So you have been Flagged for Promotion?
OTCMarkets.com has started the process of flagging companies that are doing any sort of “stock promotion”. Stock promotion is not illegal as long as it is done properly. We are aware of its intricacies. OTCMarkets.com, which is NOT a regulatory agency, seems to pick and choose which stocks get flagged. It seems that most stocks are always involved in some form of advertising or another, so it really boils down to what marketing efforts they are aware of vs. the ones they are not. There is heavy competition for investors at these levels, and companies MUST advertise if they are ever to get on the map with this kind of investor.
Why Did My Company Get Flagged?
Sometimes, OTCmarkets.com signs up for different popular stock alert newsletters, and when they see one, they flag the company. Obviously, there are many of these newsletters, and it would be a full-time job to do this, so we believe that it mostly happens as competitors of the company, shorters, and competitors of the IR newsletters that “report” these communications to OTCMarkets.com.
In this letter, I will take you through all the things that you need to do, as OTCMarkets.com claims, to avoid being flagged directly. While we are aware that even if you follow these rules, OTCMarkets.com can still put a flag up. It seems to be arbitrary, at best.
The ‘Policy on Stock Promotion’ is located here:
https://www.otcmarkets.com/files/OTC_Markets_Group_Policy_on_Stock_Promotion.pdf
And a similar article here tells an interesting story about the perils of any stock promotion. Ironically, OTCMarkets.com is in and of itself a stock promotion website, as it advertises some of the very companies they are advising against paying another party for stock promotion. The front page of www.otcmarkets.com starts with some sort of hand-picked company CEO interview every day.
https://www.otcmarkets.com/files/Best_Practices_for_Issuers_Stock_Promotion.pdf
Directly from their ‘Policy on Stock Promotion’ are the 9 “characteristics of misleading and manipulative promotion.”
- “Fail to clearly identify the sponsor of the promotion, and/or the promotion is sponsored or paid for by anonymous, unidentifiable third parties.”
We always put a line in the disclaimer that literally reads as such:
“Our company has been compensated up to $xxxx.xx from ABC Corporation. We have never owned any shares of xxxx stock”
Sometimes it may say an exact number, and sometimes it may say “up to” if we believe that we will be further compensated down the road. Technically, this is not entirely necessary, but in the interest of transparency, we would rather over-disclose than not be crystal clear.
- Typically, focus on a company’s stock rather than its underlying business.”
We put the company logo (with a link to the company website) as well as a description of the company (not the stock) in the main body. From there, we will often point to or cut and paste recent press releases and/or already public information.
- “Use highly speculative language. Materials often rely on grandiose numbers and figures related to the target company’s industry, business model, financial results, or business developments.”
We make no projections as to volume or price anywhere in the content.
If the industry, financial numbers, or business developments are mentioned or discussed, they are done so in the form of already public press releases or pointed directly to corresponding press releases, released BEFORE the newsletter had been drafted.
- “Tout performance or profit potential of an issuer’s security with unsupported or exaggerated statements about the stock price or its anticipated trajectory.”
Any performance touted would only be PRIOR performance, that is already publicly available or directly from an existing stock chart. We make no statements, exaggerated or otherwise, about the potential of any stock price. Most often, the stock price never gets mentioned.
- “Make unreasonable claims pertaining to an issuer’s operations.”
We make no claims about an issuer’s operations that aren’t already posted on the company’s public website or already made in press releases.
- “Suggest a promise of specific future performance of the stock or profit to investors.”
We have never made a promise of anything. We do not even promise to keep the investor updated on future developments. It might be the only newsletter they get from us on the subject, or they might see 100 more.
- “Provide little or no factual information about the company, omit material information.”
All Newsletters come with links directly to the company website, and to the OTCMarkets.com company profile. If either site is lacking material information, then otcmarkets.com is as culpable as we are for this omission.
- “Urge the investor to take action immediately so as not to miss out on a great opportunity.”
We never “urge” anything. All our newsletters are considered stock alerts,” with no call to action one way or another. As a matter of fact, our disclaimer, specifically states that “there is no right time to purchase or sell penny stocks.”
- “Fail to provide details or disclosures about the risk associated with the issuer’s security.”
Every single bit of our content comes with a full-length disclosure that can be seen below. This disclaimer is way above and beyond any in the industry and covers any risk statement that any reasonable person could take.