By Michelle Price and John McCrank

WASHINGTON/NEW YORK (Reuters) – As many as 2,000 companies could disappear from the off-exchange “pink sheets,” long a favorite of retail investors, when a new rule aimed at stamping out fraud in this notoriously risky enclave of U.S. equities markets comes into effect next week.

Securities and Exchange Commission’s (SEC), rule increases investor disclosures. It requires off-exchange issuesrs, which are often penny stock companies that don’t meet main exchange listing standards to publicly disclose accurate and current financial information.

Around 2,000 of approximately 11,000 companies that are quoted on OTC Markets Group’s Pink Market in New York do not provide this information due to an oversight in their current rules.

OTC Markets attempted to inform companies and to encourage them to file their paperwork. However, it is not clear if they will do so by Sept. 28 deadline.

He estimated that the Pink Market operator might have to temporarily remove between 1000 and 2,000 stocks. Investors will not be able to access broker quotes via their online retail brokerage platforms.

This shakeup comes as retail trading is booming and has caused some brokerages, such as Charles Schwab/TD Ameritrade or Fidelity, to ban new purchases of affected stocks. It has left retail investors confused about whether they should bail out or continue to follow the rules in the hope that companies will comply.

Customers will still be able to trade their shares until Sept. 28th, but brokers warn of limited liquidity which often means that investors are getting a poor deal. Investors who still wish to be involved in businesses that haven’t complied with the rules may have to speak to their broker.

The new rule also applies to certain corporate bond and government issuers. Industry lobby groups warned this week about potential disruptions to the critical funding market.

Zinn stated that the rule will likely increase trading costs for these companies.

Zinn stated that “we are in agreement with SEC’s goal of providing as many disclosures as possible.” He said some companies might not want to share financial data with the public for legitimate reasons.

Some companies might not wish to pay the legal costs of compliant documentation, while other may not be interested in trading their stock.

Zinn stated that in such circumstances no quotes could cause more harm than good for investors.

A request for comment was not received by the SEC.

There are many issuers on the Pink Market, some of which include reputable foreign businesses looking to gain access to the United States. However, some of these companies are volatile and risky penny-stocks that have fallen into delinquency, distress or simply are shells.

SEC warned that fraud and manipulation are rampant in the off-exchange markets.

Other than a broker-dealer who had already verified the company, the SEC required broker-dealers to verify the financials of any company that offered stock quotes on the Pink Market. Even if the original review was years old and the company has since stopped publishing financial data, this requirement still applies. This exemption is now ended by the new SEC regulation.

Companies are required to give their investors transparency or be unable to quote them. Jim Angel, a Georgetown University professor said that this is a positive thing. The problem lies with the companies who choose to not disclose. The companies are punishing their shareholders for what they do.”

‘SHOW ME THE MONEY’

A new wave of amateur investors has piled in to penny stocks over the past 18 months, trading on low or no-fee retail broker platforms and hyping up their positions on social media.

In August, there were 601.1 billion transactions https://datawrapper.dwcdn.net/q3K2z/2 on penny stock markets tracked by the Financial Industry Regulatory Authority, a 130% jump compared with a year earlier, but down from a peak of 1.9 trillion transactions in February.

Shell companies that have liquidated defunct stores Blockbuster, Sears are among the stocks most affected by this rule.

China’s Luckin Coffee (OTC:) Inc, which last year de-listed from the Nasdaq following an accounting scandal, is among the most actively traded on the broader Pink Market, OTC Markets data shows.

Some retail investors are worried by the imminent rule change and have turned to social media to vent their concerns and get gossip about whether or not companies will follow through.

Twitter has been updated by several executives representing affected businesses to assure investors (NYSE:) of the imminent paperwork. These pledges could be another chance to buy for some thrill-seekers.

Stocktwits user LASPit posted the following message on Aug. 27, before their broker restricted purchases of cannabis producer CannTrust Holdings Inc. (TSX.) Inc., which is embroiled in a legal battle with regulators.

It’s all about us now. There is no stopping! You must show us the money! “Please show the money to me at the end!” A user with the handle GottamakedatMoney replied.