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Letter From National Quotation Bureau
Chapman, Spira & Carson - Disscusion

From: Robert Jordanian
Date: 3/29/99
Time: 7:41:39 PM
Remote User:


Hey, you haven't even answered my last message and now I've got another letter on the 15c2-11 thing. Tell me this, why do you securities people talk in codes. We executives are not lawyers, I pay lawyers to interprete that stuff. Anyway, take a look at this one as well, it seems as though I have uncovered something really big. Do you think that everybody got one of these letters? I scanned this one in so you can see the entire context of the message.

National Quotation Bureau

Dear Company President:

I am writing to alert you of proposed rule amendments at the Securities Exchange Commission (SEC) that could have a disastrous impact on both the liquidity and value of your company's stock.

And I hone that, after reading this letter, you will take the time today-or as soon as you can-to contact the SEC and voice your opposition to these amendments.

In a nutshell, these amendments to Rule 15c2-11 I would require market makers in OTC Bulletin Board and Pink Sheets stocks to learn about the stocks they trade, study the companies' financial statements, and keep an eye out for fraud.

It sounds good in theory.

But in the real world, legitimate market makers would face an impossible task,

Under these amendments, the burden of regulating and policing microcap stocks would effectively shift from the federal government and the SEC, to the market makers who trade in these stocks,

Market makers who choose to continue trading microcap stocks would face unlimited liability for the accuracy and truthfulness of financial information over which they have no control. They would leave themselves open to crushing lawsuits from plaintiff's attorneys and disgruntled investors anytime a stock turns down.

No legitimate broker or trader is going to accept that responsibility.

Instead, if this rule is implemented, you and I are going to see legitimate market makers headed for the exit door, ceasing to quote OTC Bulletin Board and Pink Sheets stocks including your company's securities.

That means no liquidity for OTC Bulletin Board or Pink Sheets stocks, a loss in price transparency wider spreads-and a major drop in stock prices as a result.

NQB fully supports the strengthening of rules to fight fraud in the microcap markets. No doubt you do, too. But these amendments aren't the answer.

In fact, according to respected Business Week investment commentator Gary Weiss, this rule would actually play right into the hands of scam artists who manipulate stock prices since they would dominate the microcap market once legitimate traders and brokers pulled out.

Clearly, these proposed SEC amendments would irreparably damage the microcap market and the companies whose securities are traded in these markets.

Investors would lose, companies would lose . . . This is a lose-lose situation for everyone involved. That's why you need to make your voice heard at the SEC now.

I'm asking you to write a letter on your company's letterhead today, and voice your opposition to the proposed amendments to Rule 1 5c2-1 1, the rule that governs quoting of your company's stock on the NASD OTC Bulletin Board and the Pink Sheets.

Send three copies of your letter to:

Jonathan G. Katz Secretary, Securities Exchange Commission Mail Stop 6-9 450 Fifth Street, N.W. Washington, D.C. 20549

Or, if it's more convenient, you can e-mail your comments to

Either way, your letter or e-mail should refer to File No. S7-5-99. And, please make sure your letter or e-mail reaches the SEC before April 7, 1999, the deadline for the comment period.

If possible, please send copies of your comments to SEC Commissioners Arthur Levitt (Chairman), Isaac C. Hunt, Jr., Norman Johnson, Paul R. Carey, and Laura Simone Unger, and call or write your U.S. Congressman, your two U.S. Senators, and your State Securities Regulator. Instructions to find these individuals are at the end of this letter.

Of course, any personal pull you can use with your elected officials would also be a help, And finally, please ask others in your company to comment to the SEC, and fax a copy of this letter to your major shareholders, your investment banker, and your trade association. Urge them to get involved, too.

I know I'm asking you to do a lot. But it's your company's future at stake, I think you'll agree that this issue deserves an hour or so of your time.

Remember, there are many high-powered individuals who are pushing the SEC to adopt these amendments.

The only way to defeat these amendments is through public outcry from corporate officers, traders and investors, and there is no substitute for your personal voice in this debate. This rule change is going to get pushed through if you remain silent.

So please, don't rely on others to get the job done. Write your letters or e-mails today. Together, we must win this battle and convince the SEC not to overregulate and destroy the secondary markets for small companies.

As Chairman of the National Quotation Bureau, I know perhaps better than anyone the importance of preserving the OTC Bulletin Board and Pink Sheets markets. And I know the devastating impact that small companies will face if legitimate market makers are driven from these markets and cease to trade these securities,

I'm asking for your help to preserve this critical part of the securities market, so that companies like yours will continue to be traded by reputable and legitimate market makers and brokers, and to maintain share value and liquidity for your company's securities.

Please do your part by writing your letters or e-mails today. Every voice counts in the debate, and yours could be the one that puts us over the top.

Thank you for your time and help in this fight.


R. Cromwell Coulson Chairman

P.S. The future of thousands of businesses-including yours-will depend on whether or not we can defeat these proposed amendments to Rule I 5c2-11,

We can only defeat these amendments with your help, and remember, the

comment period closes on April 7, 1999.

So please, take action today, And once again, thank you very much for your help,


• To comment to the SEC via Internet, use rule- comments@sec. gov

* To find the address and/or phone number for your Congressman and Senators, call the US, Capitol switchboard at (202) 224-3121, or see

* To find your State Securities Regulator, see http://www,

* To send Regulatory Fairness Comments to the Small Business Administration, use

For more information about this issue while you're online:

* check -41110. html for the rule proposal

http://businessweek,com/1 998/20/b357811 5.htm for the Business Week commentary

* visit our NQB website,, Our NQB web pages include links to the other sites.

Last changed: March 17, 2000