An SEC proposal to tighten the requirements that broker-dealers must meet before being permitted to post public quotations on OTC securities was published in the Federal Register. Comments must be submitted by December 30, 2019.

Currently, in order to post such quotations, a broker-dealer either must (i) have access to specified information regarding the issuer or (ii) be able to rely on the fact that at least one other broker-dealer has been posting quotations (i.e., the "piggybacking exemption").

Under the proposal, the piggybacking exemption would be significantly reduced and would be eliminated in the case of shell companies. It would not be sufficient for the broker-dealer to have the relevant information; the necessary information would have to be current and "publicly available." The SEC said that it had found widespread fraud in connection with the sale of OTC securities, and that issuers were often delinquent in their public filings.