10 Days of Action For MicroCaps & The SEC


Microcaps and the SEC have an interesting relationship. The last 10 days saw a lot of action from the SEC regarding microcaps, some good and some bad.

Below we have listed the good, the bad, and the ugly from the SEC in the last 10 days in regards to micorcaps.

The Good

SEC Small Business Advocate Act Signed Into Law

On December 16th, President Barack Obama signed into law the SEC Small Business Advocate Act of 2016 or HR 3784.
The Act will create a new office within the SEC for an individual tasked with protecting and promoting the interests of small business and establishes the Small Business Capital Formation Advisory Committee.

Learn more HERE

SEC Charges Broker-Dealer With Violating Short Sales In OTC Equity Securities

On December 16th, The Securities and Exchange Commission announced settled cease-and-desist proceedings against the CEO of a Wilson-Davis & Co for the firm’s violations of SEC market structure rules.

According to the SEC press release, “While improperly availing itself of the exception, Wilson-Davis engaged in numerous short sales in over-the counter equity securities, which violated Rule 203(b)(1) of Regulation SHO and resulted in improper trading profits.”

Learn more HERE

The Bad

New SEC White Paper: “Outcomes of Investing in OTC Stocks”

On December 16th, the SEC released a white paper covering the “Outcomes of Investing in OTC Stocks”.

The study sound that OTC stocks tend to be highly illiquid; are frequent targets of alleged market manipulation; generate negative and volatile investment returns on average; and rarely grow into a large company or transition to listing on a stock exchange. So bad news but if your a microcap professional you probably already knew this. 

Learn more HERE

The Ugly

SEC Charges Gatekeepers in Sham MicroCap IPOs

On December 16th, the SEC charged Newport Beach, Calif.-based securities lawyer Michael J. Muellerleile with authoring false and misleading registration statements used in sham IPOs for five microcap issuers in order to transfer unrestricted shares of penny stocks to offshore market participants.

Learn more HERE

SEC Charges Transfer Agent Ignored “Red Flags” in the Transfer of Large Blocks of MicroCap Securities

The SEC also charged Empire Stock Transfer and its supervisor of operations Matthew J. Blevins with transferring large blocks of several penny stock securities without restrictions to offshore nominees despite red flags indicating the shares were likely part of an illegal operation.

Learn more HERE

SEC Charges Career Microcap Shell Promoter

The Securities and Exchange Commission announced that on December 19, 2016, it charged Edward F. Panos with defrauding investors by orchestrating a shell factory and promotional scheme in various microcap issuers.

Learn more HERE.


SEC Small Business Advocate


Securities and Exchange Commission



microcap IPO

Small Business Advocate Act


microcap broker/dealers

microcap short selling

OTC Stocks

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