any transaction in...

This kind of action, stock promotion, in the first place affects investors then restricts capital development, and in the end undermines effective pricing methods throughout all markets. So stock advertising represents an issue in the industry if it's deceptive and manipulating, by impacting trade the national stock market on the one hand and over-the-counter on the other.  To prevent this OTC Markets Group created a Promotional Risk flag, which is the way investors can detect this kind of stock promotion program. The first thing that the OTC Markets team does is accumulate data from a large group of players and study it just before displaying the Promotional Risk flag on their website if they notice any sign of stock promotion. In this group of stock promotion signs OTC Markets Group just added another one-Shell Risk designation. That mark warns that a firm shows criteria common of shell firms based on an assessment of the firm’s main annual financial records.  Wha...

According to the SEC, a penny stock is any share of a publicly traded corporation that trades for less than $5. In addition, the market cap of these firms is lower. These types of stock are usually shares of firms that are either in the early stages of development or have yet to achieve a large market share in their industry. Nevertheless, this does not imply that penny stocks are worthless. On numerous occasions, these types of firms are devoted to the latest innovations. As a result, market players will acquire them based on assumptions rather than overall outlines. This type of stock, as we can see from the first paragraph, pertains to the stock of tiny businesses. Although some penny stocks are traded on major exchanges like the NYSE, the vast majority are quoted over-the-counter (OTC) via the electronic OTCBB (which is a facility of FINRA) or the privately held OTC Markets Group. Trading penny stocks is a great way to make both quick money and may pay off as a long-term invest...

The SEC amended Exchange Act Rule 15c2-11, which is a crucial element of the over-the-counter (OTC) market regulatory system. The changes are intended to improve the rule, which was last considerably changed about thirty years ago, and to take into account developments in communications technology.   Prior to actually posting quotations in OTC securities, broker-dealers must analyze current and information available to the public, according to the modified rule. To improve investor protection, the amendments also restrict some of the exemptions available under Rule 15c2-11 and add new exclusions for low-risk securities.     Given the current rule’s timeliness and modifications, its practical implementation streamlines the process of small-cap companies going public. For firms accessing the OTCQB and OTCQX markets, OTC Markets Group can now undertake “Initial Reviews” under Rule 15c2-11, which is a replacement to the regular FINRA Form 211 process.   The r...