Company: GULTU
Filing Date: 2025-03-28
Form Type: 10-K
Source: 0001641172-25-001201
Chunk: 9

Company: Gulf Coast Ultra Deep Royalty Trust
Filing Date: 2025-03-28
Form: 10-K
Item: Item 1A
Chunk 9
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 including (i) a standardized risk disclosure document identifying
the risks inherent in investing in “penny stocks,” (ii) all compensation received by the broker-dealer in connection with
the transaction, (iii) current quotation prices and other relevant market data, and (iv) monthly account statements reflecting the fair
market value of the securities.

Any
broker-dealer that initiates quotations for the Royalty Trust units might not continue to do so, and the loss of any such broker-dealer
likely would have a material adverse effect on the market price of the Royalty Trust units.

FINRA
sales practice requirements may also limit a Royalty Trust unitholder’s ability to buy and sell royalty trust units.

In
addition to the “penny stock” rules described below, FINRA has adopted rules that require that in recommending an investment
to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to
recommending speculative low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain
information about the customer’s financial status, tax status, investment objectives, and other information. Under interpretations
of these rules, FINRA believes that there is a high probability that speculative low-priced securities will not be suitable for at least
some customers. The FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy royalty trust
units, which may limit Royalty Trust unitholders’ ability to buy and sell Royalty Trust units and have an adverse effect on the
market for Royalty Trust units.

Because
the Royalty Trust units are deemed a low-priced “penny stock,” it will be cumbersome for brokers and dealers to trade in
the Royalty Trust units, making the market for the Royalty Trust units less liquid and negatively affecting the price of the Royalty
Trust units. The Royalty Trust will be subject to certain provisions of the Exchange Act, commonly referred to as the “penny stock”
rules as defined in Rule 3a51-1. A penny stock is generally defined to be any equity security that has a market price less than $5.00
per share, subject to certain exceptions. Since the Royalty Trust units are deemed to be a penny stock, trading is subject to additional
sales practice requirements of broker-dealers. These require a broker-dealer to:

  Deliver to the customer,                                  
  Disclose certain price information