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.
References in periodicals archive ?
Regulators estimate that American investors are being defrauded of some $6 billion annually - three times the peak amount during the 1980s before enactment of the Penny Stock Reform Act of 1990.
In addition, if delisted from The Nasdaq SmallCap Market, CinemaStar's securities would be considered "penny-stock" securities, as defined in the Securities Exchange Act of 1934, and CinemaStar's securities would be subject to the "Penny-Stock Disclosure Rules" as provided in the Securities Enforcement Remedies and Penny Stock Reform Act of 1990 and subsequent amendments.