Brokerages to Buy Dark Stocks

 I wish I had a rosy picture to paint you but alas we have reality to deal with.  A year ago in Sept 2021 the new SEC rule went into place, resulting in the destruction of dark stock trading.  Every single online brokerage I know of in the US stopped allowing buys in any dark stocks.  

This post is a summary of the few brokerages that still allow you to buy non-filing dark stocks.  

If anyone has found a solution please comment or send me an email.  

Brokerages, the new SEC Rule, and a Podcast

Now that the SEC followed through with their rule 15c2-11 change blocking quotes from non-reporting companies, the brokerages are all backing away.  I don't know if the SEC realized this would happen but it seems like every online brokerage company's response is to just take their ball and go home.  

In recent weeks we've seen announcements from Schwab, TDAmeritrade, and others saying they will not allow clients to purchase non-reporting stocks after August 2021.  Unfortunately I don't know of a single online brokerage that will let you buy dark stocks after the rule change goes into effect in Sept 2021.  

I was a guest on The Investor's Roundtable the other day to discuss this topic.  You can hear the audio here and watch video here.  Give it a listen to hear my own opinion as well as some others I really respect.  I have to say it was a real trip to be on a panel with my hero Dave Waters of OTC Adventures / Alluvial Capital.  

SEC Wants to Stop Trading in Dark Stocks

A year ago I wrote a post SEC Considers Blocking Dark Stocks about the SEC's idea, “If a company is a dark company and listed in the OTC market and hasn’t put out financials for six months, maybe it shouldn’t be quoted or offered to retail investors,” and unfortunately it seems to be moving forward.

They now have a rule change proposal "Publication or Submission of Quotations Without Specified Information" which they are accepting comments on for a limited time.

All dark stock investors should be concerned.  Please contact them.

SEC Considers Blocking Dark Stocks

The SEC has a series of round table discussions to combat penny stock fraud.  One horrible proposal they discussed is, “If a company is a dark company and listed in the OTC market and hasn’t put out financials for six months, maybe it shouldn’t be quoted or offered to retail investors,”

This would mean death for dark stock investing.  The SEC is taking comments on these proposals as feedback on their Equity Market Structure Roundtables.  Tell them what you think.

A Conversation With OTC Markets

Recently I mailed a letter and copy of my blog post Brokerage Firms, OTC Markets, and Dark Companies to the CEO of OTC Markets (OTCM).  I explained the issues I have with OTCM's stop designation list and told him I'd like to talk about how we can come to a resolution.  Thankfully he took me up on the request and we had a phone call the other day. It was great to hear another point of view and I just wanted to do a follow up post to get out their side of the story.

Brokerage Firms, OTC Markets, and Dark Companies

Followers of this blog know I've had issues with brokerage companies due to the types of companies I own. I have contacted 40 brokerage companies in the past 6 months in an attempt to find one who'll give me the freedom I want. In this post I discuss findings.

OptionsHouse kicked me out

A few days ago OptionsHouse sent me the following in an email:

After a review of your account, OptionsHouse has determined we will be unable to service your account ending *** going forward.  Your account has been placed in liquidation only trading status, meaning existing positions can be closed out but no new positions can be established. Please make arrangements to transfer your account out of OptionsHouse within thirty (30) calendar days.

They went on to explain the ways I could withdraw cash or transfer my account.  My wife has an account and got the same email.  They give no explanation.  I have been a customer for years.  I am active.  Now I'm given 30 days, don't let the door hit you on the way out.  Why must I leave...we won't tell you.  

The SEC allows companies to go dark

There is a rule, Rule 12g, from the SEC which allows companies to deregister if they have less than 300 shareholders "of record".  A good background explanation can be found here.  If you invest in the microcap space this issue should concern you.  If you stay here long enough one of your companies will go dark and the stock price will tank and the company will tell you to go pound sand when you ask for a report...

Here is the SEC rule.  Rule 12g-4 allows a company to deregister if it has less than a certain number of shareholders.  That number is 1200 for a bank or 300 for other companies.

Fidelity blocks dark companies

Well chalk up today to a bad day.  I found out this morning that Fidelity has decided to block companies marked with a stop from otcmarkets.com.  This includes at least the companies on otcmarkets Caveat Emptor list.  Generally for me this means Fidelity is blocking companies that don't file with otcmarkets.