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SEC Grants Exemption Allowing 12g3-2(b) Filers to Piggyback into Pink Sheets

On March 13, 1998 the SEC issued an exemption letter in response to a request from Nasdaq that OTCBB foreign and ADR securities which file under Rule 12g3-2(b) be eligible to piggyback into another similar quotation medium, including the NQB Pink Sheets. The exemption expires on April 3, 1998, so any requests submitted under the exemption must be received by the NASD Regulation OTC Compliance Unit on or before April 3, 1998.

Ordinarily, the piggybacking exception does not apply when moving a security from one quotation medium, such as the OTCBB, to another quotation medium, such as the Pink Sheets. However, due to the unusual circumstances that have arisen in conjunction with the OTCBB's permanent approval, approximately 335 foreign and ADR securities will be deleted from the OTCBB prior to the open on April 1, 1998. Therefore, the SEC has granted Nasdaq's request to allow a subset of those foreign and ADR securities to piggyback into another quotation medium. The SEC states that a Market Maker does not have to submit a Form 211 to move a foreign or ADR security if the following conditions are met:

  1. The foreign equity security or ADR no longer is eligible for quotation in the OTCBB as of March 31, 1998 solely as a result of the rule change contained in Release No. 34-38456;
  2. The security is eligible for piggybacking in the OTCBB pursuant to paragraph (f)(3) of Rule 15c2-11 immediately prior to April 1, 1998;
  3. A broker-dealer relying on this exemption must have published quotation in the security in the OTCBB on at least 12 business days during the 30 calendar days preceding April 1, 1998, with no more than four business days in succession without quotations [*see footnote];
  4. The issue of the security must not be the subject of bankruptcy proceedings;
  5. The issuer of the foreign security or of the security underlying the ADR must be included on the Commission's most recent annual list of foreign issuers exempt from registration under Rule 12g3-2(b) of the Exchange Act; and
  6. A broker-dealer publishing quotations for an unregistered foreign equity security or ADR in the OTCBB as of March 31, 1998 and relying on this exemption must move its quotations for that security or ADR to another quotation medium by April 3, 1998.
The list of foreign issuers exempt from registration under Rule 12g3-2(b), referenced in condition #5 above, can be found on the SEC Web site or go to www.sec.gov, click on "Current SEC Rulemaking", then click on "Other Commission Notices and Information", then choose the third item. You can also find the securities list in Securities Exchange Act Release No. 39681 dated February 19, 1998.

If a security does not meet all of the conditions listed above, your firm will have to file a Form 211 to move your quote to the Pink Sheets, unless another exception to SEC Rule 15c2-11 is available.

If your firm wishes to move its quotes of a security, or a set of securities, that meets the conditions listed above, then fax a letter to the NASD Regulation OTC Compliance Unit which includes the symbol, name, and SEC file number of each security, along with your firm name, and have the letter reviewed and signed by a principal of your firm. Please fax your letter to the NASD Regulation OTC Compliance Unit at 301-208-2806 prior to April 3, 1998. After a review by the NASD Regulation OTC Compliance Unit, your request will be forwarded to the Pink Sheets. Any requests received after April 3, 1998 will not be granted the exemption, and your firm will have to file a Form 211 to commence quoting on the Pink Sheets or any other similar quotation medium.

If you have any questions regarding this exemption, please contact the NASD Regulation OTC Compliance Unit at 301-208-2802.


* If you choose to send the letter to NASD Regulation Compliance prior to April 1, 1998, you must have been a Market Maker in each security on your list for at least 30 days prior to the date of your letter, and you must have entered quotes in the security for at least 12 of those 30 days, with no more than 4 consecutive days without quotes.


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