July 20, 2022


What is happening: The SEC published a new interpretation of Rule 15c2-11 in 2021, indicating it would begin enforcing the rule in debt markets. Rule 15c2-11 prohibits broker-dealers from publishing quotes on securities in the OTC markets unless they collect and review specified issuer information that must be publicly available.

Historic reversal. Originally intended for equity markets, Rule 15c2-11 was implemented in 1971 to reduce fraud in the penny stock market. The new interpretation of Rule 15c2-11 represents a significant change in regulation, as it is the first time in its 50-year history the rule will apply to fixed income markets.

Why it matters to 144A issuers. Rule 144A provides a safe harbor from Securities Act registration for the sale of securities to qualified institutional buyers. However, in conflict with the provisions of Rule 144A, the new interpretation of Rule 15c2-11 will require private issuers of 144A securities to make public their financial statements so broker-dealers can offer to buy and sell their securities.

Consequences to 144A issuers

  • Impeding price discovery, making it more difficult and expensive to raise capital.
  • Anti-competitive, issuers must make sensitive financial information publicly available.

No-action relief. The SEC issued no-action relief in response to industry concerns. 144A issuers are required to comply with Rule 15c2-11 starting January 4, 2023.

What's next: Formal rulemaking is needed. SEC staff published the new interpretation of Rule 15c2-11 without notice or comment. CCMC encourages the SEC to extend the existing no-action relief pending completion of a formal rulemaking process.

Share your concern. Contact Kristen Malinconico at