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LOM Withdraws From OTC Markets
Hamilton, Bermuda: 8th June 2005 - The Board of Directors and management of LOM Holdings Limited have decided that effective 30th June 2005 LOM will dramatically curtail client activity in the US bulletin board and pink sheet over the counter markets. LOM has, over the past several years encountered increasing scrutiny and negative publicity from this one area of our business in particular - the US OTC Bulletin Board market.
This is the market that trades the most junior US securities and involves micro cap stocks. It's fraught with risks and has become very difficult from a risk management perspective. In addition, the market is regulated in such a way that LOM, as agent in a transaction, is at risk from any wrongdoing or alleged wrongdoing by our customers, despite having met all the relevant regulations required of us in our jurisdictions.
LOM recognizes the need for change to ensure customers do not breach enormously complex regulations, which have become increasingly tough and excessively risky.
As a result, the brokerage subsidiaries of the LOM Group will dramatically restrict dealing in the US OTC Bulletin Board market effective Thursday, 30th June. The only exception to this will be where the client is well known to the group and where the OTC portion of their transactions form only a small percentage of the whole portfolio and even then there will be restrictions on the manner in which such transactions are executed.
All other business will continue as usual uninterrupted.
It is with regret to our loyal clients that LOM has decided to drastically curtail activity in this area. Customers will no longer be able to deliver OTC securities into their accounts at LOM, nor will they be able to deliver securities to any third party account internally or externally. Customers who hold OTC securities at LOM may sell those securities or alternatively deliver them out to the organization from which they were received in the same manner as such securities were delivered to us.
LOM regrets withdrawing from any market and we will suffer an adverse financial impact as a result. However, we recognize that although we have been fighting regulatory battles on principle, it is a war that is being lost at significant cost to us - both from a financial and reputational perspective; and we respect this reality.
We're rolling up our sleeves and working hard to get LOM firmly back on target. Removing this piece of the business will enable the other successful areas of the business to flourish untarnished by the negative publicity trading in the over the counter market has attracted.