Penny Stock Agreement

If QEQS preferred offer information is not available, the broker/trader must then search for his own offer and offer offers in the Penny stock to be disclosed to the customer. However, a broker/trader cannot use his or her own offers to meet the advertising obligations under Rule 15g-3, unless: (1) the broker/trader has made at least three good faith inter-trader transactions in the last five business days at his offer or offer prices; (2) no less than 75% of these transactions were carried out uniformly for these listings; and (3) The broker/trader reasonably believes that these prices accurately reflect the prices at which he is willing to trade with other traders.1 Brokers are required to comply with Penny`s stock rules, which relate to the disclosure of risks and other market information related to Penny`s stock transactions and the determination of the client`s suitability for such high-risk transactions. Section 15 (h) of the stock exchange law provides that no broker or trader may purchase or sell penny shares by a client, unless that broker or trader (i) authorizes the client to the specific penny transaction and receives a written agreement from the client on the transaction; (ii) provides the client with a risk information document outlining the risks associated with investing in penny stocks; (iii) if applicable, disclose to the customer the current market offer for the penny share, including the price of the offer and offer, as well as the number of shares that apply to such an offer and the price; and (iv) communicates to the customer the amount of compensation that the company and its broker receive for the trade. In addition, after the sale is completed, a broker must send his client monthly statements of account indicating the market value of each item on the customer account. Although the definition of the penny portfolio is essentially identical to that of the designated security, the amended 15c2-6 rule covers a slightly different universe of securities transactions. For example, the definition of the penny portfolio in Rule 3a51-1 contains an exclusion for securities whose issuer has demonstrated net assets of $2 million or more, but adds a requirement that the issuer be operational for at least three years. Issuers that have been in business for less than three years must have at least $5 million in tangible assets to be excluded from the penny portfolio definition. In addition to the issuer`s net injury exclusion, Rule 3a51-1 provides, unlike Rule 15 quater2-6, for an alternative exclusion for the securities of an issuer with an average turnover of $6 million over the past three years (i.e. revenue of at least $18 million until the end of the three-year period). For example, and this is not a comprehensive summary, a penny issuer cannot use a free writing prospectus in connection with the registered offer of securities. A known experienced issuer (WKSI) cannot be a Penny stock issuer.

A penny issuer should not be included in an S-1 form per reference.

Posted in Uncategorized