- Pink Sheets
Pink Quote, informally known as the Pink Sheets, is an electronic quotation system operated by
Pink OTC Marketsthat displays quotes from broker-dealers for many over-the-counter securities. Market makersand other brokers can use Pink Quote to publish their bid and ask quotation prices. Starting in 1913, and prior to the creation of the electronic system in 2000, these quotes were printed on pink colored paper by the National Quotation Bureau. The term Pink Sheets is also used to refer to a market tier within the current Pink Quote system.
The Pink Sheets is not a
stock exchange. To be quoted in the Pink Sheets, companies do not need to fulfill any requirements (e.g. filing financial statementswith the SEC). With the exception of foreign issuers, mostly represented by ADRs, the companies quoted in the Pink Sheets tend to be closely held, extremely small, or thinly traded. Most do not meet the minimum [http://www.sec.gov/answers/listing.htm U.S. listing requirements] for trading on a stock exchangesuch as the New York Stock Exchange. Many of these companies do not file periodic reports or audited financial statementswith the SEC, making it very difficult for investors to find reliable, unbiased information about those companies.
For these reasons the SEC views companies listed on Pink Sheets as "among the most risky investments" and advises potential investors to heavily
researchthe companies in which they plan to invest.
Buying Pink Sheets
sharesis supposed to be difficult. Broker-dealers are enjoined to weed-out unsophisticated investors who may get an word-of-mouthtip about a small stock. Many Pink Sheets stocks may only be registered for sale in one state so that the only way to purchase the stock is to make a DRIP/ business/unsolicited/accredited or other sophisticated form of investment. Many registered representatives do not even know how or if they can sell them.
OTCQX market tier
OTCQX is a premium market tier offered by Pink OTC Markets that aims to raise the visibility of OTC-traded companies that, although not traded on a
stock exchange, have operating businesses and provide substantial disclosure to the marketplace. The Pink Sheets has provided online stock tracking for many companies in its long history of online stock trading. . Similar to companies quoted on the Pink Sheets, OTCQX companies are not required to be fully SEC reporting companies (i.e. current with all SEC filings). Despite this, OTCQX companies must provide audited financials and certain disclosures to Pink OTC Markets.
OTCQX has two subcategories, PremierQX, the highest tier, and PrimeQX for companies that are too small for PremierQX, but otherwise meet the reporting requirements. The two categories are further differentiated into International and Domestic (US) companies.
Pink Sheets market tier
August 1, 2007, all Pink Sheets traded companies that are not able or willing to meet the standards of OTCQX will be placed in one of the following disclosure categories. Designed to increase the amount of information available in all Pink Sheets traded companies, the disclosure categories do not signify issuer quality or merit of any security. Categorization is based on the level and timeliness of a company's disclosure and any category can include speculative, distressed, or questionable companies. Investors are encouraged to use caution when considering these companies for investment. [cite news
title=Pink Sheet Categories]
Indicates reporting companies that submit filings to
regulatorswith powers of review and that make the filings publicly available or non-reporting companies that make current information publicly available on the Pink Sheets News Service. The Current Information category is based on the level of disclosure and is not a designation of quality or investment risk. This category includes shell companiesor development stage companies with little or no operations as well as companies without audited financial statementsand as such should be considered extremely speculative by investors.
Is designed for companies with
financial reportingproblems, economic distress, or in bankruptcyto make the limited information they have publicly available. The Limited Information category also includes companies that may not be troubled, but are unwilling to meet Pink Sheets' Guidelines for Providing Adequate Current Information. Companies in this category have limited financial informationnot older than six months available on the Pink Sheets News Service or have made a filing on the SEC's EDGARsystem in the previous six months.
Indicates companies that are not able or willing to provide
disclosureto the public markets - either to a regulator, a stock exchangeor Pink Sheets. Companies in this category do not make Current Information available via Pink Sheets News Service, or if they do, the available information is older than six months. This category includes defunct companies that have ceased operations as well as 'dark' companies with questionable management and market disclosure practices. Publicly traded companies that are not willing to provide information to investors should be treated with suspicion and their securitiesshould be considered highly risky.
Caveat Emptor - Buyer Beware
There is a public interest concern associated with the company, which may include a spam campaign,
stock promotionor known investigation of fraudulent activity committed by the company or insiders. During a spam campaign, any stock that is not in the Current Information category will also have its quotes blocked on pinksheets.com.
Other OTC markets
OTC Bulletin Board(OTCBB) is a listing of securities similar to the Pink Sheets, but operated independently. Many OTCBB companies are also listed on the Pink Sheets.
Securities that are not listed on any stock exchange, the OTCBB, or the Pink Sheets are considered to be in the Grey Market. Transactions are processed independently and not centrally listed or quoted. Trades are reported to a Self Regulatory Organization (SRO) who then passes the data on to market data companies.
* [http://www.pinksheets.com Official website]
* [http://www.sec.gov/answers/pink.htm SEC information about the Pink Sheets]
* [http://www.sec.gov/answers/listing.htm SEC Listing and Delisting Requirements]
* [http://www.pinksheets.com/pink/otcguide/investors_market_tiers.jsp OTC Market Tiers]
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