Investor Bulletin:

Trading Suspensions

The SEC’s Office of Investor Education and Advocacy 

is issuing this Investor Bulletin to help educate 

investors about the SEC’s rules and regulations 

related to trading suspensions. The federal securities 

laws generally allow the SEC to suspend trading in 

any stock for up to ten business days. This bulletin 

answers some of the typical questions we receive 

from investors about trading suspensions. A list of 

companies whose stock is currently subject to an 

SEC trading suspension, or which previously has been 

subject to an SEC trading suspension, may be found 

here.

Why would the SEC suspend trading in 

a stock?

The SEC may suspend trading in a stock when the 

Commission is of the opinion that a suspension is 

required to protect investors and the public interest. 

Circumstances that might lead the Commission to 

suspend trading include:

•	 A lack of current, accurate, or adequate 

information about the company, for example, 

when a company is not current in its filings of 

periodic reports;

•	 Questions about the accuracy of publicly 

available information, including in company press 

releases and reports, about the company’s current 

operational status, financial condition, or business 

transactions;

•	 Questions about trading in the stock, including 

trading by insiders, potential market manipulation, 

and the ability to clear and settle transactions in 

the stock.

Why couldn’t the SEC forewarn 

investors that it was about to suspend 

trading in a stock?

The SEC cannot announce that it’s working on a 

suspension. We conduct this work confidentially to 

maintain the effectiveness of any related investigation 

we may be conducting. Confidentiality also protects 

a company and its shareholders if the SEC ultimately 

decides not to issue a trading suspension. The SEC 

is mindful of the seriousness of suspensions, and 

carefully considers whether it is in the public interest 

and for the protection of investors to order a trading 

suspension.

Investor Assistance (800) 732-0330 www.investor.gov

1
What happens when the ten-day 

suspension period ends? 

The SEC will not comment publicly on the status 

of a company when the ten-day suspension period 

ends because the company may still have serious legal 

problems. For instance, the SEC may continue to 

investigate a company to determine whether it has 

defrauded investors. The public would not know if 

the SEC is continuing its investigation unless the SEC 

publicly announces an enforcement action against the 

company.

Furthermore, when an SEC trading suspension ends, 

a broker-dealer generally may not solicit investors 

to buy or sell the previously-suspended over-thecounter (“OTC”) stock until certain requirements 

are met.  Before soliciting quotations or resuming 

quotations in an OTC stock that has been subject 

to a trading suspension, a broker-dealer must file a 

Form 211 with the Financial Industry Regulatory 

Authority (“FINRA”) representing that it has satisfied 

all applicable requirements, including those of Rule 

15c2-11 and FINRA Rule 6432.

Among other things, Rule 15c2-11 requires brokerdealers to review and maintain certain documents and 

information about the company, including in certain 

cases:

1. the company’s state of organization, business line, 

and names of certain control affiliates; 

2. the title and class of the securities outstanding; and 

3. the company’s most recent balance sheet and its 

profit and loss and retained earnings statement. 

No broker-dealer may solicit or recommend that 

an investor buy an OTC stock that has been subject 

to a trading suspension unless and until FINRA 

has approved a Form 211 relating to the stock.  If 

there are continuing regulatory concerns about 

the company, its disclosures, or other factors, such 

as a pending regulatory investigation, a Form 211 

application may not be approved.

However, limited or “unsolicited” trading can occur 

in an OTC stock that has been subject to a trading 

suspension after the suspension ends but before a Form 

211 is approved.  This may allow investors to trade 

the stock when a broker or adviser has not solicited 

or recommended such a transaction.  Even though such 

trading is allowed, it can be very risky for investors without 

current and reliable information about the company.

Will trading automatically resume after 

ten days?

It depends on the market where the stock trades. 

Different rules apply in different markets.

For stocks that quote in the OTC market (which 

includes stocks quoted on the Bulletin Board and 

OTC Link (f/k/a Pink Sheets)), quoting does not 

automatically resume when a ten-day suspension 

ends. Before OTC stock quoting can resume after a 

suspension period, SEC regulations require a brokerdealer to review specific information about the 

company in accordance with Exchange Act Rule 

15c2-11 and FINRA Rule 6432. If a broker-dealer 

does not have confidence that a company’s financial 

statements are reasonably current and accurate in all 

material respects, especially in light of the questions 

that may have been raised by the SEC suspension 

action, then a broker-dealer may not publish a quote 

for the company’s stock. The OTC markets function 

through dealer systems where only broker-dealers may 

quote and facilitate trading in OTC stocks. 

In contrast to stocks that trade in the OTC market, 

stocks that trade on an exchange resume trading as 

soon as an SEC suspension ends. 

Investor Assistance (800) 732-0330 www.investor.gov

2
If the suspended stock resumes 

trading, why is it trading at a much 

lower price?

The trading suspension may raise serious questions 

and cast doubts about the company in the minds 

of investors. While some investors may be willing 

to buy the company’s stock, they will do so only at 

significantly lower prices.

Take precautions following an SEC 

trading suspension: Check for reliable 

information.

Investors should be very cautious in considering an 

investment in a stock following a trading suspension. 

At the very least, investors should assure themselves 

that they have current and reliable information about 

a company before investing.

•	 Research the Company:  Always research 

a company before buying its stock, especially 

following a trading suspension.  Consider the 

company’s finances, organization, and business 

prospects.  This type of information often is 

included in filings that a company makes with the 

SEC.

•	 Review the Company’s SEC Filings: This 

information is free and can be found on the 

Commission’s EDGAR filing system. Some 

companies are not required to file reports with 

the SEC.  These are known as “non-reporting” 

companies.  Investors should be aware of the risks 

of trading the stock of such companies, as there 

may not be current and accurate information 

that would allow investors to make an informed 

investment decision.

•	 Be Skeptical: Investors should always ask why 

someone provides them a “hot” tip. Investors 

should also do their own research and be aware 

that information from online blogs, social 

networking sites, and even a company’s own 

website may be inaccurate and sometimes 

intentionally misleading. 

If current, reliable information about a company and 

its stock is not available, investors should consider 

seriously whether this may be a good investment.

Why would the SEC suspend trading of 

a stock when it knows that such action 

will hurt current shareholders?

The SEC suspends trading in a security when it is 

of the opinion that the suspension is required in the 

public interest and to protect investors. Because a 

suspension often causes a dramatic decline in the price 

of the security, the SEC suspends trading only when 

it believes that the public may be making investment 

decisions based on a lack of information, or false or 

misleading information. A suspension may prevent 

potential investors from being victimized by a fraud.

How can investors find out if the stock 

will trade again after a suspension?

Investors can contact the broker-dealer who sold you 

the stock or a broker-dealer who quoted the stock 

before the suspension. Ask the broker-dealer if it 

intends to resume publishing a quote in the company’s 

stock.

If there is no market to sell my security, 

what can investors do with their 

shares?

If there is no market to trade the shares, they may 

be worthless. Investors may want to contact their 

financial or tax advisers to determine how to treat 

such a loss on their tax returns.

Investor Assistance (800) 732-0330 www.investor.gov

3
What can investors do if the company 

acted wrongfully and they have lost 

money?

If investors want to get their money back, they will 

need to consider taking legal action on their own. 

The SEC cannot act as their lawyer. Investors must 

pursue all of their legal remedies themselves or with 

the assistance of legal counsel they engage themselves. 

For more information about how to protect your legal 

rights, including finding a lawyer who specializes in 

securities law, read our flyer, How the SEC Handles 

Your Complaint or Inquiry.

To learn how to file an arbitration action against a 

broker-dealer, investors can contact the Director of 

Arbitration at FINRA. FINRA also offers mediation 

as an option before going to arbitration.

Where can investors get information 

about trading suspensions?

Investors can find a list of companies whose stocks 

have been suspended by the SEC since October 1995 

on our website.

How can investors learn more? 

We offer educational materials so that investors can 

develop an understanding of the securities industry 

and learn how to avoid costly mistakes and fraud. 

Our educational materials also provide tips on how 

investors can invest wisely. Investors can order our 

free publications by calling (800) SEC-0330, or access 

them on the Internet through the SEC’s Investor.

gov website. For additional educational information 

for investors, see the SEC’s Investor.gov website or 

the Office of Investor Education and Advocacy’s 

homepage. For additional information relating to 

trading suspensions and the risks of investing in lowpriced stocks, see: 

•	 Our publication, Microcap Stock: A Guide for 

Investors 

•	 SEC Trading Suspensions: http://www.sec.gov/

litigation/suspensions.shtml 

•	 Company filings with the SEC 

•	 Section 12(k) of the Exchange Act 

•	 Exchange Act Rule 15c2-11; FINRA Rule 6432

•	 Form 211

The Office of Investor Education and Advocacy 

has provided this information as a service to 

investors. It is neither a legal interpretation nor 

a statement of SEC policy. If you have questions 

concerning the meaning or application of a 

particular law or rule, please consult with an 

attorney who specializes in securities law.

Investor Assistance (800) 732-0330 May 2012

4