Form 211 serves a critical purpose in the financial world, specifically for market makers and broker-dealers. It is a form that is submitted to the Financial Industry Regulatory Authority (FINRA) by these firms seeking to quote and trade in over-the-counter (OTC) securities on the OTC Bulletin Board (OTCBB) or in the OTC Markets Group's platforms.
The primary purpose of Form 211 is to provide transparency and protect investors by ensuring that market makers and broker-dealers meet certain requirements before quoting a security. When a company wants to have its shares traded on the OTCBB or the OTC Markets Group's platforms, it needs a market maker to quote its stock. However, these market makers must gather and disclose specific information about the company to demonstrate compliance with FINRA rules.
To satisfy the requirements, the market maker or broker-dealer must complete and submit Form 211 to FINRA. This form includes detailed information about the issuer, such as the company's business operations, officers and directors, financial statements, and any material events or pending litigation. The purpose is to ensure that investors have access to relevant information and can make informed decisions.
Upon receiving Form 211, FINRA reviews the information provided by the market maker or broker-dealer to determine if it is complete and compliant. The review process involves evaluating the company's suitability for quoting based on the quality, accuracy, and adequacy of the disclosed information. If the submission meets the necessary criteria, FINRA grants clearance for the market maker to quote the company's securities, allowing trading to begin.
Overall, the primary objectives of Form 211 are to protect investors from potential fraud or misleading information, promote market transparency, and maintain the integrity of OTC markets. By ensuring that market makers meet specific standards and disclose relevant information about the companies they quote, Form 211 helps safeguard the interests of investors and promotes fair trading in OTC securities.