October 3, 2019
As proposed, S7-14-19 should not be enacted. This may help to prevent most "pump and dump" schemes but it creates draconian negative unintended consequences.
I am a private investor and have owned a number of thinly traded stocks that do not publicly publish financial statements. The primary market for these companies is OTC Markets Group which clearly highlights these companies with their "stop" designation. They delineate in detail why that investors should be cautious while further stating: "Caveat Emptor (Buyer Beware)." This indication reveals that the company is not publishing their financials on the SEC website or on the OTC Markets Group website. It certainly does not mean that you can not obtain these financials directly from the company. It is important to note that many of these companies that do not publish their financials are large and profitable entities.
In the Summary preamble of S7-14-19 it states "The Commission is proposing to provide greater transparency to investors..." There is of course nothing currently stopping companies from publicly publishing their financials. However, I believe that many companies would reconsider doing so if this were to be enacted. This is because without published stock prices management would become less accountable to shareholders for their performance.
I believe that this will severely restrict liquidity in the stock of many companies. A less active market means a decline in overall transparency. Furthermore, if there are not published "BID" or "ASK" prices then this will undoubtedly make them more susceptible to manipulation. If broker-dealers are no longer allowed to provide price quotes for such securities then there will be no investor protections and there will be not be a fair, orderly, and efficient market.
Brad Christensen
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