SOURCE: Pink Sheets, LLC

January 11, 2007 15:16 ET

Pink Sheets Raises Eligibility Standards for OTCQX Designated Advisors for Disclosure (DADs)

NEW YORK, NY -- (MARKET WIRE) -- January 11, 2007 -- Pink Sheets, LLC today announced that it has raised its eligibility standards for OTCQX Designated Advisors for Disclosure (DADs). The new standards are designed to create a more credible and trustworthy market by limiting DAD status to the most qualified firms and requiring that newly public issuers can only be sponsored by an Investment Banker DAD.

Companies are known by the company they keep, and the reputation of OTCQX will be driven by the quality of the issuers listed. The OTCQX listing process outsources the annual disclosure review to the DAD community. Therefore the integrity of OTCQX depends on DADs representing the highest standards in advising issuers.

The changes also clarify the different advice needs of different issuers. For issuers that are new to public markets, raising capital or looking to increase their visibility, only an investment bank can offer the premium capital markets services and advice that emerging issuers and their investors need. For seasoned issuers that are primarily looking to provide credible disclosure to investors in a cost efficient manner, their principal disclosure counsel is uniquely positioned to serve as a DAD.

"OTCQX is a premier market tier and these new standards reinforce our desire to only offer DAD eligibility to the most qualified and experienced securities professionals who can provide expert advice to OTCQX companies," commented Cromwell Coulson, Chairman and CEO of Pink Sheets. "Already, we have approved Merriman Curhan Ford & Co. of San Francisco as an Investment Bank DAD, Ellenoff Grossman & Schole of New York as an Attorney DAD, and Roth Capital Partners, LLC of Los Angeles as an Investment Bank DAD. They represent the type of firms that have the ability to provide services and counsel appropriate for the premium level companies on OTCQX," Mr. Coulson continued.

The OTCQX is a new market tier offered by Pink Sheets that provides a premier trading, quotation and disclosure venue for the securities of the highest quality companies in the U.S. OTC markets. Companies that have substantial operating businesses and provide credible disclosure to the public may qualify for the premium tier OTCQX, which commences trading on March 5, 2007. Each OTCQX company must nominate either an Investment Banker or an Attorney as their DAD to advise them in providing disclosure to the market and meeting the OTCQX listing requirements. The DAD advisory role will bolster investor confidence in the quality of OTCQX issuer disclosure.

The new DAD standards include:

For NASD Investment Banker DADs:

--  Must have net capital of not less than $5 million, or in the case of a
    broker-dealer that has been engaged in the investment banking or securities
    business for more than five years, not less than $2 million, as computed
    pursuant to the provisions of Rule 15c3-1 under the Exchange Act;
--  If a corporation, a majority of its board of directors, if a
    partnership, a majority of its general partners, or if a limited liability
    company, a majority of its managing members, are persons who have been
    actively engaged in the investment banking or securities business for at
    least two years;
--  Must be approved by the NASD to participate in firm commitment
    underwritings under the category: "Underwriter or Selling Group Participant
    (corporate securities other than mutual funds)";
--  Must be actively engaged as an underwriter or selling agent in public
    or private offerings of equity securities, as a manager or co-manager, and
    during the last five years, have raised more than $50 million in such
    offerings of aggregate gross proceeds for issuers of equity securities that
    at the time any such offering closed or thereafter were listed on NASDAQ.
For Attorney DADs:
--  An Issuer will only be able to use an attorney DAD if they are a
    Seasoned Public Issuer and has therefore engaged in its current business
    operations and has had a class of its securities publicly traded on the
    Pink Sheets, the OTC Bulletin Board©, or a national securities exchange
    for not less than two years;
--  Each attorney who will provide services as a DAD must demonstrate
    substantial experience, either alone or through collaboration with another
    attorney, providing advice regarding disclosure obligations under the
    federal securities laws to an issuer with a class of securities registered
    under Section 12(b) of the Securities Exchange Act of 1934 (the "Exchange
--  Each attorney who will provide services as a DAD, cannot accept
    payment for its services in the form of securities of the Issuer or any of
    its affiliates; and
--  Issuers that utilize an attorney DAD shall not, during any time that
    it is listed on OTCQX, engage in any public or private offering of Equity
    Securities, except through a broker-dealer that satisfies the requirements
    to serve as a DAD (whether or not on the list of DADs maintained by Pink
    Sheets); provided, however, that this requirement shall not apply to
    offerings of securities to employees or to current bona fide equity
For a complete list of DAD and PAL requirements, please refer to the OTCQX Rules and DAD Applications, which are available at


An alternative to listing on traditional exchanges, OTCQX is a new market tier for issuers of securities that are traded in the over-the-counter (OTC) markets. The OTCQX trading, quotation and disclosure platform, comprised of the PremierQX and PrimeQX tiers, is designed to distinguish strong public companies from the nearly tens of thousands of securities traded on OTC. Additional information is available at

About Pink Sheets, LLC

Pink Sheets, LLC is the leading provider of services, software and financial information for the OTC securities markets. Its electronic quotation, trading and disclosure services enhance the efficiency of OTC trading, provide better executions for OTC investors and improve the capital formation process for OTC issuers. For more information visit the Pink Sheets website at

Contact Information

  • Contact:
    R. Cromwell Coulson
    Chairman and CEO
    Pink Sheets, LLC
    1 (212) 896-4400
    Email Contact