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
Gmlpf is back on the expert market?
Apparently it is. Something has also changed with FIISO, which OTC calls ‘pink’ but FIISO is now also grayed out on thinkorswim. I’m glad I don’t own much of either. This is a continuing goat rope. And for who knows how long.
It is and it isn’t. Putting in the ticker symbol, it says “Pink.” * Going to the quote page, it says “Expert Market.”
FWIW – It was trading normally this AM, no problems. However, check back later. With the SEC and OTC Markets directing, the new “Investor Protection” movie now screening will likely have as many twists and turns as a high-speed road chase in a James Bond movie.
*Update – GMLPF now showing Double Diamond when you plug in the ticker. Paragraph 2 was correct!
September 28, 2021 – Tuesday of last week – marked the effective date of SEC Rule 15c2-11. It was an extraordinary week in terms of revealing how ineptly this transition was handled by the SEC, brokerages, and OTCMarkets.com.
Using screen shots, I have documented some of the wild market swings that took place last week in various issues that I follow (and not necessarily own). I took screen shots of the steep selloff in the AmTrust issues (shareholders there were totally blindsided by the change from Pink, Current to Expert Market); I also captured the GMLPF Tuesday morning trip down to $20.00 (and the Wednesday / Thursday / Friday resurrection); and I got shots of the LTS issues, where at least the slow selloff was telegraphed over the summer.
At some point, there will be a reckoning for this mess. I think it would be smart to document how the SEC “helped” and “protected” fixed income investors. I’d be grateful if my fellow investors would do the same for the affected issues that you follow. You never know when they might come in handy down the line, and the swings last week were wild enough that they should be preserved as evidence.
A reckoning for who, the SEC? Not going to happen.
I am hoping to track down the trading data for GMLPF and the various securities within the AmTrust and the LTS issues for the week of September 27 through October 1, 2021, preferably in Excel-compatible format.
Can anyone give me any pointers on how to obtain this information?
Thanks in advance.
Go to OTCmarkets. Enter the ticker and scan down to “Trade Data”. Shows market trades in the stock.
Unlike most of you, I use a retail broker and pay trade commissions and brokerage fees. I use a full service broker to gain access to IPOs and secondary offerings. After reading the link below, my guess is that I could place limit buy orders on these depressed issues.
https://blog.otcmarkets.com/2021/03/25/understanding-the-expert-market/
Anyone have any experience trading these issues with a full service broker?
af,
Could you please tell me who is your full service broker? I have been shut out out of a couple of IPO’s for having a discount broker.
I have several retail brokers, and I have done business with them for 40 years. In order to get the IPOs and secondary offerings that I want, I have to take many deals that I do not want — including many losers. They just don’t give away large amounts of free money associated with the hot IPOs. In the end, the brokers and I both come out way ahead, but there’s a lot of give and take. I am not a huge player like an institution, but I accept a very low profit margin because I take very little inventory risk.
I know it sounded inflamatory and paranoid when I posted that we are being herded, but the evidence indicates just that. The cowboys do not want the cows running THEIR ranch.
THAT’S the American Way!
I’ve been unable to find a broker to trade expert markets. I have several stocks who have fallen into this category and want to buy. Did you have any success? Thanks
Another oddity with WTREP today – I thought I had something exciting to report as I noticed TDA’s ThinkOrSwim platform added back the value of my WTREP positions into my accounts today. However, I guess TOS isn’t communicating with TDA today because when checking my account’s value on the website had WTREP still valued at zero, zip, nada….. Don’t you just feel so much better having all this noise going on causing nothing but unnecessary agita?
2WR, I have some good advise so pay close attention. Do not panic and sell your WTREP shares. At current $0.00 price, you literally would be giving them away, so hang tough. 😂
What would I do without you and your sage wisdom, Grid? … I was this close to pushing the sell button at $0.00….. ha. BTW, where are people seeing “expert market” quotes or trades? that’ll just add to the no soup for me fun..
SLMNP still trading on Schwab….weird
WTREP has a distribution day tomorrow Sept 30. I’m sure they’ll be some more drama around that. Probably won’t show up on time and without hassle, but hoping for the best…. My TD account today does show the value back up again from zero yesterday.
George – How are you checking TDA account? If I look via logging into the website, my account still shows 0.00 on WTREP, But still today, as it was yesterday, if I check via ThinkOrSwim, it shows the value of 25.09 restored.
Ahhh, yes, same here. On TOS it shows up at 25.09, but on the website it doesn’t show up and has a zero value..
Bizaroland
The ironic thing is only a basic minimum amount of time and effort by management should keep them off the hit list.
Take an issue I just bought again today (I trade it frequently as bid and ask is usually so wide a truck can drive through it. NSYC….
https://www.otcmarkets.com/stock/NSYC/quote
It skates by on “Pink Limited Information”. All it does is submit its skimpy annual financials to OTC every year and they post it.
https://www.otcmarkets.com/otcapi/company/financial-report/294235/content
A very simple financial statement from a simple stockyard company with land they are selling from another stockyard that closed shop many decades ago. It has been around for well over a 100 years, and has a tiny float of about 43,000 shares. But this is all that is really needed to stay in good graces apparently… For today anyways, ha.
I posted a comment on the Reader Initiated Alert section today, stating that AGRIP, Agribank, a GSE, cannot be traded on TDA. A Govt sponsored entity with over $100B in assets owed by numerous
institutions, etc and essentially a Govt product isn’t fit for trading because the OTC board shows it ‘dark’. I don’t know the rule , but does a govt entity have to file financials with the SEC, because obviously this one does not. We are in fantasy land. Thanks
My comment included an error. The market cap is $50B+. Sorry.
Thanks,
I was looking for a final list of 15c2-11 stocks from the SEC and all I could find was the final rule (297 pages). There may be a link buried in the rule but on a quick perusal I couldn’t find it. The most recent list of proposed restricted stocks that I could find is from TD.
The link to the rule is: https://www.sec.gov/rules/final/2020/33-10842.pdf
The link to the TD stock list as of 092021 is (may be updated from Justin’s post?): https://www.tdameritrade.com/retail-en_us/resources/pdf/TDA101550.pdf
If anyone comes across the final “official” list, please post it.
I’ve been watching from afar and letting the my decisions emerge from the froth once the tide goes out and exposes a bit more of the motives. I have always thought that that was a good idea in almost any analysis.
Seems the hallmark of the American markets have been: Access, Fairness, Breadth, Transparency to price discovery, and I will add Timeliness now that electronics are in the game.
THAT ALL is changing. I would have to say that there is a movement towards Territory Control and considered Capital Flight Contingency. There’s a whiff of panic in government; you can tell by their actions. Development of Emergency Scenarios for every department are all the rage with the War Mentality Government.
The herd is slowly being herded into narrower pastures. Capital and Capital Management is on a very narrow base historically. Acceptance of lockdown has been part of that training too. That is fact, not personal statement.
Gensler is new, I took an e-course this COVID season with him as professor. Not a good match of personality from my perspective with Sargent Dow Jones.
The winds of change HAVE begun blowing. America is ONLY about ONE thing: MONEY and its control.
PS: To a comment above: Marian McPartland is another well known McPartland, a great talent!
LTSH just traded 100 shares @ 12.00, down from yesterday’s close of 18.70. A nice 35.8% haircut thanks to the new rule.
SLMNP trading on Schwab will we be able to sell in the future?
Saw SLMNP on TD Ameritrade today. They listed it as “Over the Counter Market.” They reported high, low, closing price ($1006.06 up .06), volume of 27 shares and bid, ask. Things seem to change on a daily basis. They are showing pertinent details on my Positions page. Haven’t tried to buy any more shares yet though.
I’ve put in a bid for 1 share @ 995 for the past 2 days. They have been rejected immediately with a little note about the new rule at the top of the rejection.
FWIW
Fidelity allowing to post a sell, but buying for SLMNP is restricted.
Tex, on a positive note a bid of over 18 came out after that and was left unmolested the rest of the day.
I’m seeing volume for issues on the expert market like SLMNP and KTBA. I assume this means they are being “actively” traded over there. KTBA showing a last trade at 30, SLMNP at 1015 and GMLPF at 22.40. Someone was prepared to buy these on the cheap on the expert market.
Merrill actually let me buy ktba at 30, and then place a sell order for it! No go on slmnp though.
Vanguard assured me that they will help me send sell orders to the expert market if I want to dump, but only on a day order basis, and I have to pick my own limit based on their last trade indicator.
I just bought a couple shares of SLMNP at 1010 at ally invest just now. I will try 1000 next. lol
With WTREP now being deemed worthless at brokerage houses, if you own it in an IRA is anyone going to try moving it to their Roth account or open a Roth account using WTREP for funding??? If one does that, and WTREP gets called relatively quickly thereafter, wouldn’t you then be restricted from having access to those funds for withdrawal for a period of time something like 5 years? Just wondering………. There’s got to be something good to come from this ridiculousness and either that or the decrease in IRA assets for next year’s RMD might be that goodness..
Ktba is now on the bad list too.
Now I dont presently own KTBA, but that would pi$$ me off. That is just wrong. That truly is an ATT direct obligation and they assumed it. This is just computer garbage entered and thus garbage outcome. Its just a trust mechanism held at a bank with these bonds. There is nothing to report. In fact when filings were made back in day, on they reported to look at ATT financials.
Well…I do own KTBA, and it really would piss me off. Seems to me that either ATT or Citi (Citi sub Smith Barney brought this to market) should make a market. In any case, I’m not selling. I think a market will develop either by ATT doing the right thing or something else. ATT made a tender for the underlying bond a couple of years ago at an equivalent price of $35 for KTBA if I recall correctly.
Nanny state of Fidelity cancelled all of my KTBA orders prior to opening today.
I dumped my small KTBA position today at $31. You other guys can fish for these dead in the water expert market stocks. I am not locking up funds that I may never be able to sell except at a big loss.
Maybe they fix KTBA down the road but I don’t care. One thing I have learned is when a situation changes, get out and ask questions / reassess later
Also didn’t hurt that I had originally bought the shares a tad over $30. So locked in that gain plus whatever dividends I have already collected
Also sold KTBA today, Maverick (and SLMNP). Agree w/you 100% about not locking up funds possibly forever. If it gets straightened out, great, I’ll be back for them. But I took my gains and I’m happy to have the cash for now.
I was asleep at the wheel and did not take any action on my 1800 KTBA. I should have sold the last week in September when there was a market. Schwab accepted a 100 share sell offer yesterday (no action), but I see no trades this week and price still quoted at $30 as last trade, possible carryover from last week.
Is there anything that I can do rather than hold on and draw interest? I am 80 and I suppose that the IRA holding the KTBA will pass on to my beneficiary upon my death. I wonder what will happen should the IRA be drawn down to where the KTBA is the sole asset and there is still a required distribution?
codger – sorry to hear about that. If it comes to that, you can distribute the stock “in kind” to a taxable account and pay taxes (if it’s came from a traditional IRA) on the value on the day that happens. Who knows what price they might use, but maybe it’s a lower one.
Meanwhile, feel free to email Jason Zweig at the WSJ about how happy you are about the SEC protecting you from having a market for your retirement assets. Unlike the SEC, he actually cares.
I think some of have been sold for around $30.10 today. I have an outstanding bid for $30.01 and has not hit today. It did earlier in the week where I did pick up some. I have 15 yrs to retirement, so I am open to picking some up and keeping in my sock drawer 🙂
I appreciate the insights presented re KTBA marketability.
Schwab did sell a few shares for me today at $30.10. Since there seems to be a market I am holding rest of position in anticipation of $0.875 dividend next month.
Codger, you may still be able to sell your KBTA if you really want to. I was able to sell AATRL on Schwab the other day with simply a limit order.
Schwab won’t show any trades, but the OTC shows there has been volume in KBTA at the $30 price point for the past several days.
Put in a limit order at $30 and see what happens. Or undercut it somewhere in the $29s, if you really want to see it sell.
Codger…if you have a Schwab account you can get Street Smart Pro. That will enable you to see trades on KTBA…although bid ask is a black hole. There have been six trades in KTBA today…all at 30.10. One trade for 700 shares..the others were all under 100 shares.
StreetSmart Pro is the old platform that was retired in 2014. The current Schwab trading tool is called StreetSmart Edge. If you don’t want to install it, you can also run it on a Citrix server.
https://www.schwab.com/trading/tools-and-platforms
If you have a TDA account you can see trades in “thinkorswim” (installed or web version).
There are currently 11 trades today of KTBA – most at $30.10
If you have Fidelity, you can still get Time and Sales data in Fidelity Active Trader Pro
You won’t see a bid and ask shown – but you will know what the trades are being made at. You should be able to enter a sell order – just set your limit price close to where the trades are being made and hopefully someone will pick them up
I dumped all my KTBA back in September at $31 and change when they first moved to the expert market
https://www.otcmarkets.com/stock/KTBA/overview
scroll down for trade data… no need for a special account.
Ok, more listings from OTCMarkets.
this was posted on the evening of 9/27.
https://www.otcmarkets.com/files/OTCM-211-post-close-09-27-21.xlsx
It is an excel file containing listings of a lot (or all) of the OTC Market securities and their current status.
One other little trick.
you can sign up for Versioista at versionista.com for the free account and they will monitor the website for you and alert when there are any changes
Thanks Justin. Based on that large and unwieldy spreadsheet, the following tickers might be preferreds that are no longer quotable.
COWPP CTPPO DMRRP XXFPL MSSEL PARDP NMPWP NICRL OCESP OCESO PNCFO SKTPP CTGSP HGUBP FSMEM FSMEO CBJCL COTRP NWCOP PRLEP BOLBP BACRP SMANP IPWLO BDWGP AMBKP NCPLL FIISO FNMFO SBNCM FIISP FNMFM CBTRP ALAXL OGKJL EHPTP GLTIL SSRAP WGNAP MBIPO MBIPP WFCNP AATRL HRDIL GRRBP NGOOL GPELL GPEOL IUTIL IUCDL MSLXP NWSAL ADKIL AGRIP ROMVL NGOWL HLBYL BHORL EPORP CSTNL AFSIP SLMNP SBDKP ROYTL AFSIM CWGRP NCRRP CTRVP GRZZP YGYIP CIMXP NWSLL PVLYL BUIQL SEZNL TZROP AVHHL MPLXP UVBIL FLRAP APTSP GTXAP GSBYP EQTNP VNOOP
Thanks Justin. Based on that large unwieldy spreadsheet, I believe these might be preferreds that are no longer eligible for quotes.
COWPP CTPPO DMRRP XXFPL MSSEL PARDP NMPWP NICRL OCESP OCESO PNCFO SKTPP CTGSP HGUBP FSMEM FSMEO CBJCL COTRP NWCOP PRLEP BOLBP BACRP SMANP IPWLO BDWGP AMBKP NCPLL FIISO FNMFO SBNCM FIISP FNMFM CBTRP ALAXL OGKJL EHPTP GLTIL SSRAP WGNAP MBIPO MBIPP WFCNP AATRL HRDIL GRRBP NGOOL GPELL GPEOL IUTIL IUCDL MSLXP NWSAL ADKIL AGRIP ROMVL NGOWL HLBYL BHORL EPORP CSTNL AFSIP SLMNP SBDKP ROYTL AFSIM CWGRP NCRRP CTRVP GRZZP YGYIP CIMXP NWSLL PVLYL BUIQL SEZNL TZROP AVHHL MPLXP UVBIL FLRAP APTSP GTXAP GSBYP EQTNP VNOOP
Vnoop at the end is Vornado. That will turn into vno-o in a while.
VNO-O yeah. I was worried another consequence of this SEC rule might be to wrecked the otc market for new issues for retail investors if those are generally ineligible. Of course VNOOP shows as Pink Current so it should be quotable, not that I’ve tried anywhere.
Anybody know of a work around to open this file if you don’t pay for Microsoft office?
A quick googling brought this up about free xlsx readers https://listoffreeware.com/list-of-best-free-xlsx-viewer-software/
https://www.openoffice.org/
it is the free open source version to read Microsoft stuff. Excel, word, etc.. Everyone uses it. Super popular. Safe. It is basically a clone of MS Office. It can read and write their files. I have it on every PC I have owned for a very long time now.
Sorry, meant to post this in the 15c2-11 chain originally, so this is a repost:
Is it OK to swear on this board?
https://www.otcmarkets.com/stock/GMLPF/overview
GMLPF has moved to the expert market with no warning. I spoke for 15 minutes on August 23rd with Josh Kane (head of NFE IR) and Chris Guinta (NFE CFO) to warn them of this possibility, and dammit, they let it slide.
I am reassured somewhat by their assertions during this call that NFE is all in favor of full financial disclosure (and by the fact that they posted GMLP financials on the NFE IR web site), but dammit, it didn’t have to happen this way.
+++++
Now that I have expressed my initial irritation, I have to also say that this entire 15c2-11 implementation has been absolutely cack-handed. From the SEC to the brokerages to OTCMarkets’ absurdly inept treatment of these issues (witness the AmTrust BS today – fortunately no position there) I am more than a little ticked off.
esw3
“But they are who we thought they were! And we let ’em off the hook!”
Dennis Green
I have some GMLPF.
This whole thing has been a comedy of errors. Needless confusion and suffering for all involved. Who is buying all these shares on the cheap?
Seems kind of fishy given the antics of the two Fed heads that are “retiring” after some questions regarding “ethics”. What a JOKE.
The new FINRA guy was well known from the CFTC and let’s just say he was not beloved either.
I noticed a minute ago that New Fortress Energy has just today updated its GMLP / GMLPF financials. I’m cautiously optimistic that they’re paying attention to this whole 15c2-11 imbroglio.
Dedicated GMLP page:
https://ir.newfortressenergy.com/gmlp
GMLP Financials, as of 09/28/2021:
https://ir.newfortressenergy.com/static-files/85a087a5-2221-473e-be32-1abc9082a8cb
That’s great news that they are making an effort. There is no reason for them to post financials for 6/30 which are after the merger closed, unless they are doing it to comply with these silly rules. So maybe OTC markets will adjust this so that GMLP can be quoted.
As long as GMLP is outstanding, NFE has to keep doing separate financials for the MLP, since they have to do K-1s for GMLP holders.
JD:
Not sure why OTC markets would be incentivized to bring GMLPF back. The bid-ask spreads on these “Expert” Market securities are 10-20%. I watched GMLPF trades today – buyers and sellers were truly getting raped. GMLPF was Bid $20, and Ask $22.15.
If the Expert Market dealer buys 100 shares for their own account from a market seller, they are cleaning up on anyone crazy enough to put in market buy orders.
They are banking commissions/spreads they once only dreamed about! This Expert Market is like the wild, wild West on steroids.
Rob, the bid and ask prices you saw on GMLPF were “stale.” They were from yesterday. On the issues I looked at today, there were NO valid, accurate bid or ask prices.
Gmlpf is now listed as pink current info on otcmarkets.
I keep refreshing the page to make sure it hasn’t changed back (lol), what a cf this has been on many levels.
Look, how cute…OTC has just changed the labels and has them now identified as only “expert market”. No stop sign anymore, ha.
https://www.otcmarkets.com/stock/SLMNP/overview
https://www.otcmarkets.com/stock/AFFT/overview
Grid, no problem! They have changed them to Double Black Diamonds just like what you ski on! Put your boots on, get your poles ready and you will a certifiable expert ready to go . .
Since the company was trying to buy them from me… this might be their chance to pick them up on the dip and finish the job. Maybe I’ll get another letter asking if I want to sell to them again for fire sale prices.
Gmlpf just got switched to dark, and is listed as expert market. Talk about changing the rules at the last second.
Also vanguard emailed me to say my slmnp sell order will be cancelled tomorrow due to corporate action.
So we can’t even leave sell orders out there for whomever might want them?
E*Trade just cancelled my GTC buy order for AATRL, and when I try and enter a new buy order it shows it as “Pink No Information”. I could have sworn it was not on the list last I checked, but maybe I just missed it, because there it is now.
I have some AATRL as a “sock drawer” issue in a Roth. I guess that means it will be cemented to the bottom of the sock drawer. At least until 2037.
I just sat down at my computer, and logged in to Fidelity. After a few minutes, I saw five orders…but they weren’t orders….Fidelity unilaterally cancelled all of my buys I had in for SLMNP below the market.
Same here with SLMNP, I just re-entered it. Bad Fido!
So with SLMNP is there the expectation that it will ever trade again, without a rule change or company starts reporting? Or will it be impossible to get out of it (without tendering back to the company) and we will be stuck for life?
I had a couple of orders for AFSIM and AFSIB which were not supposed to be affected. The orders hit as the shares dropped through the floor. I am down about $5000 so far. How come these orders were not blocked?
I noticed some inconsistency between OTCMarkets website and some of the brokers. OTCMarkets listed No Info while brokers were still saying Current info. Of course tomorrow when its too late, they will have it updated.
Nothing is impossible to get out of… I have sold all kinds of illiquid stuff for estates. The question is at what price for the asset and how much will the commission be?
I snuck in a GTC bid through Ally yesterday on a low ball bird dogging effort. I noticed this evening they still have the order as open. So if it does trade, Im hoping it sneaks through if I can bag them.
Extra, extra – read all about it!
The SEC exempted enforcement of 15c2-11 for bonds and other fixed income securities until January 3, 2022:
https://www.sec.gov/files/rule-15c2-11-fixed-income-securities-092421.pdf
“Gift Link” to Financial Times coverage of the situation:
SEC grants bond brokers reprieve on rule change after fear of disruption
https://on.ft.com/3oaAif8
This link can be opened up to 3 times and is valid for 90 days
SIFMA statement on the exemption:
SIFMA Statement On SEC No-Action Letter Regarding Amended Rule 15c2-11 In Relation To Fixed Income Securities
SIFMA today issued the following statement from Kenneth E. Bentsen, Jr., SIFMA president and CEO, on the SEC No-Action Letter Regarding Amended Rule 15c2-11 in Relation to Fixed Income Securities:
“SIFMA appreciates that the SEC has granted no-action relief on Rule 15c2-11 in relation to fixed income securities. Applying the Rule to fixed income securities when heretofore that has not been the case, and the rule has not been designed to be applied to them, would have had potentially significant negative effects on fixed income market participants including to its investors, market makers, and issuers. There are significant differences between trading in the equity and the fixed income markets. While we appreciate the relief, we continue to believe that for the Rule to be applied to fixed income securities it should be amended to reflect the differences between fixed income markets and OTC equity markets, and we believe that process will take additional time.”
https://m.mondovisione.com/news/sifma-statement-on-sec-no-action-letter-regarding-amended-rule-15c2-11-in-relati/
@ESW3
“You like that?” 🙂
Kurt Cousins
Great news for us. More trading opps and the ones I held on to may go up from here. People who bailed out for a loss are probably kicking themselves. How do you play the game when the rules keep changing?
Martin, I wouldnt bust out the pom poms yet. They dont give a rip about baby bonds. FINRA gives them no respect and lists them as “equity linked notes”. I bet this ruling has zero to do with baby bonds as they trade on stock exchange. Which is frustrating as that is just the vehicle wrapper. A senior unsecured baby bond is just as legally binding as a $1000 senior unsecured bond on the bond exchange.
AFSI Preferreds are still getting hammered today. I was not expecting that!
Hmmm. Letter just says enforcement is delayed. This might mean that some brokers will enforce bonds and other will not. What a conundrum.
There is a second “no enforcement” letter out from the SEC with respect to 15c2-11 and fixed income securities (which I have been reminded do *not* include the preferred shares / baby bonds type of fixed income securities that are most frequently discussed around here):
https://www.sec.gov/files/fixed-income-rule-15c2-11-nal-finra-121621.pdf
Looks to be a phased implementation over three years, with the details in the link just above. Here’s a good summary / critique of the amended rule from the Cadwalader law firm. I liked this bit the best:
“Rule 15c2-11 has been in existence for 50 years and never applied to debt securities. Applying a rule that was not intended for debt securities without any consideration of whether that is good policy is bad process. Delaying the application of the Rule, and “amending” the Rule by adding Annexes in a staff no-action letter, does not address the regulatory process issue or the public policy issue. If the SEC believes that it may be beneficial to apply Rule 15c2-11, or some variant thereof, to debt securities, it ought to propose a rule, take public comment, and consider that public comment before imposing new requirements. ”
https://www.mondaq.com/unitedstates/securities/1143994/sec-provides-time-limited-relief-on-the-application-of-rule-15c2-11-to-debt-securities
The plot thickens…….
Just an FYI that I received a letter from Schwab regarding the new restrictions.
The letter I received specifically mentions “my affected position” which is/was LTSA.
What it does NOT say is anything related to LTSL or LTSH which I also happen to own both.
Many have already discussed that Pfs and BBs might be going down different paths. I don’t know if they’ll be treated different after the rules take effect either way. I am just passing along what I received.
If bonds continue to trade somehow, maybe we may get a little bounce? I am not relying on that happening, but this would be a pleasant outcome to the BB’s at least.
LTSL and LTSH are also “closing transactions only” on the Schwab website. I think it was just a mistake in the letter.
@ESW3
“You like that?” 🙂
Kirk Daniel Cousins
I know someone has mentioned it already but the OTC plans or appears to already have an “expert market” for the island of incoming 15c2-11 broken toys. I also read how the SEC said no way Jose in a different post here.
What are the chances in just a year or so all of these pink no info securities go right back to trading as many of them have real value? That is the whole purpose of over the counter from day one in it’s most angelic form. So won’t they just end up on the “expert market” or the grey market? Then it is just a matter of us pushing brokers to make a list to separate the wheat from the chaff? Even if there is no bid/ask publicly available for us we can simply buy from previous levels we know are “excellent”, “good”, or “fair”.
I just have a feeling that this might be a tempest in a teapot? That all these securities we call ills might not have much info available but pay like clockwork thus there should be some way for the man on the street to be able to purchase them. I cannot see the OTC not being all over this to make a way for this to happen. Or someone new steps in which is doubtful but not unheard of if regulations don’t strangle them to death.
Or am I totally off base here?
FC asks: “Or am I totally off base here?”
FC, I think this is a “known unknown” that cannot be modeled or quantified. We are dealing with a US Government organization and I have heard rumors that sometimes they are slow to act, even if they are wrong. And my guess is that the brokers for the most part are NOT on our side. As I have stated before, we III’ers are maybe 1 out of 100,000 investors. We are absolutely, positively a pain in the rear for the brokerages. I did a rough look and saw less than 20 issues that we care about in the “Pink No Information” bucket.
Knowing we are say 1 in 100,000, how much time and effort should a brokerage spend on helping us trade those 20 issues? Answer is ZERO compared to the more pressing issues that the other 99,999 people have.
We all probably agree with the intent to prevent people from investing in totally fraudulent penny stocks. All of the reputable brokerages agree with NOT making those stocks available to investors.
I think the range of outcomes is very wide:
1) Extreme case is this is all “much ado about nothing” and all of these issues will be quoted and tradeable again in short order, say less than three months
2) Opposite extreme case is they are NOT tradeable in our lifetimes and our heirs get to worry about it. Since all of us have different life expectancies we can fill in our own number of years here.
3) Everything in between these two extremes.
My own pure guess is that case 2 has the highest probability. For all of our accounts other than the possible corporate bond case, we have miniscule amounts of Pink No Info holdings. We did make a small allocation to LTSH/LTSL hoping they pay off at maturity, even if they remain untradeable until then. But is is a microscopic allocation.
The corporate bond situation is potentially a big deal in one account that I discussed earlier. We have a major allocation to individual corporate bonds. And yes, they all eventually mature, so it is not the end of the world if they are untradeable until then. The account is not margined, so it is mostly a problem explaining to an 80+ investor why the account value dropped ~25% to 50% overnight.
Someone on here mentioned earlier that they were aware of hedge funds or the like already being set up to take advantage of what they might possibly be able to do by being active in the “expert market” by creating a fund concentrating on the relative bargains being created in limiting the markets. Has anyone heard anything more about the creation of any of these funds?
There’s not going to be an expert market for the No Info names since the SEC can’t be bothered to think about it. Remember this rule was a puff piece to make the SEC look good on consumer protection. they sure aren’t going to fix it now since that would mean admitting they screwed up the details and ignored the unanimous public comments criticizing the many flaws. Maybe the institutional lobby for the bond market will have better luck, but don’t expect their efforts to be applied to stocks or preferreds.
And I would highlight that this issue is of much bigger importance than just the corner of the market involving impacted preferred stocks. There are thousands of “no info” common stocks, including hundred year old stalwarts like Boston Sand and Gravel (BSND), that are high quality companies that either don’t want the expense of paying OTCM for financials they can put on their website for free or otherwise should qualify for quotation but won’t because OTC markets has been made into a de facto regulator.
Well we can all agree there exists an “expert market” at OTC. Just visit https://www.otcmarkets.com/research/stock-screener and select expert market under the drop down markets. Naturally grey is there to select as well.
And once they are kicked off the pink the OTC wants them to end up on the expert market (maybe grey). I think we can all agree on that even though the SEC says they have not even given it any thought. Maybe not right away but they will go somewhere and those are the two logical places, right? You cannot restrict the public from buying and selling what they want. You just make it more difficult to do it properly with all your ducks in a row. Public bid/asks, who manages ownership so divs get paid, purchase history, etc…
Since preferred often fall into fixed income.. like bonds.. they could possibly be included for the ride. Common? Who knows there. Your BSND is a great example of a common with value.
I know this is all speculation but from reading the otc website it seems they will do almost whatever it takes to make most of this stuff tradeable. This is what they do after all.
https://www.otcmarkets.com/learn/15c2-11-resource-center
I quote from their webpage:
“If OTC Markets Group is not able to confirm that a company’s disclosure is current and publicly available by the September 28th Compliance Date (e.g. those designated as “No Information”), those securities will move to the Expert Market for unsolicited quoting only.”
It is like they will force the discussion to take place with the SEC. I know this discussion can go around in circles endlessly but the OTC is a nice partner to have on our side.
As for what 2whiteroses mentioned I imagine they are. I am just a lowly retail investor but even I was trying to figure out how I can buy on the expert market. The big boys most likely will once they see the lay of the land and offer such opportunities to their accredited investors who are already approved. I doubt they need for me to sign up and approve me with my tiny resources compared to their existing clients.
So is there actually any way to get qualified as a “sophisticated investor” to trade in the Expert Market?
The whole accredited investor thing has some qualifications. The most straight forward way is having a million in assets not counting your main residence and minus any debt OR make more then 200K per year if you are single. I forget the exact income level you need to show year after year with the assumption it will continue. The rest are harder for us to qualify for. I forget if you need both to be YES to qualify. I don’t think so but I would have to reread it.
There is no agency that monitors it. It is done by the organization you are dealing with. For example a hedge fund. They will determine if you are accredited or not. Your broker as well. Here is an example of a doc from td ameritrade. https://www.tdameritrade.com/retail-en_us/resources/pdf/TDA3745.pdf If you search the doc for accredited you will see how it discusses it. They handle who is and is not and have you fill out the proper form.
What I was hoping for is a specialized broker who will accredit us and allow us to buy from the expert market. So we can put up a bid/ask that the public cannot see and they handle all of the backend for us. Maybe one does not even have to be…
So right now my tradeking account DOES allow me to sell expert market shares as well as grey. The thing is I have never had a reason to try it yet. There was nothing I wanted on it before or to dump. I have no clue if it would actually work. With all the rules changes taking place it is still a mystery to me. Could I have bought in the recent past? Obviously I can unload still when I see that message pop up saying “closing only”.
I tested a symbol lookup with CCVAJ (grey) and SKAJ (expert). I can click on trade. The information I see is ridiculously sketchy looking when it comes to bid/ask. Almost like you can trust nothing you might see. It told me with SKAJ it is closing only so that means I could sell. It would not be very hard for them to allow buys possibly. After all the website said the same thing with OCESP but a simple call and approval got it done yesterday.
I hope this helps. I do not guarantee anything is correct. I am still learning about this seldom used OTC area personally.
FC,
Here is more info on the req’s for being considered an accredited investor:
https://www.investor.gov/introduction-investing/general-resources/news-alerts/alerts-bulletins/investor-bulletins/updated-3
another source…
https://www.investopedia.com/articles/investing/092815/how-become-accredited-investor.asp
As my children would say. What is your super power?
I’m rich.
Uh oh… sounds like you may have just ended up on another Federal watchlist 🙂
Also worth noting on the subject of being accredited, the proposed House tax bill will forbid IRAs from owning anything that has investor requirements such as being accredited. Existing holdings are not grandfathered and must be sold or distributed within two years or the IRA status is revoked.
https://www.ropesgray.com/en/newsroom/alerts/2021/September/Large-IRAs-and-High-Income-Retirement-Savers-Targeted-by-Amendment-to-Budget-Reconciliation-Bill
Now maybe you could argue you can own these preferreds anyway without being accredited, you just had to be accredited to make it easier to buy them if that Expert market ever shows up. But just be careful because anyone with a decent IRA is a clearly target.
xerty – Do you happen to know who’s supposed to be responsible for definitively identifying which securities officially fall into that category of being non-qualified for IRAs?
the IRS I think, and they would get an extra 3 years to investigate any IRA related misdeeds, beyond the normal 3 year for non-fraud audits (Sec. 138313).
https://waysandmeans.house.gov/sites/democrats.waysandmeans.house.gov/files/documents/SubtitleISxS.pdf
Judging from how they normally work, they don’t care what you do now. they’ll come and find you 5 years later and stick you with a big bill and back taxes and penalties. $3.5T won’t pay for itself.
So shares such as AATRL and the CoBank preferreds that have fallen into a gray area where they trade like any other issue now though were originally 144 will remain in a gray area until they’re not and that could be 5 years and potentially many tax dollars and penalties fees later. We here on III probably know some or most of the names that might be considered questionable in the future under this if it’s adopted, but I bet the majority of current owners haven’t a clue. But of course, nothing’s going to be clarified for anyone upon adoption…. You gotta love Govt, don’t you!….
@xerty, the IRA size maximum and required 50% distribution of excess will lead to a nightmare tax year. I haven’t seen any avoidance strategies either.
As written, this would be a horribly unpractical rule. First off, investors don’t know which securities would fall under the rule – even looking at my own portfolio, I’m not sure if I have any such holdings. Invalidating an entire IRA for something you may have bought years ago is grossly unfair. Not to mention that if you have no way of selling the security, pretty much your only logical choice to save the rest of the IRA would be to distribute the security to your after-tax account, but they say you can’t do that, either! So this looks completely unworkable. If they want to put on a new restriction going forward, that’s fine, but I really don’t see how this can be applied retroactively.
Qniform – the proposal is still not passed or final, and things may yet change. The IRA maximum rules I find quite offensive and I say that as someone well shy of being impacted. Punishing success used to be unAmerican, and the original taxes paid on Roth conversions were paid in good faith for a lifetime free of RMDs per the present laws. This is the politics of envy and are aimed at under 500 successful and/or lucky investors.
https://www.bloomberg.com/news/articles/2021-09-16/roth-ira-how-the-richest-americans-use-retirement-accounts-to-avoid-taxes
“More than $279 billion sits in mega-IRAs, individual retirement accounts with at least $5 million each… nearly 500 of them somehow managed to get $25 million or more into their IRAs.”
“Somehow”? You don’t end up $25M in your IRA by accident. You either paid a ton to convert balances from years of high retirement savings and/or DB plans, or your invested very well, or both. Here’s one of Buffett’s guys who did very well for himself by picking good stocks.
https://s3.documentcloud.org/documents/20971124/ted-weschler-statement.pdf
“Somehow” sounds like the same guys who look at your life’s work starting a company and say “you didn’t built that”. Tomorrow, the incentives might be such that you wouldn’t bother.
Meanwhile, if you have a huge IRA and they do pass the law as proposed, you just need to stop working entirely and move to munis and non-dividend stocks to cut your income down to nothing. The proposal only applies the IRA RMDs for large accounts in conjunction with high AGIs (although being unable to continue this low income approach for even a single year could be very very bad).
I called Schwab and was told there is no way at this time to be able to bid on these securities. Doesn’t matter if you are accredited, sophisticated, or any other adjective. As is always the case when you call a brokerage firm, there is no guarantee that is the right answer, but that’s what I was told today.
The trouble with many like BSND, is this rule has no bearing on them at all. They went dark a long time ago, and on purpose. Only a few people control the float and it serves many purposes for themselves. Its a great company, but this issue is of zero concern to them.
I bought about 25 shares a few years ago just to get a copy of the financials. They give it to shareholders. I have since sold as I bought it for amusement and a quick small gain. But these types of companies (and there are several on OTC) are self dealing and could care less if they ever trade publicly.
Fc – yes, of course OTC Markets would like everything to continue to trade, not the least of which is because they run an otc exchange where they get fees from each trade that happens on there (OTC link, although trades happen elsewhere too). But they can’t do anything but ask nicely and the SEC has said it’s not a priority, and more to the point, this misguided protecting the customer from trading low tier OTC securities is a higher priority. They may never take up the Expert Market accredited investor quote visibility proposal.
Yes, these no info issues will end up Grey or Expert. Right now Expert vs Grey is a distinction without a difference – it’s basically Grey in that there are no quotes, but instead of being kicked down to Grey for getting an SEC suspension, Expert is reserved for those few stocks that got slapped with Caveat Emptor status for being a pump and dump or a fraud. It’s a bit easier to come back from, ie if the promotion wasn’t done by the company and after it’s over they’ll got back to Pink and quoted, but otherwise it’s just as bad. There are only about 100 Expert market names vs 1000s of No Info ones.
“ You cannot restrict the public from buying and selling what they want. “
But they can lean in the brokers to encourage them to ban trading in these stocks and have successfully done this to most retail brokers. TDA, Schwab, Etrade, Vanguard, Fidelity, and IB will not all purchase of most of these securities and after the new rule kicks in, I would be surprised if ANY of them will allow purchases.
In addition, FINRA or the SEC can threaten expensive compliance audits related to otc securities. These are not idle threats – they have big costs in terms of additional required compliance personnel and if anything isn’t don’t exactly right there will be 7-8 figure fines assessed. Given the low trading volume in most otc issues, it doesn’t take much pressure on this front to make it non-economic for the brokers to support Grey market trading even if the regulators can’t legally outlaw it.
That’s where we’re going. Grey market is where stocks go to die. Once the liquidity is gone because the market is so terrible and nearly everyone can’t place orders on it, then it won’t be worth anyone’s effort to save because they’re getting paid on future volume (either as brokers or as the exchange).
I’ll be happy to be wrong, but I think all these No Info issues will basically be private equity whee there are a couple brokers who will charge you 10-20% spreads to line up a buyer or seller if you’ve got a big block of stock. Otherwise, buy and hold!
Tex, are most of your bonds in unlisted companies? Seems pretty unlikely, so I’m not sure why you would think there’s any chance of 25-50% of them being priced at zero. Not to mention that the bond market doesn’t operate like the stock market and bidders should not disappear. And then not to mention that most brokerage firms don’t actually value bonds based on actual trading of a bond (because there often isn’t any), but based on models comparing the bond to other comparable bonds. So I don’t think there should be much concern of some huge devaluation.
This could have been posted on the illiquid board, but it likely fits here:
AWRY (Allegheny & Western Railway Co.) $100 face value, 6% coupon yield just hit close to 5 year low today @102.00, down 15% from 120.00 traded last Thursday 9/16. it was the biggest % loser today amongst>$10 preferreds/babys/terms. 295 shares traded @ 102, so no way of knowing if any more are offered at that price. This is a “Pink No Information” issue so trading is a even more challenging than a regular illiquid. As with all of the other Pink No Information issues, we really do NOT know how this will be handled in the future. Your heirs might be stuck with it being unsaleable
My assumption is that this was fire-selled because someone did NOT want to take the untradeablity risk.
We do not own it in any accounts or have any open orders.
Is anyone aware of any kind of work around? I’m wondering who is buying these. I see shares moving on these restricted issues. Thanks
Dick – I’ve been able to buy two of these restricted issues in the past week, but only by trial and error. One small company is not supposed to be trading and Fidelity, Schwab and Vanguard won’t let me trade it. However, TD is still allowing me to buy shares, although I am unsure why – because it was on their restricted list. They charge me $6.95 per trade. I continue to have a “low-ball” order in for this security as there are still a few sellers.
Also, by pure luck, I had an open order at Schwab for one of the securities on the list when the restrictions went into place. Schwab will not allow me to place a new order, but for some reason allowed the old order to stay open. Today I bumped up the price on the old order and hit some shares at a pretty good price.
The other possible “loophole” is opening up an account at one of the brokerage firms that acts as the Market Maker for one of the securities on the list and they may allow you to purchase shares. I’m not taking this route yet, as the fees they charge will likely be expensive, but it may be an option for me down the road. Hope this helps.
“It Was Fun While It Lasted” Dep’t., from Ally Invest:
You currently hold securities that may be impacted by recent amendments to SEC Rule 15c2‑11, effective September 28, 2021. The amendments change when and how securities not traded on a national securities exchange (i.e., OTC securities) are quoted. Due to these changes, Ally Invest will no longer be able to accept new opening transactions (i.e., long buys or short sells) for affected securities after September 24, 2021. You will still be able to close existing positions for the time being. Please note: The amendments could impact the price and liquidity of these securities.
The affected securities are subject to change. A current list can be found here: OTC Liquidation Only https://bit.ly/3Cqv5mX
For more information on Rule 15c2-11, please consult the OTC Markets Resource Center. https://www.otcmarkets.com/learn/15c2-11-resource-center
I did not see any of the Ladenburg Thalman Financial Services, Inc. issues on the Ally list:
LTSA the pfd, or the senior notes LTSK 7 1/4 s 28, LTSF 7s28 or LTSH 7 3/4s 29. Any opinions?
David, unfortunately, I dont have an opinion, but a fact. They are on that list. Go down to either page 57 or 58 (that is what my ipad is showing) and you will see them all. I think you only went through the first A-Z. There is another alphabetized list after the first one.
Thanks for straightening me out. I found it.
Hi Gridbird,how much affect will this have on the old Alabama and Ameren preferred? Thanks B/L
Hey Big Lou. There should be zero impact. Those companies report their subsidiary earnings in SEC so shouldnt be a problem unless OTC gets a hissy from them not paying them anything.
I only have 2 presently going to the dark, but I do worry about issues such as CRLKP, SLMNP, and a few more obscure ute preferreds I own going that way if rules are interpreted differently or OTC wanting extraction fees.
you were right to worry about SLMNP. Today they’re “no info” and the last day you can easily sell.
https://www.otcmarkets.com/stock/SLMNP/quote
All the AFFS Amtrust issues got hit with this as well this morning. Holder beware!
Thanks! I ended up selling all of my SLMNP. It’s very disappointing to get “protected” by the SEC like this where I’m forced out of positions.
wow my AFFS shares just lost $3000. I did not realize they were going to be affected.
AFSIM
AFSIB
AFSIC
I assume they will continue to pay the dividends?
I just bought OCESP today using ally. You just had to call and get the purchase approved. It is on the list. I am typing this here just to document the fact. I think we have until this Friday to buy anything else. Pretty much everyone here knows what went on with OCESP today but who knows if anyone else googling around might come upon it and find it useful. It appears that letter which went out was for the website itself to start. Not a call in. Eventually too that will end.
The Washington Post is out with an article today on how 15c2-11 will affect bond trading:
https://www.washingtonpost.com/business/a-big-bond-market-headache-courtesy-of-the-sec/2021/09/16/0fcbd9fe-16de-11ec-a019-cb193b28aa73_story.html
A Big Bond Market Headache, Courtesy of the SEC
From the article:
“There’s one big problem: The rule, which had long been understood to safeguard retail investors from penny stocks and other “pump-and-dump” schemes, doesn’t explicitly exclude fixed-income assets, except for municipal bonds. The Bond Dealers of America, a trade association for securities dealers and banks specializing in fixed income, says SEC staff have informally confirmed that the rule applies equally to both equities and debt.
“The industry is mildly freaking out,” Kevin McPartland, head of research in Greenwich Associates’ market structure and technology group, said in an interview. Firms must be compliant with the amendment on Sept. 28. “Dealers can’t operationally make that happen in that span of time. If nothing changes, at the end of the month they may have to stop quoting some bonds,” he said.
To get a sense of the level of panic, look no further than an Aug. 6 joint letter from the Securities Industry and Financial Markets Association and the BDA, which are seeking an exemption:
“We are concerned that the rule as written could apply broadly to quotation activity for fixed income securities, and that the application of the rule to quotations for fixed income securities will deter that quotation activity in a way that will have a significant, deleterious effect on the fixed income markets. We believe that such an application of the rule is overbroad and unnecessary and will increase costs, decrease liquidity, and reverse the gains in transparency that the fixed income markets have achieved in recent years as the market has become more electronic.”
…
Throughout the letter, the BDA can barely hide its incredulity at the whole situation. The group summarizes its position like this:
“The bond market simply is not the high risk, low transparency world of microcap stocks. Moreover, applying the Rule to fixed income would increase compliance costs for dealers, which ultimately would be reflected in higher transaction costs for investors. Finally, adding additional requirements before a firm can provide a quote or execute a trade for a customer could discourage firms from quoting certain securities altogether.”
As far as I can tell, this looming compliance headache hasn’t been discussed much anywhere, aside from these letters. That’s likely because bond traders assumed the SEC couldn’t possibly have intended to rope mortgage-backed securities and junk bonds into its Exchange Act Rule 15c2-11, given the gigantic size of those markets relative to a few hundred thinly traded stocks. Yet for now, that’s exactly what it’s doing.
“Until April of this year, I’ve never paid attention to this rule because this was not a fixed-income rule,” Michael Decker, the BDA’s senior vice president of federal policy and research, said in an interview. “The SEC has now taken the position that the rule already applies to fixed income and it has always applied.”
…“I don’t think the SEC has thought through this,” Decker said. In light of Gensler’s recent remarks, “it’s wise for everybody to take a few steps back, think about what enforcement policies will look like.”
An SEC spokesperson didn’t reply to an emailed request for comment.
It would be shocking if the SEC fully ignored the concerns of the BDA and Sifma, especially after Gensler made a point to highlight that non-Treasury fixed-income markets are “so critical to issuers.” Even if the regulator stops short of granting a full exemption of all fixed-income securities, it could at least push back the compliance deadline to avoid any risk of dealers pulling back on their bond trading while waiting for guidance. The joint letter from the two organizations hints at such a compromise solution, which would narrow the scope of debt covered by the rule. It’s also possible that the SEC will simply choose to look the other way at bond trading — Decker said he’s not aware of any enforcement action ever taken against fixed-income dealers because of 15c2-11.
“Kevin McPartland” … any relation to Tim?
One day I might take a trip to McPartland. I heard it’s like Graceland for Preferreds and BBonds. I heard even WTREP makes a surprise appearance!
Re “As far as I can tell, this looming compliance headache hasn’t been discussed much anywhere, aside from these letters….”
The WP author should come on over here to III 😉
Bur Davis,
The article is specifically about the impact to bond trading, not stocks. As far as I know, the impact to bond trading has NOT been discussed here and I didn’t realize it would apply. I agree with those quoted in the article that the logic for the rule in the stock market doesn’t makes sense in the bond market.
Applying 15C2-11 to corporate bonds would be very problematic. One case is for any kind of leveraged account, it you suddenly take money good bonds and value them at zero, it might force a margin call and some fire sales. But you would presumably not be able to sell the zero valued bonds and have to sell the properly valued ones. Would be a real mess.
The other situation is also problematic. Even if you have a non-margined account that holds bonds written down to zero, it can other problems like cross defaults. One of the accounts we manage is for an 80 something person with a substantial account. We hold many, many individual corporate bonds instead of ETF’s to achieve the desired stock/bond allocation. Going to be hard to explain how the account suffered massive losses overnight and what implications it has. Hope it does not cause a heart attack when they see the account balance the first time.
Baby and bath water for sure. . .
Tex the 2nd: The Bond Dealers of America (“BDA”) and the Securities Industry and Financial Markets Association (“SIMFA”) agree with you. Here’s a draft copy of a joint letter they sent to the SEC (I pulled it from that Bloomberg article republished by the Washington Post posted earlier today – I asked the Bloomberg reporter if he had a final copy; haven’t heard back yet).
https://bit.ly/2ZasC1R
From page 10:
II. Exemptive Relief Sought
Based on the above, we respectfully request that the Commission issue an exemptive order excluding quotations published for fixed income securities from the scope of Rule 15c2-11. We request that any security that is a debt security and any non-convertible preferred stock, collectively referred to herein as “fixed income securities” be included within the scope of the exemption.
+++++
Wouldn’t it be *great* if the SEC listened to ’em?
Tex the 2nd,
Massive losses overnight in a IRA account would be the perfect time to convert it to a Roth? I have been wondering if anybody has thought of a way to pull this off.
35spline, we plan to do exactly that if they value equities at zero. We bought a small allocation to LTSH/LTSL in several IRA accounts. If they write them down to zero, we will transfer the positions to existing ROTH accounts. We did a lot of this in March 2020 during the COVID crash. No position had collapsed to zero, but we took the ones that were down the most and converted them.
I just checked and ~ 99% of the individual corporate bonds we own are in taxable accounts, so even if they zero them out, we will not be able to convert them to ROTHS. If you have a cash balance, you could go buy some short term corps in IRA’s just on the chance they get written to zero. That is not as easy as it sounds, since many short term corporates (and munis and CD’s for that matter) have ask prices with negative yields to maturity. I would not want to buy something knowing you are going to lose money unless you had a high probability of it getting a zero value. . .
If any III’er has a larger allocation to these stocks in an IRA, they would be the ones that could get the maximum benefit. Hopefully we have very low allocation to these in all of the IRA accounts we manage. But in today’s crazy world, we might wake up one day and have some surprises.
I will post if and how it works.
Totally unrelated but kind of interesting is that Congress is working on a “Peter Thiel” ROTH tax bill as part of the $3.5 Trillion spending package. They are upset that Peter’s ROTH is literally worth $20 Billion. He put founders stock valued at pennies in it and grew just a little. This was one of the tax facts that was illegally leaked to ProPublica a few months ago. So they are writing new laws to force him to pay tax on some of it. And yes at some point in the future, they could decide to tax ALL ROTHS.
FT picking up on this now:
US bond lobbies warn SEC of severe disruption under rule change
Regulator’s application of 50-year-old statute would have ‘significant, deleterious effect’, trade groups say
https://www.ft.com/content/47a6ad77-e70f-48ab-831f-17fbd21a4086
List was updated again on August 30.
https://www.tdameritrade.com/retail-en_us/resources/pdf/TDA101550.pdf
Since Schwab no longer allows buy orders for the 15c2-11 issues. Is anyone familiar with another broker who will until September 18? LTSA.
Someone here said that TD will be through (or until?) September 4. Not sure if any will allow buys to September 18.
LTSA does look tempting today. I have a decent amount of LTSL but no LTSA because I want a maturity date in case there is no liquidity in the future. I do have an account at TD that I could potentially buy LTSA, but I’d have to sell something else first. But the covenants on LTSA just aren’t that great for a preferred stock that I might never be able to sell at a reasonable price, so odds are I’m not going to pull the trigger. This is not a low risk company so the prospect of being trapped in a non-paying security is real.
IBKR is currently allowing buy orders in all LTS issues, and as far as I’m aware, there’s been no notification that they will be disallowing them anytime in the future.
TD said these issues will be restricted “on or after” Sept. 3. Ally presently has no restrictions.
This 15c2-11 article by a FL securities attorney was previously posted, but I want to get it filed in the right chain:
https://securities-law-blog.com/tag/sec-denies-expert-market-for-now/
The article is very strong in discussing the exceptions to the new rule, and in defining how and when information will be deemed publicly available.
I have a few stocks on the list that will not be available to be traded soon, so I’m glad this comment section was opened up. Schwab has pretty much closed these down, but TD is still allowing trading until the close of business on Friday. Not sure how this will work out in the future, but I have a number of open orders on TD. They do charge $6.95 per trade on some of these issues, but well worth the price if you like a company that you believe is trading well below the actual value of the assets.
fyi on the Illiquid Securities page Justin noted that TDA published an update to its list of securities affected by 15c2-11 at:
https://www.tdameritrade.com/retail-en_us/resources/pdf/TDA101550.pdf
I asked TDA to check on IVREF, Inovalis Real Estate Income Trust, a Canadian Reit, which trades on the GREY market. They replied it is not on the restricted list and so still trades , even though it isn’t listed as ‘financial info posted’. So, be careful , because there does not appear to be any consistency as to which issues will be able to be traded ( or even sold ). I held same and sold because I don’t want to be stuck with a product, but will rebuy after Sept 28 if it is still tradeable.
The REIT looks interesting. Will investigate further. I, too, did not see it on the latest restricted list put out by TDA.
“Inovalis Real Estate Investment Trust Announces Distributions for September, October, and November 2021
Not for distribution to U.S. news wire services or dissemination in the United States ”
Time to call IBKR…
The F (or Y) foreign otc tickers have somewhat different rules under this SEC change. If they make appropriate disclosures in their home market, that can be enough to allow continued quoting as otc here. Whether OTC Markets notices that or not is another question.