Understanding Securities Law
The business professional's guide to securities laws
 

Getting a Pink Sheet Ticker Symbol on the requires two things:

• You have to have free trading stock.
• You have to have a FINRA issue you a Ticker Symbol. The SEC does not issue ticker symbols.

The single biggest impediment to getting a Pink Sheet Ticker Symbol is free trading stock. You are not filing a registration statement with the SEC so you don’t automatically have free trading stock. Instead, the stock you have previously sold to your shareholders must be free trading. This takes time. Under SEC Rule 144, described in detail elsewhere on this site, your shareholders do not have free trading stock unless they have held their stock for one full year.

But having free trading stock isn’t enough. You also have to meet the other FINRA requirements described above, specifically:

• Enough free trading shares
• Enough non-affiliated shareholders
• No market concentration

Even then it is still more difficult to clear FINRA for a Pink Sheet only application than for an application for the OTCBB or a higher exchange. FINRA will give great scrutiny to the following:

• How your offered and sold all of your stock and whether that process was done in full compliance with SEC statutes, rules and regulations.
• Whether or not your company is a shell company as defined by the SEC.

So it is critical that you pay great attention to the furnishing FINRA the following:

• All documents related to the offering of your securities from the inception of your company, including copies of checks and subscription agreement
• Proof that your company is engaged and in the future continues to engage in a valid business activity and is not a shell company.
• A shareholder list generated by a Transfer Agent clearly showing free trading stock.
• An opinion of SEC counsel on the free trading status of your stock so indicated on your Transfer Agent’s shareholder list.

The Form 211 for a Pink Sheet application is much longer than for an application for the OTCBB or higher exchange. In general, the disclosure items are similar to those in an SEC registration statement.

The financial statements, however, do not have to be audited. That said, you cannot just print out your Quickbooks balance sheet and income statements. The financial statements must look like those in an SEC filing, just not audited by a PCAOB member firm. Accounting firms that prepare financial statement to send the PCAOB auditors for SEC registration statements are qualified to prepare financial statements for a Pink Sheet application.