Penny stock policy adopted

The Ontario Securities Commission is calling for a risk disclosure statement in the marketing of penny stocks.

Effective June 1, such a statement will be provided (except in specified circumstances) to each potential investor prior to the first trade. Also, a written suitability statement must be obtained from each investor before a transaction.

A securities dealer selling penny stocks must calculate his markup based on the prevailing market price and not the dealer’s average cost.

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