Virtu Financial Urges SEC to Tighten Listing Rules for Risky Penny Stocks

​Virtu Financial has formally petitioned the U.S Securities and Exchange Commission (SEC) to implement stricter regulations regarding the listing of high-risk "penny stocks" on National Securities Exchanges.

The petition highlights concerns about these stocks' susceptibility to pump-and-dump schemes and other forms of market manipulation. Despite the Penny Stock Reform Act's intent to protect investors by limiting such listings, current exchange rules allow these stocks to remain listed for extended periods, often without meeting stringent continuing listing requirements.

The petition emphasizes the disparity in corporate governance practices between these stocks, primarily foreign-based, and those of U.S.-based issuers. Many foreign-incorporated companies cited in SEC filings acknowledge lesser shareholder protections compared to U.S. standards, posing challenges for investors in safeguarding their interests.

Virtu urges the SEC to mandate rigorous initial listing standards that include limitations on dilutive capital structures and enhanced disclosures to mitigate risks associated with these volatile stocks. The proposed reforms aim to uphold investor protection standards and maintain market integrity on National Securities Exchanges.