What is 'Form 211'

Form 211 is a type of form that is required by the Financial Industry Regulatory Authority (FINRA) or the Internal Revenue Service (IRS).

BREAKING DOWN 'Form 211'

Form 211 is required by FINRA and the IRS for different purposes.

1. FINRA’s Form 211 must be completed by a market maker and filed with FINRA to initiate or resume quotations for a security on the OTC Bulletin Board, OTC Markets or any similar quotation medium. Form 211 completion indicates that the market maker has satisfied all applicable requirements of SEC Rule 15c2-11, as well as the filing and information requirements of FINRA Rule 6432.

2. The IRS’s Form 211 is a form that must be submitted to the IRS by a “whistleblower” who seeks to claim a reward for providing information about tax evasion to the U.S. government.

FINRA

Since the OTC Bulletin Board (BB) operates as a dealer system, all securities quoted on it must be sponsored by participating market makers. A market maker registers such a security by completing Form 211 unless an exemption applies. Such exemption is granted to an issue if it meets certain criteria – for instance, if it is listed on a regional exchange and is current in its SEC filings – and requires completing a Rule 15c2-11 Regional Security Exemption Form.

As the OTCBB is only a quotation service for FINRA market makers and not a listing service, OTCBB issuers have no listing requirements to meet – unlike issuers listed on stock exchanges. While OTCBB issuers have no financial disclosure requirements, market makers must meet eligibility and regulatory requirements related to quotation display and quotation activity for such securities, which necessitates completing Form 211.

Form 211 seeks information about the issuer and the security in five parts:

  • Part 1 – Issuer and security information.
  • Part 2 – Issuer information.
  • Part 3 – Supplementary information: Required information includes the identity of persons for whom the quotation is being submitted, issuer trading suspensions within the past 12 months (if applicable) and any other material or adverse information relating to the issuer.
  • Part 4 – This section has to be completed for OTCBB quotation requests only. It seeks information on periodic financial reports filed by the issuer through the SEC’s EDGAR system, or filed with another regulatory authority.
  • Part 5 – Certification: This section has to be signed by the firm employee who can be contacted about information provided in the Form 211, as well as the firm’s registered principal responsible for the application. The signatories attest to the accuracy and reliability of the information accompanying the form.

Most market makers request additional information from the issuer, over and above the Form 211 requirements, as part of their due diligence.

The market maker must submit the completed Form 211 to the FINRA OTC Compliance Unit, along with two copies of the required issuer information, at least three business days before the security can be quoted on the OTCBB. Once the security has been cleared for quotation, Nasdaq’s Corporate Data Integrity Department notifies the market maker that it has been registered in the security and may commence quoting it.

IRS

A whistleblower can submit IRS Form 211 to claim a reward unless he or she was employed by the U.S. Department of the Treasury at the time of receiving or providing the information on the tax evasion, or is a present or former federal government employee who received the information in the course of official duties. Form 211 rewards can be substantial, up to 30% of the additional tax, penalty and other amounts the IRS Whistleblower Office collects.

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