Penny Stock Reform Act

(redirected from Penny Stock Reform Act of 1990)

Penny Stock Reform Act

Legislation in the United States giving the SEC greater authority to regulate penny stocks. Specifically, the Act gave the SEC the ability to oversee broker-dealers who primarily transact in penny stocks. Because penny stocks trade over-the-counter, the Act also mandated the creation of automated quotes for penny stocks.

Penny Stock Reform Act

A 1990 congressional act that expanded the SEC's authority over previously unregulated promoters who associate with broker-dealers to sell penny stocks. The act also placed restrictions on blank check offerings and required broker-dealers to disclose more information about penny stocks to customers. Perhaps most importantly, the act called for the creation of an automated quotation system for OTC stocks.