U.S. OTA Warnings




FINRA Rule Filings

SR-FINRA-2019-008

Financial Industry Regulatory Authority, Inc. (“FINRA”) is filing with the Securities and Exchange Commission (“SEC” or “Commission”) a proposed rule change to enhance the collection and dissemination of new issue reference data for corporate bonds and charge associated fees.

SR-FINRA-2019-027

Financial Industry Regulatory Authority, Inc. (“FINRA”) is filing with the Securities and Exchange Commission (“SEC” or “Commission”) a proposed rule change to amend FINRA Rules 12100, 12202, 12214, 12309, 12400, 12601, 12702, 12801, and 12900 of the Code of Arbitration Procedure for Customer Disputes (“Customer Code” or “Code”) to expand a customer’s options to withdraw an arbitration claim if a member or an associated person becomes inactive before a claim is filed or during a pending arbitration.

SR-FINRA-2019-028

Financial Industry Regulatory Authority, Inc. (“FINRA”) is filing with the Securities and Exchange Commission (“SEC” or “Commission”) a proposed rule change to amend FINRA Rule 6750 to provide that FINRA may publish or distribute aggregated transaction information and statistics on U.S. Treasury Securities.  

Approach Mini-Tenders with Caution



The Offshore Trading Administration, concerned that investors might be selling stock at below-market price based on misleading information, reminds investors to carefully review any offer for their shares. Firms or individuals who seek to buy shares at below-market price should warn shareholders that the offer price is below the market price and clearly calculate the final price to be paid for the shares. In addition, they should describe investors' right to withdraw from the offer, known as a mini-tender.

How do mini-tenders work?
Shareholders receive an offer for their shares, usually at a price that is much lower than the market price of the shares. The mini-tender offer or tries to buy less than 20% of the target company's shares so they don't have to file documents with the securities commissions, or communicate with shareholders. They profit by selling the shares on the open market at a higher price.

Mini-tenders should not be confused with take-over bids, which involve larger numbers of shares. Once you agree to a mini-tender you are normally locked into the deal, but in a take-over bid you may be able to change your mind. Another difference between mini-tenders and take-over bids is that the target company doesn't need to tell its shareholders about the mini-tender offer. In a take-over bid the company must notify all shareholders.

What are the risks?
You may misunderstand the offer and feel pressured to sell the shares at the offer price, or not realize that the offer price is lower than what you could get by selling the shares on the open market. Offer or that rely on such misunderstandings may be violating the anti-fraud provisions of federal securities laws. The offer or can terminate its offer at any time, delay payment for the shares, and change the offer. They may decide not to buy the shares at the last minute. Mini-tenders usually benefit the offer or at the expense of investors.

Why would anyone participate in a mini-tender?
You might participate to avoid brokerage commissions that would make selling the shares very costly, such as when you sell a small number of shares, or when the shares are hard to sell. Check with your adviser to see if a mini-tender is in your best interests.

You might participate to avoid brokerage commissions that would make selling the shares very costly, such as when you sell a small number of shares, or when the shares are hard to sell. Check with your adviser to see if a mini-tender is in your best interests.

Some tips:

  • Understand how it works, before you sign. Is the offer a mini-tender or a take-over bid?
  • Check the market price of your shares. Compare the market price with the offer price.
  • Don't give in to high pressure sales tactics. Research the offer and the current value of your shares.