The SEC’s Office of Investor Education and Advocacy is issuing this Investor Bulletin to answer some of the questions we receive from investors about what happens at the end of a trading suspension.
Why would the SEC suspend trading in a stock?
The federal securities laws generally allow the SEC to suspend trading in any stock for up to ten business days if the SEC believes the suspension is necessary to protect investors and the public interest. Some examples of when the SEC may suspend trading include:
- Questions arise about the accuracy of publicly available information, including in company press releases and reports, about the company’s current operational status, financial condition, or business transactions; or
What happens after a suspension depends on the market where the stock trades – different rules apply in different types of markets.
- Over-The-Counter (OTC) Stocks
A quoted market for stocks that trade in the OTC market, which includes stocks quoted on DBOT ATS, Global OTC ATS, and OTC Link ATS, among other venues, does not automatically resume at the end of a trading suspension period. Before an OTC stock can resume being quoted after a suspension, a broker-dealer must fulfill the requirements of certain SEC and Financial Industry Regulatory Authority (FINRA) rules. For additional information on these rules, please read our Investor Bulletin: Trading Suspensions.
Stocks that trade on a national securities exchange will resume trading automatically when a suspension ends.
Use caution before buying or selling any stock after a trading suspension ends. The SEC may continue to investigate a company to determine if it has violated securities laws and rules, but will not make any comments on the status of any investigation. The SEC will publicly announce any enforcement action against the company.
How can investors learn more about trading suspensions?
For additional information relating to trading suspensions and potential risks of investing in low-priced stocks, see:
Visit Investor.gov, the SEC’s website for individual investors.
The Office of Investor Education and Advocacy has provided this information as a service to investors. It is neither a legal interpretation nor a statement of SEC policy. If you have questions concerning the meaning or application of a particular law or rule, please consult with an attorney who specializes in securities law.