Opinion ID: 2771328
Heading Depth: 4
Heading Rank: 1

Heading: “National Securities Exchange”

Text: Under the first prong of Morrison, Section 10(b) applies to “the purchase or sale of a security listed on an American stock exchange.” Morrison, 561 U.S. at 273. Securities listed on the OTCBB and the Pink Sheets are not within these parameters. According to the SEC, there are eighteen registered national security exchanges; the Pink Sheets and the OTCBB are not among them.11 See SEC Commission (the ‘SEC’) was an independent agency of the United States which was charged by law with protecting investors by regulating and monitoring, among other things, the purchase and sale of publicly traded securities, including securities traded on the Pink Sheets and the OTCBB. Federal securities laws prohibited fraud in connection with the purchase and sale of securities . . .” (Indictment ¶ 8.) 11 Indeed, the OTCBB is, by definition, a quotation service for “securities which are not listed or traded on NASDAQ or any other national securities exchange.” OTCBB Frequently Asked Questions, FINRA, http://www.finra.org/Industry/Compliance/MarketTransparency/O TCBB/FAQ/index.htm (“OTCBB FAQ”) (emphasis added) (last visited Jan. 5, 2015). Likewise, the Pink Sheets may include securities that “[have] been delisted from an exchange.” Frequently Asked Questions, http://www.otcmarkets.com/learn/otc101-faq (last visited Jan. 5, 2015). Unlike companies listed on a national securities 13 Website, http://www.sec.gov/divisions/marketreg/mrexchanges.shtml (hereinafter “SEC Webpage on National Securities Exchanges”) (last visited Jan. 5, 2015); see also 15 U.S.C. § 78f(b) (requiring that exchanges register with the SEC and comply with various requirements to constitute a “national securities exchange”). Further, the stated purpose of the Act refers to “securities exchanges” and “over-the-counter markets” separately, which suggests that one is not inclusive of the other. See Securities Exchange Act of 1934, 48 Stat. 881, as amended, 15 U.S.C. § 78a et seq., (described as “[a]n Act [t]o provide for the regulation of securities exchanges and of over-the-counter markets . . . [and] to prevent inequitable and unfair practices on such exchanges and markets”) (emphasis added). Given that a “national securities exchange” is explicitly listed in Section 10(b)—to the exclusion of the OTC markets—and coupled with the absence of the Pink Sheets and the OTCBB on the list of registered national security exchanges on the SEC Webpage on Exchanges, we exchange, those quoted on the OTCBB and the Pink Sheets are not subject to “listing and maintenance standards, which are stringently monitored and enforced . . . . [and do not] have reporting obligations to the market.” OTCBB FAQ. 14 are persuaded that those exchanges are not national securities exchanges within the scope of Morrison.12