In Brief : SEC Proposes Penny-Stock Curbs
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WASHINGTON — The Securities and Exchange Commission today proposed stiff new rules to protect small investors from high-pressure sales tactics often used in the sale of so-called penny stocks.
The commission voted 5 to 0 to propose requiring stockbrokers to obtain written customer agreement and make a documented “suitability” determination before completing the sale of such stocks in most cases.
Penny stocks are inexpensive securities sold over-the-counter. They are not listed on any major stock exchanges or quoted on the NASDAQ over-the-counter system.
SEC staff members said the rule was deliberately crafted in a narrow way to avoid hurting the ability of small companies to use the markets to raise capital.
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