(July 25 – 14:15 ET) – Earlier this month, the British Columbia Securities Commission and the Investment Dealers Association sent a joint letter to all B.C.-registered investment dealers reiterating the need to apply extra care in strictly adhering to trading rules and regulations when dealing in Over the Counter Bulletin Board securities.
“Investment dealers have a duty to know their clients and to recommend investments suitable to their clients’ investment needs and preferences,” said Stephen Wilson, BCSC executive director. “They must also be alert to the possibility of illegal activity associated with trading in OTCBB securities.”
The OTCBB is a stock quotation service operated by the National Association of Securities Dealers for companies too small to list on the association’s better known NASDAQ Stock Market.
Unfortunately, novice investors often confuse the bulletin board with NASDAQ — something unscrupulous promoters have been known to encourage. And because most companies listing on the OTCBB are small and thinly traded, they have recently become favourite targets for stock manipulation scams, many of which involve internet chat rooms and touts who talk up the value of a little known company.
The most recent example of this problem surfaced in June when U.S. authorities charged 120 people in connection with a $50 million securities fraud scheme involving two companies traded on the OTCBB.
-IE Staff