“One of the key components to Reg A, generally, is the free trading aspect of the shares, once the offering is complete. So any non-affiliate who’s purchasing a Reg A share all of a sudden has a freely tradeable security, the mechanism for which that, for how that works, all takes place on our market. We’re looking at Reg A as an opportunity to help companies through that process.” Dan Zinn, General Counsel, OTC Markets Group
I had the good fortune to speak with Dan Zinn and Jason Paltrowitz, of OTC Markets Group, to talk about what they do, and the new Reg A+ reality companies are experiencing—and how the OTC is helping them navigate through the post-raise aftermath. If you’ve ever considered a Reg A+ raise, this episode features a host of insightful tidbits you’ll want in your back pocket. And, even if you haven’t—you’ll learn why Mark Cuban now believes Reg A+ can help “counter the culture of Silicon Valley.” Don’t miss this one.
Background on the OTC Markets
OTC Markets Group, Inc. (OTCQX: OTCM) operates the OTCQX® Best Market, the OTCQB® Venture Market, and the Pink® Open Market for 10,000 U.S. and global securities. Through OTC Link® ATS, the company connects a diverse network of broker-dealers that provide liquidity and execution services. OTC Markets Group enables investors to easily trade through the broker of their choice and empowers companies to improve the quality of information available for investors.
OTC Link ATS is operated by OTC Link LLC, member FINRA/SIPC and SEC regulated ATS.
Here’s a Sneak Peak
Wondering how the OTC Markets operate? Zinn explains:
We are really the bulk of the OTC trading, meaning securities—equity securities—that are traded otherwise than on an exchange like New York Stock Exchange and NASDAQ. We have about 10,000 securities overall, and we split those up into three markets largely dependent on the timeliness and sufficiency of the disclosure that people provide, and at the top levels in our OTCQX market, and our OTCQB market, there are certain quantitative and qualitative standards that companies need to meet in order to be designated on those markets. So within that framework, we look at Reg A+ as a great opportunity for companies to get their feet wet as a public company.
Zinn also talks about just how much reporting is required:
It’s a little bit lighter touch. It’s not full Sarbanes-Oxley type reporting. So there certainly is a cost, and there’s certainly a benefit associated with making that ongoing disclosure for your kind of investors, but it’s not the full package that you get into with a registered offering. And that along with the free trading aspect of the shares is one of the, I think, key components to Reg A. That’s one of the nice things that’s attracting issuers and investors.
David Zinn, General Counsel, Bio:
Dan Zinn is OTC Markets Group General Counsel and Corporate Secretary. He leads the company’s regulatory and policy making efforts and is often a speaker on over-the-counter equity markets. Prior to joining OTC Markets Group in 2010, he served as outside counsel to OTC Markets, as a partner at The Nelson Law Firm LLC. Previously, Dan worked in the corporate office of AIG. He earned his JD at the Benjamin N. Cardozo School of Law and received his BS from Pennsylvania State University.
Jason Paltrowitz, Executive Vice President, Bio:
Jason Paltrowitz is Executive Vice President and Global Head of Business Development at OTC Markets Group, where he is responsible for all international and domestic corporate services new business and relationship management. Prior to joining OTC Markets in October 2013, Mr. Paltrowitz was Managing Director and Segment Head at JP Morgan Chase and was responsible for the custody, clearing and collateral management business in the Corporate and Investment Bank division. Mr. Paltrowitz started his career at BNY Mellon serving in multiple senior management positions, most notably as Head of M&A for the Financial Markets and Treasury Services Sector and 11 years in the Depositary Receipt Division as the Head of the Global Capital Markets Group. Mr. Paltrowitz also served as a member of the Board of Directors at OTC Markets Group from 2008 – 2011.
Mr. Paltrowitz holds a Bachelor’s degree in International Relations from Boston University and received his MBA from the NYU Stern School of Business.
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