Lack of public information. Often, the biggest difference between a microcap stock and other stocks is the amount of reliable publicly-available information about the company. Most large public companies file reports with the SEC that any investor can get for free from the SEC’s website. Professional stock analysts regularly research and write about larger public companies, and it is easy to find their stock prices on the Internet or in newspapers and other publications. In contrast, the same information about microcap companies can be extremely difficult to find, making them more vulnerable to investment fraud schemes and making it less likely that quoted prices will be based on full and accurate information about the company.

No minimum listing standards. Companies that list their stocks on exchanges must meet minimum listing standards. For example, they must have minimum amounts of net assets and minimum numbers of shareholders. In contrast, companies quoted on the OTC Bulletin Board (OTCBB), OTC Link LLC (OTC Link) or Global OTC generally do not have to meet any minimum listing standards, but are typically subject to some initial and ongoing requirements. You can find the OTCBB’s eligibility requirements for stocks at http://www.finra.org/industry/faq-otcbb-frequently-asked-questions and you can find additional information about OTC Link and Global OTC at www.otcmarkets.com and www.globalotc.com , respectively.

Risk. While all investments involve risk, microcap stocks are among the most risky. Many microcap companies are new and have no proven track record. Some of these companies have no assets, operations, or revenues. Others have products and services that are still in development or have yet to be tested in the market. Another risk that pertains to microcap stocks involves the low volumes of trades, which may make it difficult for you to sell your shares when you want to do so. Because many microcap stocks trade in low volumes, any size trade can have a large percentage impact on the price of the stock. Microcap stocks may also be susceptible to fraud and manipulation.

Please be advised that the above information is being provided for educational purposes only. Thus, it is not designed to be complete in all material respects. If you have any questions relative to the contents of this post, you should consult a qualified professional.

Contact Us:

With extensive courtroom, arbitration and mediation experience and an in-depth understanding of elder abuse, exploitation and securities law, our firm provides all of our clients with the personal service they deserve. Handling cases worth $25,000 or more, we represent clients throughout Florida and across the United States, as well as for foreign individuals that invested in U.S. banks or brokerage firms. Contact us to arrange your free initial consultation.

At the Boca Raton Law Office of Russell L. Forkey, we represent clients throughout South and Central Florida, including Fort Lauderdale, West Palm Beach, Boca Raton, Sunrise, Plantation, Coral Springs, Deerfield Beach, Pompano Beach, Delray, Boynton Beach, Hollywood, Lake Worth, Royal Palm Beach, Manalapan, Jupiter, Gulf Stream, Wellington, Fort Pierce, Stuart, Palm City, Jupiter, Miami, Orlando, Maitland, Winter Park, Altamonte Springs, Lake Mary, Heathrow, Melbourne, Palm Bay, Cocoa Beach, Vero Beach, Daytona Beach, Deland, New Smyrna Beach, Ormand Beach, Broward County, Palm Beach County, Dade County, Orange County, Seminole County, Martin County, Brevard County, Indian River County, Volusia County and Monroe County, Florida. The law office of Russell L. Forkey also represents South American, Canadian and other foreign residents that do business with U.S. financial institutions, investment advisors, brokerage and precious metal firms.

Many microcap stocks trade in the “over-the-counter” (OTC) market. Quotes for microcap stocks may be available directly from a broker-dealer or on OTC systems such as the OTC Bulletin Board (OTCBB), OTC Link LLC (OTC Link), or Global OTC.

OTC Bulletin Board is an electronic inter-dealer quotation system that displays quotes, last-sale prices, and volume information for many OTC equity securities that are not listed on a national securities exchange. The OTCBB is operated by the Financial Industry Regulatory Authority, Inc. (FINRA). You can read more about the OTCBB marketplace at http://www.finra.org/industry/faq-otcbb-frequently-asked-questions .

OTC Link LLC is an electronic inter-dealer quotation system that displays quotes, last-sale prices, and volume information in exchange-listed securities, OTC equity securities, foreign equity securities and certain corporate debt securities. In addition to publishing quotes, OTC Link provides, among other things, broker-dealer subscribers the ability to send and receive trade messages, allowing them to negotiate trades. OTC Link is registered with the SEC as a broker-dealer and operates an Alternative Trading System pursuant to Regulation ATS, and is a member of FINRA. OTC Link organizes stocks into three marketplaces based, in part, on the amount and quality of available information about the particular stock. You can read more about the OTC Link marketplace at www.otcmarkets.com.

Global OTC is an electronic inter-dealer quotation system that displays quotes, last-sale prices, and volume information in OTC equity securities. Archipelago Trading Services, Inc., a broker-dealer registered with the SEC, operates Global OTC as an Alternative Trading System pursuant to Regulation ATS. For additional information about Global OTC please visit www.globalotc.com .

Please be advised that the above information is being provided for educational purposes only. Thus, it is not designed to be complete in all material respects. If you have any questions about this post, you should contact a qualified professional.

Contact Us:

With extensive courtroom, arbitration and mediation experience and an in-depth understanding of elder abuse, exploitation and securities law, our firm provides all of our clients with the personal service they deserve. Handling cases worth $25,000 or more, we represent clients throughout Florida and across the United States, as well as for foreign individuals that invested in U.S. banks or brokerage firms. Contact us to arrange your free initial consultation.

At the Boca Raton Law Office of Russell L. Forkey, we represent clients throughout South and Central Florida, including Fort Lauderdale, West Palm Beach, Boca Raton, Sunrise, Plantation, Coral Springs, Deerfield Beach, Pompano Beach, Delray, Boynton Beach, Hollywood, Lake Worth, Royal Palm Beach, Manalapan, Jupiter, Gulf Stream, Wellington, Fort Pierce, Stuart, Palm City, Jupiter, Miami, Orlando, Maitland, Winter Park, Altamonte Springs, Lake Mary, Heathrow, Melbourne, Palm Bay, Cocoa Beach, Vero Beach, Daytona Beach, Deland, New Smyrna Beach, Ormand Beach, Broward County, Palm Beach County, Dade County, Orange County, Seminole County, Martin County, Brevard County, Indian River County, Volusia County and Monroe County, Florida. The law office of Russell L. Forkey also represents South American, Canadian and other foreign residents that do business with U.S. financial institutions, investment advisors, brokerage and precious metal firms.

The term “microcap stock” (sometimes referred to as “penny stock”) applies to companies with low or micro market capitalizations. Companies with a market capitalization of less than $250 or $300 million are often called “microcap stocks” – although many have market capitalizations of far less than those amounts. The smallest public companies, with market capitalizations of less than $50 million, are sometimes referred to as “nanocap stocks.”

Please be advised that this information is being provided for educational purposes only. It is not designed to be complete in all material respects. If you have any questions about this post or have been adversely affected by investing in a microcap or nanocap stock, you should contact a qualified professional.

Contact Us:

With extensive courtroom, arbitration and mediation experience and an in-depth understanding of elder abuse, exploitation and securities law, our firm provides all of our clients with the personal service they deserve. Handling cases worth $25,000 or more, we represent clients throughout Florida and across the United States, as well as for foreign individuals that invested in U.S. banks or brokerage firms. Contact us to arrange your free initial consultation.

At the Boca Raton Law Office of Russell L. Forkey, we represent clients throughout South and Central Florida, including Fort Lauderdale, West Palm Beach, Boca Raton, Sunrise, Plantation, Coral Springs, Deerfield Beach, Pompano Beach, Delray, Boynton Beach, Hollywood, Lake Worth, Royal Palm Beach, Manalapan, Jupiter, Gulf Stream, Wellington, Fort Pierce, Stuart, Palm City, Jupiter, Miami, Orlando, Maitland, Winter Park, Altamonte Springs, Lake Mary, Heathrow, Melbourne, Palm Bay, Cocoa Beach, Vero Beach, Daytona Beach, Deland, New Smyrna Beach, Ormand Beach, Broward County, Palm Beach County, Dade County, Orange County, Seminole County, Martin County, Brevard County, Indian River County, Volusia County and Monroe County, Florida. The law office of Russell L. Forkey also represents South American, Canadian and other foreign residents that do business with U.S. financial institutions, investment advisors, brokerage and precious metal firms.

The Securities and Exchange Commission recently filed an enforcement action against a former microcap company president with defrauding over 700 investors nationwide who were pressured to invest has agreed to lifetime officer-and-director and penny stock bars.

The SEC’s complaint alleges that from 2009 until 2015, Keith Houlihan of Boca Raton, Florida, while president of publicly-traded Sanomedics, Inc., hired and worked with an unregistered broker and his boiler room operation to illegally sell shares of Sanomedics by cold-calling the investing public using high-pressure sales tactics. In 2009 and 2010, Houlihan falsely told investors that for a limited time he was able to offer them Sanomedics shares at a steep discount to the stock’s market price. The complaint alleges further that Houlihan used investor monies to pay undisclosed sales commissions to boiler room sales agents and more than $110,000 to himself for personal expenses. In 2013 and 2014, Houlihan signed Sanomedics’ annual and quarterly filings with the SEC that contained false statements about Sanomedics’ financing and did not disclose the illegal boiler room activity.

In December 2017, the U.S. Attorney’s Office for the Southern District of Florida criminally charged Houlihan. He was subsequently sentenced to 111 months imprisonment and ordered to pay approximately $21 million in restitution.

The SEC’s complaint, filed in federal court in Miami, Florida on May 4, 2018, charges Houlihan with violating Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Exchange Act Rule 13a-14, and with aiding and abetting the boiler room’s violations of Section 15(a) of the Exchange Act and Sanomedics’ violations of Section 13(a) of the Exchange Act and Rules 12b-20, 13a-1 and 13a-13 thereunder. In addition to the lifetime bars, Houlihan agreed to settle the SEC’s charges by consenting to a judgment that permanently enjoins him from violating the charged provisions of the federal securities laws. The settlement is subject to court approval.

The SEC charged the boiler room operator, Miguel “Michael” Mesa, and Sanomedics’ former CEO, Craig V. Sizer, with fraud in 2016. A federal court subsequently entered consented-to final judgments against Mesa and Sizer that imposed lifetime penny stock bars on each of them and a lifetime officer-and-director bar on Sizer. The SEC subsequently barred Mesa and Sizer from the securities industry.

Contact Us:

With extensive courtroom, arbitration and mediation experience and an in-depth understanding of elder abuse, exploitation and securities law, our firm provides all of our clients with the personal service they deserve. Handling cases worth $25,000 or more, we represent clients throughout Florida and across the United States, as well as for foreign individuals that invested in U.S. banks or brokerage firms. Contact us to arrange your free initial consultation.

At the Boca Raton Law Office of Russell L. Forkey, we represent clients throughout South and Central Florida, including Fort Lauderdale, West Palm Beach, Boca Raton, Sunrise, Plantation, Coral Springs, Deerfield Beach, Pompano Beach, Delray, Boynton Beach, Hollywood, Lake Worth, Royal Palm Beach, Manalapan, Jupiter, Gulf Stream, Wellington, Fort Pierce, Stuart, Palm City, Jupiter, Miami, Orlando, Maitland, Winter Park, Altamonte Springs, Lake Mary, Heathrow, Melbourne, Palm Bay, Cocoa Beach, Vero Beach, Daytona Beach, Deland, New Smyrna Beach, Ormand Beach, Broward County, Palm Beach County, Dade County, Orange County, Seminole County, Martin County, Brevard County, Indian River County, Volusia County and Monroe County, Florida. The law office of Russell L. Forkey also represents South American, Canadian and other foreign residents that do business with U.S. financial institutions, investment advisors, brokerage and precious metal firms.

The Securities and Exchange Commission recently announced that it filed a civil injunctive action on April 25, 2018, against a lawyer and two other individuals relating to two microcap schemes involving undisclosed “blank check” companies. In separate, settled administrative proceedings, the SEC charged another individual and two public companies related to one of the schemes.

The SEC’s complaint alleges that attorney Diane J. Harrison, Esq. and her husband, Michael J. Daniels, both of Palmetto, Florida, manufactured at least five microcap issuers with the undisclosed intent to sell them based on their status as public companies with purportedly unrestricted shares available for resale in the public markets. According to the complaint, Daniels and Harrison created the false appearance that the companies were pursuing specific business plans with independent management and shareholders by installing friends and family (including defendant Catherine A. Bradaick-Zolla of Sarasota, Florida, who also provided other assistance to the fraud) as purported officers and shareholders. The SEC alleges that, in reality, Daniels and Harrison controlled the shares. According to the complaint, Daniels and Harrison sold four of the five companies to Andy Z. Fan of Las Vegas, Nevada and, along with Bradaick-Zolla, continued to provide support to Fan. For example, the SEC alleges that Daniels, Harrison, and Bradaick-Zolla prepared false SEC filings, Harrison submitted false legal opinion letters, and Daniels and Bradaick-Zolla entered manipulative trades to artificially set the price of the stocks in the public market. The SEC previously issued a stop order on the public offering of the fifth company in Daniels and Harrison’s pipeline.

The SEC’s complaint also alleges that Harrison participated in a separate fraudulent scheme involving at least 11 undisclosed blank check companies secretly controlled by Alvin S. Mirman and Sheldon R. Rose. The SEC previously filed enforcement actions against Mirman and Rose, who were also convicted of criminal charges and sentenced to prison based on the same alleged conduct. According to the SEC’s complaint, Harrison provided at least 21 false legal opinion letters in furtherance of Mirman and Rose’s scheme.

The SEC’s complaint, filed in the United States District Court for the Middle District of Florida, alleges that Harrison and Daniels violated Section 17(a) of the Securities Act of 1933 (“Securities Act”) and Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rules 10b-5 and Rule 13a-14 thereunder, and aided and abetted violations of Section 13(a) of the Exchange Act and Rules 12b-20, 13a-1, 13a-11, 13a-13 and 13a-14 thereunder. The complaint also alleges that Daniels violated Section 9(a) of the Exchange Act, and that Harrison also violated Sections 5(a) and 5(c) of the Securities Act. The complaint further alleges that Harrison and Bradaick-Zolla aided and abetted violations of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. The complaint seeks permanent injunctions, disgorgement with prejudgment interest, civil penalties, penny stock bars, and officer-and-director bars against each defendant.

In separate orders instituting settled administrative proceedings, the Commission charged Fan and two public companies under his control, AF Ocean Investment Management Company and ChinAmerica Andy Movie Entertainment Media Company, with issuing false press releases and making false SEC filings regarding their purported revenues. The Commission also charged Fan with manipulating the price of both companies’ stock and fraudulently selling his controlling interest in another public company.

Without admitting or denying the SEC’s findings, Fan and the two companies agreed to the entry of cease-and-desist orders. Fan further agreed to entry of an order barring him from participating in penny stock offerings, barring him from serving as an officer or director of a public company, and ordering him to pay $140,000 in civil penalties. AF Ocean and ChinAmerica each further agreed to entry of an order revoking their securities registrations.

Contact Us:

With extensive courtroom, arbitration and mediation experience and an in-depth understanding of elder abuse, exploitation and securities law, our firm provides all of our clients with the personal service they deserve. Handling cases worth $25,000 or more, we represent clients throughout Florida and across the United States, as well as for foreign individuals that invested in U.S. banks or brokerage firms. Contact us to arrange your free initial consultation.

At the Boca Raton Law Office of Russell L. Forkey, we represent clients throughout South and Central Florida, including Fort Lauderdale, West Palm Beach, Boca Raton, Sunrise, Plantation, Coral Springs, Deerfield Beach, Pompano Beach, Delray, Boynton Beach, Hollywood, Lake Worth, Royal Palm Beach, Manalapan, Jupiter, Gulf Stream, Wellington, Fort Pierce, Stuart, Palm City, Jupiter, Miami, Orlando, Maitland, Winter Park, Altamonte Springs, Lake Mary, Heathrow, Melbourne, Palm Bay, Cocoa Beach, Vero Beach, Daytona Beach, Deland, New Smyrna Beach, Ormand Beach, Broward County, Palm Beach County, Dade County, Orange County, Seminole County, Martin County, Brevard County, Indian River County, Volusia County and Monroe County, Florida. The law office of Russell L. Forkey also represents South American, Canadian and other foreign residents that do business with U.S. financial institutions, investment advisors, brokerage and precious metal firms.