Penny Stock Reform Act of 1990 Definition

Penny Stock Reform Act of 1990

Definition

Act enacted by Congress in 1990 to protect beginning investors from manipulative and abusive practices that were widespread in the penny stock market before the legislation was enacted. As a result of this act, the Securities & Exchange Commission created Rule 419, which outlines what information needs to be disclosed and ultimately holds up Congress's mandate requiring broker dealers to provide further information about any individual purchasing penny stocks.

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