Why Is It Difficult To Deposit MicroCap Stock?


Why Is It Difficult To Deposit MicroCap Stock?

In a new post on the OTC Markets’ blog, Jason Paltrowitz answered a question many microcap shareholders ask –  “Why Can’t I Deposit my Shares?

According to Paltrowitz, “The problems with the deposit of shares often center around broker-dealers’ gatekeeper responsibility to understand “how” the company’s shares were obtained and know “who” the investor looking to complete the transaction is, so as to protect public markets from illegal distributions of securities.

Paltrowitz writes that when deciding to accept a deposit of shares, brokers often assess the following:

– Are the shares in Certificate form? Are they legended?

– Is the holder an affiliate of the issuer?

– How were the shares acquired? Was it done through a private transaction (or chain of transactions) with an issuer or affiliate? At a material discount to market prices?

– Are those shares currently restricted? If not, is there adequate legal documentation showing the shares are freely tradable?

– What is the company’s share structure and share issuance history? Has the company done a number of issuances/private placements? How many shares does the company have outstanding?

– Does the holder have an existing account with the brokerage firm? If so, for how long, and what is the total value of the account?


Read the entire post on the OTC Markets blog HERE.



One comment

  • Interesting read are you able to cite any sources or give examples;tell stories regarding this article or Part 2

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