17 CFR 240.15g-9 - Sales practice requirements for certain low-priced securities.
(a) As a means reasonably designed to prevent fraudulent, deceptive, or manipulative acts or practices, it shall be unlawful for a broker or dealer to sell a penny stock to, or to effect the purchase of a penny stock by, any person unless:
(2) Prior to the transaction:
(A) The broker or dealer has received from the person an agreement to the transaction setting forth the identity and quantity of the penny stock to be purchased; and
(B) Regardless of the form of agreement used to satisfy the requirements of paragraph (a)(2)(ii)(A) of this section, it shall be unlawful for such broker or dealer to sell a penny stock to, or to effect the purchase of a penny stock by, for or with the account of a customer less than two business days after the broker or dealer sends such agreement.
(b) In order to approve a person's account for transactions in penny stocks, the broker or dealer must:
(1) Obtain from the person information concerning the person's financial situation, investment experience, and investment objectives;
(2) Reasonably determine, based on the information required by paragraph (b)(1) of this section and any other information known by the broker-dealer, that transactions in penny stocks are suitable for the person, and that the person (or the person's independent adviser in these transactions) has sufficient knowledge and experience in financial matters that the person (or the person's independent adviser in these transactions) reasonably may be expected to be capable of evaluating the risks of transactions in penny stocks;
(3) Deliver to the person a written statement:
(ii) Stating in a highlighted format that it is unlawful for the broker or dealer to effect a transaction in a penny stock subject to the provisions of paragraph (a)(2) of this section unless the broker or dealer has received, prior to the transaction, a written agreement to the transaction from the person; and
(iii) Stating in a highlighted format immediately preceding the customer signature line that:
(A) The broker or dealer is required by this section to provide the person with the written statement; and
(B) The person should not sign and return the written statement to the broker or dealer if it does not accurately reflect the person's financial situation, investment experience, and investment objectives; and
(ii) Regardless of the form of statement used to satisfy the requirements of paragraph (b)(4)(i) of this section, it shall be unlawful for such broker or dealer to sell a penny stock to, or to effect the purchase of a penny stock by, for or with the account of a customer less than two business days after the broker or dealer sends such statement.
(c) For purposes of this section, the following transactions shall be exempt:
(1) Transactions that are exempt under 17 CFR 240.15g-1 (a), (b), (d), (e), and (f).
(2) Transactions that meet the requirements of 17 CFR 230.505 or 230.506 (including, where applicable, the requirements of 17 CFR 230.501 through 230.503, and 17 CFR 230.507 through 230.508), or transactions with an issuer not involving any public offering pursuant to section 4(2) of the Securities Act of 1933.
(3) Transactions in which the purchaser is an established customer of the broker or dealer.
(d) For purposes of this section:
(1) The term penny stock shall have the same meaning as in 17 CFR 240.3a51-1.
(2) The term established customer shall mean any person for whom the broker or dealer, or a clearing broker on behalf of such broker or dealer, carries an account, and who in such account:
(i) Has effected a securities transaction, or made a deposit of funds or securities, more than one year previously; or
(ii) Has made three purchases of penny stocks that occurred on separate days and involved different issuers.
Title 17 published on 2015-12-04
The following are ALL rules, proposed rules, and notices (chronologically) published in the Federal Register relating to 17 CFR Part 240 after this date.
Title 17 published on 2015-12-04.
The following are only the Rules published in the Federal Register after the published date of Title 17.
For a complete list of all Rules, Proposed Rules, and Notices view the Rulemaking tab.