WASHINGTON -- The National Association of Securities Dealers approved a rule yesterday that will force up to 3,400 small companies off the Nasdaq stock market's over-the-counter listing service, which has been troubled by a rash of stock-manipulation frauds in recent years.
Most of these thinly traded stocks will have to move from Nasdaq's OTC-Bulletin Board, a loosely regulated electronic-quote service, to the Pink Sheets, which post less timely quotes than those on the bulletin board.
NASD executives said they want to improve OTC-Bulletin Board standards to help protect the reputation of Nasdaq, the nation's second largest stock market, and rid the bulletin board of fraud.
However, some Securities and Exchange Commission officials question whether the NASD rule might simply shift the venue for scam artists to the Pink Sheets, which are owned by the private National Quotation Bureau in New York.
The NASD rule would require all 6,800 companies on the OTC Bulletin Board to register with federal regulators and submit to the SEC's disclosure and accounting requirements. The proposal will be submitted for public comment and then forwarded to the SEC for final approval.
Pub Date: 12/12/97