ASA Sends Letter to SEC Highlighting Penny Stock Listing Risk

Joins trades and public advocacy groups supporting a Virtu Financial Petition to require exchanges to delist penny stocks.

WASHINGTON – The American Securities Association (ASA) joined investor and public interest advocacy groups in sending a letter to the U.S. Securities and Exchange Commission (SEC) supporting a Virtu Financial Petition calling for the removal of penny stocks from U.S. exchanges.

“ASA cares deeply about the integrity of the U.S. capital markets as well as the trust and confidence American investors have in our markets, which is why we joined a letter calling on the SEC to delist companies that don’t meet basic transparency and accountability requirements from U.S. stock exchanges,” said ASA President and CEO Chris Iacovella. “Exchanges must not put profit over market integrity and investor protection.”   

“In recent years, the markets have experienced a substantial growth in both the number of listed penny stocks and the proportion of trading in public markets that they account for,” the groups wrote in the letter. “We believe this trend poses heightened risks to investors and overall market integrity. Investors rightfully expect that when they invest in an exchange-listed company, that company operates under certain standards of transparency and corporate accountability. For many penny stocks, that is not the case.”

“Most listed penny stocks presently happen to be listed on Nasdaq, but concerns are not limited to that one market,” the groups wrote. “To address the general concerns, the Petition recommends that the SEC require all exchanges to adopt targeted changes to tighten initial listing standards, substantially reduce the length of time penny stocks can stay listed on an exchange, restrict the use of reverse stock splits to evade compliance with those standards, and monitor for potential manipulation.”

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The American Securities Association (ASA) represents the retail and institutional capital markets interests of regional financial services firms who provide Main Street businesses with access to capital and advise hardworking Americans how to create and preserve wealth. ASA’s mission is to promote trust and confidence among investors, facilitate capital formation, and support efficient and competitively balanced capital markets. This mission advances financial independence, stimulates job creation, and increases prosperity. The ASA has a geographically diverse membership of almost one hundred members that spans the Heartland, Southwest, Southeast, Atlantic, and Pacific Northwest regions of the United States.