This page is for discussion on OTC market trading as well as discussion relative to rule 15c2-11. Rule 15c2-11 is from 1971 and says that security issuers must have ‘current information’ on file, but allows the issue to continue to trade even when NO current information is on file.
Here is an article which covers rule 15c2-11 which was posted originally by 8675309xyz in the Sandbox on 8/27/2021.
Here is another more official resource as posted by Justin on 9/27/2021.
This item was posted by AzureBlue on 8/15/2022
OTC Blog discussion on expert markets.
Chime in:
On PREJF their website no longer shows when the board declares a dividend on the preferred.
I called Fidelity and their dividend people gave me the lazy answer that they get ex dates from DTC. They list today as ex but 15 calendar days prior to Dec 15 would be the 29th, no?
Do you make anything of no reported board action on the partnerre website?
PREJF is ex today.
Etrade shows the following:
Ex-Dividend Date
11/27/2024
Dividend Payable Date
12/16/2024
What I make of it is that Partner RE’s Group Treasurer Stephen Boylan may be getting a little paresseux (French word for lazy).
On the other hand, the Board did declare the dividend on November 6th, 2024 and filed the notice of same with FINRA on November 14th.
See https://otce.finra.org/otce/dailyList – filter by date & symbol.
In this way it’s something like the Osaic / Advisor Group ex-Ladenburg preferred shares LTSAP – they routinely file dividend announcements (three months in advance for LTSAP), but not in any overtly public manner like a press release.
This falls into the “mildly annoying” bucket in my view.
I would not worry about getting your Partner RE dvd. The group behind it is Covea AA- rated and the world would have to be a much darker place if they default in which case the missed dividend will be the least of your worries.
The rule is posting 10 days before the effective date. They are posting before this, so not sure that I would call this lazy. They are following the rules.
Hi Mr. C.,
If I’m following the conversation correctly, what I called the “lazy” aspect is that Partner RE is apparently no longer posting the dividend announcement on their IR / News page. (See https://www.partnerre.com/news/ for previous PREJF dividend announcements.) As LT wrote in the initial post in this chain,
“On PREJF their website no longer shows when the board declares a dividend on the preferred.”
Your other point on the 10 day rule is well taken, and I was not aware of that – thank you.
SEC updates position on applicability of rule 15c2-11 to fixed income securities
November 22, 2024 letter from Josephine Tao, Assistant Director, Division of Trading and Markets, SEC to Racquel Russell, Director of Capital Markets Policy, Office of General Counsel, Financial Industry Regulatory Authority, Inc.:
https://www.sec.gov/files/investment/no-action/fixed-income-rule-15c2-11-no-action-letter-finra-112224.pdf
_____
I believe this applies to fixed income securities issued pursuant to Rule 144, though conceivably the letter could be construed more broadly. But the last sentence in the final footnote to the letter brings no joy to the illiquid BB and preferred shares fixed income issues that trade in the “expert market” that we discuss here so frequently:
“Further, this letter does not address any FINRA rules applicable to the OTC market.”
Too bad, and it points out the illogical aspects of the rule’s enforcement.
_____
SIFMA statement in response to this letter:
SIFMA today issued the following statement from president and CEO Kenneth E. Bentsen, Jr. on the issuance of revised no-action relief for SEC Rule 15c2-11:
“Extending the 15c2-11 no-action relief is the right outcome and we commend the SEC for taking this approach. SIFMA has long held that rules need to be fit for purpose and designed thoughtfully. In this case, an equity-markets focused rule was ill-suited for application to the very different fixed income markets, and if the current no action relief that has allowed fixed income markets to continue to function effectively were to expire, these markets would have seen material disruption and investors would have been harmed through a reduction in liquidity and price transparency. If this rule is to be applied to fixed income markets, it needs to be revised through a public notice and comment process so that the Commission can design a rule that both protects investors and promotes, rather than impairs, the ability of fixed income markets to fund the consumer, business, and other credit creation that fuels our economy.”
https://www.sifma.org/resources/news/press-releases/sifma-statement-on-issuance-of-revised-no-action-relief-for-sec-rule-15c2-11/
Has anyone here written to SEC about failure of the ability to access expert market?
Yes, I have, but always in the context of companies that continue to file their audited financial statements on their own web sites (companies such as Hoegh / HMLPF and NFE / GMLPF). For example on December 5th, 2022 I requested that the SEC exempt GMLPF from 15c2-11 since the company provides audited annual financials on the NFE web site. They wrote back the very next day:
_____
Thank you for your request for exemptive relief.
The goal of the 2020 amendments to Rule 15c2-11 is to enhance transparency by requiring that broker-dealers (or a qualified interdealer quotation system “IDQS”) determine whether there is specified current and publicly available information about an issuer.
In your letter, you indicate that certain information concerning the subject security may be current and publicly available but nonetheless, OTC Markets has placed quotations on its expert market and therefore the quotations are not available to retail investors. Each broker-dealer (or qualified IDQS) must make the required determination as to whether such information meets the rule’s requirements independently and of its own accord.
Neither the Commission nor its staff will intervene with regard to the broker-dealer’s or qualified IDQS’ obligations with regard to such determinations. If a broker-dealer or qualified IDQS does not make such a determination, you may consider contacting the issuer to suggest that the required information be made available by the issuer to the broker-dealer, qualified IDQS, or general public.
However, a broker-dealer or qualified IDQS may choose to refrain from making a determination for other reasons as well, such as business purposes.
You may wish to contact OTC Markets for further information concerning the subject security.
The Division of Trading and Markets
_____
Perhaps with SEC Chair Gary Gensler heading out and Hester M. Peirce being considered as acting SEC chair we’ll see some progress on this, but I wouldn’t count on it. Peirce acknowledged that applying 15c2-11 to OTC market fixed income securities was ill-advised:
“I acknowledge that I thought of the rule’s application only in the OTC equity context. I ought to have solicited comment on the rule’s broader application. However, my failure to do so, the failure of the Commission to highlight this issue for active consideration by the public, and the failure of the relevant market participants to identify the issue during the rulemaking process, is not a reason for us now to move forward robotically and apply the rule to fixed income markets without proper deliberation. ”
https://www.sec.gov/newsroom/speeches-statements/peirce-nal-rule-15c2-11-2021-09-24
Isn’t this saying OTC markets should be the one to contact?
ESW3 – apparently more issues will be moving from the pink sheets to the expert market. OTC market said so on their last earnings call.
lt, Perhaps you can do that using one or a group of your high priced counsel.
At over $1000 per hour, he’s so busy I can’t even get him to deal with the MSEXP 144 issue yet. I’m about to give up on this guy. My former attorney at Jones, Day said they can no longer represent individuals. That attorney was $1200 / hr 3 years ago.
Funny story is the $1200 attorney told me she had to raise her rate because NY firms thought there must be something wrong with her that she only billed $900 (ten years ago btw)
Expert Market :
I found my broker at Stifel could buy expert market on my behalf. No idea what outrageous commissions I’ll pay, but you’d need top establish a relationship with them. They happen to underwrite a lot of the bonds I like to buy so it woks for me.
Quick question.
Does Amy know know Expert market securities which can be purchased on fidelity? I know SLMNP is available, any others?
I have HMLPF there and I had GMLPF but got scared off that one. Is there anything you are thinking of?
Always looking for new ideas…
Maine, I am showing 29 preferreds/babys/terms/converts/trusts that are currently paying out and are on the expert market. I am showing 23 issues that are NOT currently paying out. Of the 29, here are the 17 that appear to be tradeable on Fidelity. Note that I did NOT try to place buys on all of these, so it might not be 100% accurate.
AFFS
AFFT
AFSIA
AFSIB
AFSIC
AFSIM
AFSIN
AFSIP
CHRB
GMLPF
HMLPF
LTSAP
LTSF
LTSH
LTSK
LTSL
SLMNP
Here are the 12 that are NOT tradeable:
AATRL
AMBKP
AWRY
BANGN
CTGSP
DMRRP
KTBA
MSSEL
OCESP
PSBXP
PSBYP
PSBZP
I am not going to list the 23 that are not paying out unless someone is interested.
OCESP was called. I owned a bunch of it that I bought around $14 IIRC and it ended up getting called for the full $25 in October of 2023.
Scott thanks for the OCESP info. Interesting that Fido still shows it as a trading ticker with a last trade on 12/6/21. Each brokerage has a group responsible for managing the list of all securities they allow to trade. That is why it takes a different amount of time for each brokerage to add a new issue to their “Security Master.” When an issue is called, they remove it from the Security Master in every case I have seen except for this one! It also shows up as a valid ticker on other brokerages, so it appears that Ocean Spray did NOT properly cancel its registration when it was called.
Always a first I guess. . .
If Grid were here he would give you the history, but best I can recall OCESP started trading a long, long time ago — like in the 1920’s or thereabouts, and we had a dickens of a time finding the prospectus for it. Only a few of us were able to find a way to buy any, and Fidelity was not one of the brokers which allowed it. I went through RBC.
Seems like Ocean Spray had a series of these back in the day, and OCESP was the only one still trading, although I vaguely remember an OCESN being mentioned. I am sure there is an interesting story of why OCESP is not accounted for properly.
Thanks, Tex!
I may gamble on a ladenburg issue. Any thoughts on their situation and risk/return for their prefs? I did just notice this barrons piece.
https://www.barrons.com/amp/advisor/articles/osaic-ceo-jamie-price-consolidation-eb904603
Maine,
Here you go https://archive.ph/ykp67
I own all the different BB of Landenburg didn’t want the risk of the preferred. I am up $3.00 to $4.00 a share. Every time Tim posted about a preferred or BB IPO and I saw Landenburg’s name as an underwriter I knew I was safe. Just riding them out to term. I like what Osaic is doing on their consolidation. Slowly combining each division into a whole. Worked at a company that flipped the switch and insisted everyone go live and switch over to a new system, was a mess.
I also own all the bond issues except for LTSF. For others thinking of buying: Use limit order just above the bid. It may take a few days for a fill. The LTS bond issues are pari passu with the Advisor Group (Osaic) 10.75% 8/1/27. The current YTM this bond at the bid is 8.49%.
Thank you, Shareholder287!
One more question, if I may push my luck?
How do you know it is pari passu? which doc is it reflected in?
Thanks, Charles!
Couple questions, for you, or anyone..
Do you know if and where we can access the most recent financials? I know this is offered for some other names such as Phoenix. BTW, someone was buying Phoenix yesterday.. https://www.finra.org/finra-data/fixed-income/trade-history?symbol=PNX3814338&bondType=CA
Any comments from management regarding the prefs/BB since they we delisted? I couldn’t find anything based on a quick search, also couldn’t find a tender offer like others have done.
Maine, no idea Our friend Grid mentioned one time searching AM Best for information.
Maine,
I did a quick search on the list. DYODD
All the Ameritrust are ( I wouldn’t touch with a 10ft pole) Why? pull them up on a FINRA bond search. Bond traders are more astute than you or me. Hats off to losingtrader and 2WR
These guys are loaded with high interest debt and no trades. Why not? because the smart guys wouldn’t touch them.
Now a hint Maine, pull Oasic up on a FINRA search Tell me what you find
Thank you Maine, and Tex the 2nd.
I have KTBA and LTSAP with Schwab. I called Fidelity, and was informed they do not allow the purchase of Sec 15c2-11 Expert Market securities.
I haven’t found a broker who does, nor have I asked any if they would allow an accredited investor to purchase.
I am wondering if anyone knows the basis for SLMNP being in the expert market when Lyondell provides filings of financial info
I know there is a “show or fill” rule with the SEC but I must not be triggering the lower of the “ask”. It is a price improvement, idk. Maybe because of some OTC rules. I am still learning but this is the order I have out there that is not filling but is better than if someone just bought at 32.95. I wonder if the buy would fill at my ask or the higher shown rate?
CNLHN
200 shares
asking 32.00 (TD shows 32.95)
yield: (.4875 X 4) / 32.00 = 6.094 %
Chevron doctrine is [d]ead. First one to take SEC to court in it’s unfair practice clearly [o]verreach of authority and the so called “expert market ” is dead
Brokers are over reading the rule and if retail is limited to sell only an unfair advantage is given to the buy side
Just my 2cents on the aplication of rule 15c2-11 as it relates to all otc equity
Lastly and funny
cryptocurrencies can trade huh?
OTC orders are not shopped to all brokers you often have the best price but don’t get the fill. The big sharks have priority either because of kickbacks or because of simplicity.
SEC represents the big fish a lot more than they care about the little guys like us that’s just talking points to justify their jobs.
Which brokers allow purchasing securities from the Expert Market? As far as, I understand almost no one offers these even if you’re an accredited investor.
Fidelity offers some of them but not others. More than any other account I have but no Bid?ask numbers you need to guess. I’ve heard IBR offers some but I don’t have an account there. Or even the robinhood types if you want to go down that rabbit hole.
The SEC announced an exemption from Rule 15c2-11 for Rule 144A securities earlier today:
Order Granting Broker-Dealers Exemptive Relief, Pursuant to Section 36(a) and Rule 15c2-11(g) under the Securities Exchange Act of 1934, from Rule 15c2-11 for Fixed-Income Securities Sold in Compliance with the Safe Harbor of Rule 144A under the Securities Act of 1933
…
“The Commission finds it is appropriate in the public interest, and consistent with the protection of investors, to exempt brokers and dealers from the requirements of Rule 15c2-11, with respect to Rule 144A fixed-income securities.”
https://www.sec.gov/files/rules/exorders/2023/34-98819.pdf
There’s no joy for “equity” style fixed income securities, however – have a look at footnote 15:
/15 The Petition was limited to Rule 144A fixed-income securities and expressly excluded equity securities sold in compliance with the safe harbor in Rule 144A. See Petition at n.1. Moreover, the amendments to Rule 15c2-11 have applied to Rule 144A equity securities since the compliance date of those amendments which was September 2021. Accordingly, this exemption does not address equity securities sold in compliance with the safe harbor in Rule 144A.
I’m very dumb. I wonder if someone could spell out in English what this means? Does anything change with the expert market.
no
Finally, here’s a reputable academic survey of the unexpected application of 15c2-11 to fixed income securities. The article’s focus is on the impending application of the rule to Rule 144A securities, but it traces how poorly the rule was understood at the time of enactment and proposes a solution. Very interesting reading for income investors who have been affected by the rule!
_____
Yale Journal on Regulation
Fixed Income Securities and SEC Rule 15c2-11: History, Context, Uncertainties—and a Pathway Forward
* Jeffrey T. Dinwoodie†September 25, 2023
This Article discusses a topical legal issue in the areas of securities, corporate, and administrative law: an ongoing controversy regarding the SEC’s broker-dealer quoting rule, Rule 15c2-11 under the Securities Exchange Act of 1934. For the past fifty years, the rule has been understood to apply only to equity securities (primarily, penny stocks). But more recently, the SEC staff has stated that the rule also actually applies to fixed income securities, such as corporate bonds and asset-backed securities. This SEC staff interpretation has set off a wave of uncertainty across the financial services industry about the application of a rule to fixed income securities that many believe was actually designed for equity securities. After tracing the regulatory history of the rule, its purpose and these recent developments, the article ultimately recommends a pathway forward for the SEC to address this regulatory conundrum—a pathway that would stem the market uncertainty and also advance the SEC’s investor protection mission.
…
+++++
Proposed solution:
+++++
Rather than ignoring the uncertainty and, as two SEC Commissioners82 put it, potentially “trying to shoehorn [fixed income securities] into a rule designed for equity securities,” the SEC could take the following two steps, which would stem the uncertainty and ultimately advance the agency’s mission: (1) extend the November 2022 no-action relief indefinitely, so as to preserve the status quo; and concurrently (2) release a request for public comment to facilitate a formal evaluation and development of a public report or release discussing what, if any, additional safeguards or restrictions governing fixed income quoting activities may be necessary—and if so, how they should be structured and tailored for different types of securities. Based on the results of that evaluation, the no-action relief could then be amended or terminated, as appropriate, in conjunction with any other appropriate regulatory action.
https://www.yalejreg.com/bulletin/fixed-income-securities-and-sec-rule-15c2-11-history-context-uncertainties-and-a-pathway-forward/
ESW3 thanks much for calling my attention to this article
Lawsuit filed in federal court seeks to avoid SEC rule 15c2-11’s application to fixed income / Rule 144A securities:
_____
Manufacturing organizations sue SEC over rule reinterpretation
The National Association of Manufacturers and the Kentucky Association of Manufacturers sued the SEC Sept. 12 over its reinterpretation of a rule that would require increased disclosure from private companies.
In 2020, the SEC adopted amendments to the rule — known as Rule 15c2-11 and originally adopted in 1971 — preventing broker-dealers from publishing quotations for an issuer’s security in the over-the-counter market unless current issuer information is publicly available.
In September 2021, the SEC issued a new interpretation of the rule, applying its disclosure requirements “on private companies that raise capital via corporate bond issuances under SEC Rule 144A — without giving manufacturers the opportunity to provide comment on the damaging impacts of such a consequential change,” according to a Sept. 12 news release from the National Association of Manufacturers, or NAM.
NAM and the Kentucky Association of Manufacturers, which jointly filed a lawsuit in the U.S. District Court for the Eastern District of Kentucky, said that forcing private companies to disclose confidential financial information to the public is a violation of the Administrative Procedure Act, which governs how federal agencies develop and issue regulations.
“The SEC never allowed public comment on its novel reinterpretation of Rule 15c2-11, there is no conceivable benefit to the new standard, and the SEC did not consider the impact that its about-face will have on privately held businesses — which could exceed 100,000 lost jobs each year,” NAM chief legal officer Linda Kelly said in the news release. “The NAM Legal Center is filing suit to hold the SEC accountable and protect manufacturing growth, job creation and U.S. competitiveness.”
In November, the plaintiffs filed petitions for rulemaking with the SEC, seeking permanent and temporary relief from the reinterpretation of the rule. Following that move, the SEC temporarily delayed enforcement of its reinterpretation until January 2025 but has not taken action to reverse the reinterpretation, according to the NAM news release.
When asked for comment, an SEC spokesperson said, “We are reviewing these filings and will respond appropriately.”
https://www.pionline.com/regulation/manufacturing-organizations-sue-sec-over-rule-reinterpretation
Link to complaint:
https://documents.nam.org/law/EDKY_Complaint_NAM_v_SEC.pdf
Macroeconomic impacts of applying Rule 15c2-11 to Rule 144A debt issued by private US companies
Prepared for the National Association of Manufacturers (NAM)
September 2023
https://documents.nam.org/tax/EY_15c2-11_Report_Sept_2023.pdf
One of the preferred I have a position in has moved onto the ‘expert market’ After being listed I was able to buy / sell it still for a while, but I noticed it went down substantially and tried to make a buy order and it failed. I checked with ML, JPM and IBKR all 3 wont trade it.
Any idea on how to buy a preferred that is now on the expert market?
Does anyone here know how to determine the unique number of individual stockholders for any given series of preferred shares? As far as I can tell, this information isn’t made publicly available.
As many of you have noticed, there have been a recent raft of take-private proposals that could potentially affect the preferred shares of the company that is taken private. I am trying to figure out a way to avoid getting “GMLPF’d” – that is, having the preferred shares removed by an Exchange due to an inadequate number of preferred shareholders (that’s what happened with GMLPF, which was delisted from the NASDAQ Global Market due to an inadequate # of stockholders). With the delisting comes, of course, illiquidity, due to the unfortunate and unforeseen aspects of SEC Rule 15c2-11.
I am thinking here of SiriusPoint, Triton International, and the GasLog Ltd. / GasLog Partners preferred shares. If, say, Dan Loeb successfully consummates his take-private of SiriusPoint, could the SPNT-B shares be delisted by the NYSE (of its own volition, following its own rules) due to an inadequate number of SPNT-B stockholders?
I have called and emailed the “NYSE Listed Companies” contacts (https://www.nyse.com/contact) but not heard back.
Thank you!
Keep in mind “going dark” “delisted” and “expert market” are not the same thing. I own “delisted” issues that are neither “dark” nor expert market. I also own a “dark” preferred that is delisted but not on expert market. So the terms are not synonymous.
Just as a stand alone comment all shareholders holding in street name are generally viewed as one shareholder per brokerage.
This explains it a little bit in terms of a company wanting to go dark…
Both U.S. domestic issuers and foreign private issuers can delist and/or deregister if there are less than 300 holders of record of the relevant class of its securities as defined in Rule 12g5‑1. It is possible for a company to have less than 300 holders of record of a class of securities even though it has thousands of beneficial owners of that class of securities. This is because, in counting record holders, in general, the issuer need only count the number of registered holders on its shareholder list and if depositaries are listed, the number of holders for whom the depositary holds securities. For most U.S. issuers, this mean counting the registered holders and adding the number of participants listed in the security position listing of DTC, the principal depositary for U.S. issuers.5 For purposes of determining whether the Company has less than 300 holders of record, Rule 12g5-1 has been interpreted to mean that an issuer does not have to further “look through” DTC participants to the ultimate beneficial owners. Many companies may therefore be eligible to delist and “go dark” without management or the board of directors even being aware of the possibility.
https://www.dorsey.com/newsresources/publications/2009/03/going-dark–voluntary-delisting-and-deregistrati__
Grid, how do you distinguish among “delisted”, “going dark”, and “expert market”?
Bur, Delisted is any issue that is removed from one of the exchanges and typically (though some baby bonds go to the $1000 bond desk as $25 baby bonds) goes to the OTC. Not everything on OTC is a “delisted issue” though. Some were private placed issues that got OTC tickers assigned and just trade there. For example FIISO is an OTC pink sheet that never traded on an exchange even though its common stock parent FISI does.
Expert market is just a subsegment of the delisted issues. These cannot be traded (for reasons we all know) because the company will not report financials to OTC. If company provided delisted financials to OTC they would trade on the “OTC Pink Sheets”. Many companies provide OTC their financials so they trade freely. Many also (such as Ameren and Eversource subsidiary preferreds) freely trade on pink sheets because holding company does release financials through SEC filings despite the subsidiary preferreds being delisted.
Concerning “going dark” and “private” the differences are a bit more nuanced. A private company in my personal terms is one that has no public tradeable common stock. Going dark means a company wants to get under shareholder limit threshold to delist their companies common stock with the intent of going “private”.
If a company goes dark there still are some minimal shareholder protections such as right to companies financials if a current shareholder. Typically a company that goes dark is insider led, or family led where they control the votes to get this done. Theoretical worst case scenario for a company going dark is to feed the pigs at the trough and not maximize earnings per share. Such as deals done with other affiliated family companies that may benefit more the other family enterprise than itself, or hiring the lazy child a 6 figure salary to do nothing but get him out of the house, lol. In other words if you own shares of a dark company your interests and controlling entities interests may not be aligned at all.
Some companies trade OTC through an SEC exemption created close to 100 years ago. This company only is on OTC just as a courtesy to shareholders as they were SEC exempted from having to be on an exchange.. Ever heard of this company? At $500 plus a share it has to have some worth in it, ha.
https://www.otcmarkets.com/stock/AZLCZ/security
Thanks for all the info, Grid. All the concepts familiar, but it kind of straightened out my thinking about the terms used.
No, I’d never heard of the Aztec Land & Cattle Company (https://en.wikipedia.org/wiki/Aztec_Land_%26_Cattle_Company). Now that’s True West, man. Classic.
There are some neat stories on a few OTC companies. Another one is Boston Sand and Gravel. BSND
https://www.otcmarkets.com/stock/BSND/security
It went to expert market and they dont give a sh!§£. It has been around over a 100 years and its site has been used to film scenes in Batman, The Town, and Equalizer. Look at this pic below..The city of Boston’s highway system was built around it.
https://www.theawl.com/2017/08/the-most-overlooked-thing-in-boston-is-boston-sand-gravel/
I actually owned about 10 shares maybe 4-5 years ago at about $300 a share. I wanted to see their financials and they sent a nice little glossy without asking. I really screwed up and I should have kept them because they are now paying a $100 a year annual dividend. Boy the SEC is really saving people from owning such a crappy company, ha.
Just saying.. but boston sand and gravel is not overlooked by anyone with an eye for industry. It is probably the most well known due to their large yellow sign by the highway. But anyway..
The more interesting question is can preferred ocean spray owners request Financials? Or only common?
If you find it more interesting maybe consider shooting them an email and find out. Maybe Kate can help you.
For corporate, business, trade, and financial media inquiries, contact:
Kate Leonard
Director, Global Corporate Communications and Culture
Ocean Spray Cranberries, Inc.
One Ocean Spray Drive
Lakeville-Middleboro, MA 02349
Email: Comms@oceanspray.com
And they have a website and are generally responsive to questions.
https://www.azteclandco.com/updates.html
I think those trades were stock buybacks.. See the December notice.
The Aztec Land & Cattle Company! Wow, there is a name I haven’t heard in decades.
When I was a kid, I helped herd cattle on their land. Never occurred to me that they were a public company.
I might have to buy a share just for nostalgia. I wonder whether I could get them to issue a paper certificate to hang on the wall?
Also added thought I forgot to mention. Based on my understanding, a company going dark is not the same thing as going private.
Thanks, Grid, for complicating a simple question! Let’s use a real-world example. SPNT and SPNT-B are listed on the NYSE. Let’s say Third Point LLC / Loeb takes the company private and delists and cancels the common shares. How can you tell if the preferred shares would be delisted *by the NYSE* for failure to comply with their minimum listing standards?
The NYSE “Continued Listing Criteria” are specified here:
https://nyseguide.srorules.com/listed-company-manual/09013e2c8556747d?searchId=1150133367
802.01 and 802.01A state that “The Exchange would normally give consideration to the prompt initiation of suspension and delisting procedures with respect to a security of either a domestic or non-U.S. issuer when:
802.01A.Distribution Criteria for Capital or Common Stock (including Equity Investment Tracking Stock).—
•Number of total stockholders (A) is less than ____________________400
So far, so good – if the number of total stockholders is over 400 after the common shares are delisted and canceled, there’s no automatic delisting of the preferred shares by the NYSE.
The same rule also provides that “(A) The number of beneficial holders of stock held in the name of Exchange member organizations will be considered in addition to holders of record.”
When the common shares are delisted and cancelled, the preferred shares become the primary NYSE listing. So how does one figure out how many individual unique preferred stockholders there are to assess the risk of a delisting by the NYSE, “sua sponte”, or on its own?
That’s what I’m trying to get at. Not what happens to the (say) SPNT-B shares after a potential NYSE delisting (they could go to OTC Pink and stay liquid, or they could go to the expert market and dry up , just as you suggest).
Outside of asking the company for the information, are unique shareholder numbers publicly available anywhere?
ES, Sorry, but I have hung around 2Whiteroses too long, lol. I have got this way I guess because people (not you) get delisting and expert market mixed up to meaning the same. In terms of delisting from 300 shareholders, if every shareholder is in street name as my blurb alluded too, they are likely well under the threshold. They actually dont even have to dig further than that.
Oddly enough some reporting OTC delisted issues actually give you pretty accurate counts. Take SOCGP as an example. Note they report over 1100 entities owning this security.
https://www.otcmarkets.com/stock/SOCGP/security
Of course a lot of scenario’s could occur besides maintaining requirements and staying on NYSE… Even if somehow it got delisted they could report financials to OTC and it would trade fine on pink sheets.
The blurb and link I gave above shows the reporting process one must go through. Granted its a bit heavy. But bottom line, there are 2 ways to an “accurate” share count. The way listed above where every shareholder under a single brokerage in street name is considered just 1 entity…Or you can poke deeper but it doesnt have to be done though. In fact a preferred I own specifically mentioned that. They got under 300 by redeeming any person with less than 300 shares or so not held in brokerage account. As they stated they all only counted as one person anyways and thus didnt force a tender on those people.
Hey Grid – We’ve all got ’em (and I’m not talking about belly buttons) but only the most special amongst us are retentive about ’em…. lol
2WR, Have you considered rolling out of your GJP into more GJT? I just dont see the downside. You get higher yield and a better quality rated bond backstopping the synthetic adjustable. And if for some reason the counter party swaps were terminated you get a better YTM with underlying bond. And if redeemed you get the better sized cap gain. I dont see any advantage GJP has on GJT unless you see something Im missing.…GJP has a 35 bps higher adjustment, but that is more than negated by the $3 plus price differential.
Grid – What you’re missing is I don’t own either one nor have I ever but will take a look….. I own GJO (Walmart) and that one’s based on 3 mo LIBOR not 3 mo treas…. That’s truly sock drawer to me. I gladly pay no mind to it and continued to own it in ZIRP days when it made no sense to continue holding Now at least it does make sense…. I’ve never owned either of GJP or GJT but I do also own GJH (US Cellular). It’s been doing poorly recently but YTM I suppose is not out of line high or low for what it is.
Ok, Im sorry I forgot. I thought you owned GJP not GJO. That ‘splains it then. Too many G’s for me to remember.
Im sure you could contact IR and they would give you the info. Though its probably the method I referred to which would understand the actual amount. TFIN in their annual meeting announcement (below) actually mentioned their shareholder number, so they are aware of at least what the minimum number is..
As of February 27, 2023 we had 23,318,730 shares of Common Stock outstanding and entitled to vote at the Annual Meeting, and our shares of Common Stock were held by approximately 269 stockholders of record. Each stockholder of record of Common Stock on the record date will be entitled to one vote for each share held on all matters to be voted upon at the Annual Meeting. There are no cumulative voting rights in the election of directors.
Gridbird wrote: “I’m sure you could contact IR and they would give you the info.”
Simply FYI, asking IR for the # of unique shareholders was the first thing I did – I sent emails to Joe Nelson (head of IR at Gaslog Ltd. / Gaslog Partners) and to Dhruv Gahlaut, Chief Strategy Officer & Head of Investor Relations at SiriusPoint – but neither one has replied, and it’s been a full week in both cases. I suppose they feel no obligation to respond to me as a preferred shareholder (not a common shareholder) in both cases.
I’ve also scoured the SEC filings looking for these numbers and struck out in both cases. SPNT is holding its annual shareholder meeting soon, and you’d think that information would be in the annual report, but if it’s there I couldn’t find it.
All this makes me think that I am probably missing something, and my perception is that this is not something other people seem to be worried about, which adds to the concern that I’m paranoid about something that others aren’t. But these days, with 15c2-11 being what it is, getting GMLPF’d (getting removed from an Exchange, by the Exchange) is something I’d really like to avoid.
Thank you, Grid, for the link to the SOCGP shareholder count numbers. This means these numbers exist somewhere and that it’s a matter of tracking them down. I wonder if unique shareholder numbers are available on a Bloomberg Terminal? 😉
Speaking of Bloomberg, there’s a fascinating article in this week’s FT Magazine, “Bloomberg is contemplating life without its founder”. Here are a couple choice quotes:
“It may not be as glamorous as many other corners of the technology world, but Bloomberg terminals have become an essential part of any self-respecting bank or investment group’s toolkit. Some executives insist on having their own as a condition for accepting a job offer. “I’ve been married to the Bloomberg terminal for longer than I have my wife,” says Steve Sosnick, chief strategist at Interactive Brokers, who has had one since he started his career at Salomon Brothers in the late 1980s. ”
One more:
The company’s ability to charge for the privilege of renting a terminal is the envy of the data industry. Last year, Bloomberg raised the price for just one of its terminals by about 9 per cent to $30,000 ($2,500 a month) and the cost of multiple ones to $26,580 per unit, as reported by the FT. Because the company refuses to cut deals, even for its biggest clients, and because of how rare it is to get rid of one once they’re installed, that means the annual revenues thrown off by the terminals over the next two years are easy to calculate: at least $9.7bn.
Free link for FT subscribers: https://on.ft.com/3ojbQdm
Free gift link for non-FT types: https://on.ft.com/3Lxf7PH (“This link can be opened up to 3 times and is valid for 90 days.”)
Cheers.
Es, The companies know or have access to the info. Did you see this from an earlier post?…This is from TFIN from their annual shareholder meeting that was SEC filed a few weeks ago…Notice they put the shareholder count in it….
Stockholders Entitled to Notice and to Vote; Quorum
Only holders of record of our Common Stock at the close of business on February 27, 2023, which the Board of Directors has set as the record date, are entitled to notice of, and to vote at, the Annual Meeting. As of February 27, 2023 we had 23,318,730 shares of Common Stock outstanding and entitled to vote at the Annual Meeting, and our shares of Common Stock were held by approximately 269 stockholders of record. Each stockholder of record of Common Stock on the record date will be entitled to one vote for each share held on all matters to be voted upon at the Annual Meeting. There are no cumulative voting rights in the election of directors.
I did see your note about TFIN, Grid, and I looked at the filing (see https://www.sec.gov/Archives/edgar/data/1539638/000119312523071433/d313397ddef14a.htm ) . Unfortunately, it doesn’t say anything about the # of preference share stockholders.
I agree, the unique number of preferred shareholders is most likely available somewhere, the trouble is “where do you find it?!?”
-E. Scott
ES, you got a hard road to toe. Up into the 1990s many annual filings listed the amount of shareholders of record in the commons and the preferreds. But largely certificate issued securities are now long gone and most are in street name. So if 1000 street named shareholders owned through Schwab it would show as 1 shareholder. This is a method companies could use to go dark easier.
Grid, gentle correction: “row to hoe”, not “road to toe”. Can’t say as I’ve ever had to hoe a row of anything, but when the sun is hot and the field is wide, I expect it’s not easy…
Yes, guess your right, Bur. But I just got back from a hard 75 min walk up and down some hilly roads. And it was definitely a hard road on my toes!
lol now that’s a hard road to toe…
A shareholder asked about GMLPF during the NFE conference call:
Michael Patterson
My question is regarding your preferred shares on Golar LNG, the 8.75s. Some time ago, these were delisted. They’re currently not marginable. They can’t be solicited. They traded on the Pink Sheets. And I’ll give you an example. They traded about a 16% yield. Yesterday it was showing on the market about 14%. A trade went through at 11.5. And it just seems like quite a disservice to the shareholders of these preferreds to do that. Do you have any plans or what’s your comments on these preferreds?
Christopher Guinta
This is Chris. Why don’t you shoot me a note offline, and we can talk through this. We have put out this information publicly before and I’m happy to talk you through it. The financials are available. And we can go through it offline.
Michael Patterson
Well, with all due respect, for about three months, I’ve tried to call in, email and I never do get a return response on this. And so, can you address how come that they’re not listed? And would you consider listing these shares?
Christopher Guinta
Mike, so the shares are not listed. They were delisted when we took private the GMLP equity in 2021. We provide everything required for compliance with those shares. And we will continue to do so.
Michael Patterson
So you’re just fine with them trading at $0.45 on the dollar and it’s doing this to the shareholder. And like I say, I’d take it offline, but I can’t ever get a call answered, responded to at all. But it sounds like you’re just not going to do anything regarding them, right?
Christopher Guinta
Mike, we’re happy to look at what you’re describing. But we stay in compliance with those shares. And we provide all the information that’s required on a quarterly basis.
GS – thanks for posting that exchange here. I tuned into the NFE call a little bit late this morning (5:30 Pacific) – just in time to hear that “analyst” chime in with that terrific Texas drawl of his (I put analyst in quotes because I’m pretty sure he’s not really from Morgan Stanley – happy to hear that I’m wrong though). (Reason I doubt he’s from MS is that I’ll bet it was a ploy to get on the call … I tried getting on a NFE call to ask about GMLPF a year or so ago using my own name and affiliation as a “private investor” and they wouldn’t take my question – skipped right over me.)
His frustration was palpable, and with good reason. It would only cost NFE about $8K to get the GMLPF shares listed on OTC Markets. This would restore liquidity and GMLPF would be off this expert market BS and back to normal OTC trading status. They know this – I’ve offered to pay half the OTC filing fees to get back to pink, current status – and not one of the NFE execs have even bothered to respond to my offer. This includes CFO Chris Guinta, Cameron MacDougall their general counsel, their VP-level bean-counters and regulatory filing execs, and every single one of the many, many near-worthless “heads of IR” that have been parading through NFE’s IR department. He’s right to be frustrated.
I can feel Michael’s pain and frustration…. been there/done that with NEWT and Barry Sloane on NEWTZ and NEWTL and trying to get a straight answer on their approach to addressing the continuing BDC asset coverage ratio that remains effective in their prospectuses even though they are now a BHC. I can’t get beyond “we’re in compliance.” and they no longer even publicly update what their actual asset coverage ratio is these days as they used to… Their 10q, once again, only refers to what the coverage ratio was in Dec ’22.
Guinta, wanted no part of that question. I bet he was stunned when his patronizing answer to answer question offline got slapped down like a Mutombo blocked shot, ha. His “in compliance” answer had nothing to do with the question.
How many “expert market” AKA EM issues are there? Yesterday I posted about Dayton and Michigan Railroad, DMRRP, but as FC pointed out, I failed to mention that is was an EM issue. I should have pointed that out in the original post and in the future will either explicitly state that an issue is EM or I will NOT post about it. I think there are a number of III’ers that are able to trade in EM issues. I thought I should have the community double check my list of EM issues. Here are the 25 EM issues that I show are currently paying dividends or interest:
AATRL, Baby, Paying
AFFS, Baby, Paying
AFFT, Baby, Paying
AFSIA, Pref, Paying
AFSIB, Pref, Paying
AFSIC, Pref, Paying
AFSIM, Pref, Paying
AFSIN, Pref, Paying
AFSIP, Pref, Paying
AMBKP, Baby, Paying
AWRY, Pref, Paying
BANGN, Pref, Paying
CTGSP, Pref, Paying
DMRRP, Pref, Paying
GMLPF, Pref, Paying
KTBA, Baby, Paying
LTSA, Pref, Paying
LTSF, Baby, Paying
LTSH, Baby, Paying
LTSK, Baby, Paying
LTSL, Baby, Paying
MSSEL, Pref, Paying
OCESP, Pref, Paying
SLMNP, Pref, Paying
YGYIP, Pref, Paying
I doubt that many III’ers trade EM issues that are NOT paying out, but just in case, here are the 15 that I show.
AMTPQ, Pref, Deferred
ATPGQ, Pref, Suspend
CBJCL, Pref, Suspend
CBTRP, Baby, Suspend
COTRP, Baby, Suspend
EHPTP, Pref, Deferred
LEHKQ, Baby, Suspend
LEHLQ, Baby, Suspend
LEHNQ, Baby, Suspend
LHHMQ, Baby, Suspend
NUSPQ, Pref, Suspend
PARDP, Pref, Deferred
SKRUF, Pref, Suspend
SMANP, Pref, Deferred
TEUCF, Pref, Deferred
Please speak up if I have either left an issue out and/or have it incorrectly listed. I have NOT attempted to place orders for all of these using a regular account, my data came via other methods.
A Miracle, verbatim from FT
SEC delays enforcing disclosure rule on bond markets until 2025
Financial Times
The US securities regulator on Wednesday said it would delay implementing a rule meant to bring transparency to corporate bond markets, bowing to fierce industry lobbying as banks and trading houses warned that enforcing the 51-year-old rule on fixed income could cause “significant, deleterious effect” on the market.
The Securities and Exchange Commission has postponed an amendment to ‘rule 15c2-11’ until January 4, 2025, giving broker dealers in the bond market two more years to prepare themselves.
The statute, first implemented in 1971, requires dealers to check that a wide range of financial information is up to date on each company for which they quote prices. In 2020, the SEC amended the rule, requiring dealers to ensure the details they were checking were publicly available to investors.
Many market participants had assumed that the rule and its amendment related only to equity trading. But they had never explicitly excluded bonds — and last year the SEC decided that the rule would apply additionally to fixed income, setting off a rush among bankers and trading platforms to get ready for a dramatic shift in required disclosures.
The Securities Industry and Financial Markets Association said on Wednesday it was “pleased the SEC has recognized the potential harm” that US companies and investors would have endured from the application of the public disclosure requirements of Rule 15c2-11 to the 144A market. The 144A market allows issuers to raise capital from qualified institutional investors, such as pension funds, without having to register their securities publicly with the SEC. It has grown rapidly in size in recent years.
Still, “we note that the relief is not permanent,” said Kenneth E. Bentsen, Jr, president and chief executive of Sifma.
Thanks, Tex! Here’s the SEC’s reprieve / non-enforcement letter:
https://www.sec.gov/files/fixed-income-rule-15c2-11-nal-finra-113022.pdf
Is there an implication to SLMN?
If you mean SLMNP (https://www.quantumonline.com/search.cfm?tickersymbol=SLMNP&sopt=symbol) I don’t think so. As best I can tell, the SEC reprieve letter only applies to securities offered pursuant to 144A (see page 4 of the letter, securities matching the specifications listed in Appendix A) and doesn’t affect the retail preferred shares and baby bonds that have “gone dark” and now trade on the expert market.