Series 24: 5.10.3.1. Conducting Due Diligence On Issuers

5.10.3.1. Conducting Due Diligence on Issuers

SEC Rule 15c2-11 requires market makers that quote securities on OTC Link to conduct due diligence on the companies that issue the securities and on the securities themselves. This due diligence process includes obtaining and reviewing copies of the security’s prospectus or offering circular and the issuer’s financial documents. The relevant information must be obtained and reviewed by the market maker three days before submitting a quote in the security.

The market maker must confirm that this information is current and publicly available. For registered securities, this means that the market maker must confirm that the prospectus and current financial disclosures are available on EDGAR. For non-registered securities, the market maker must confirm that similar information (e.g., an offering circular) is publicly available through a reputable online source like a regulator’s website or OTC Link.

The SEC also requires market makers to attest to their compliance with the requirements of Rule 15c2-11 on Fo