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Penny Stocks And Over The Counter Bulletin Board OTCBB
Author : Ahmad Hassam
Penny Stock Investing is sometimes highly profitable. Have you ever thought of trading penny stocks? You must have heard a lot about penny stocks. So where do you find penny stocks? Penny stocks are listed on OTCBB ( Over The Counter Bulletin Board) and Pink Sheets. Sometimes you can find real gems on OTCBB and Pink Sheets. You never know. Penny stocks have risen from a few cents like $0.1 to $100 in just matter of days. Those who learn how to spot the right penny stock that is poised to shoot up make a lot of money within a short span of time.
Over the Counter Bulletin Board (OTCBB) Market started on trial basis in 1990 as part of a reform process initiated under the Penny Stock Reform Act of 1990! SEC was mandated by this act to start an electronic system for the real time trading quotes of penny stocks.
This electronic system was started to provide investors and traders to have the spread of price quotes and trade transaction information. In 1993, all firms whose stocks got traded as domestic Over The Counter Equities were required to report the trades on ACT ( Automated Transaction Service) within 90 seconds of the transaction. This mandatory requirement was meant to provide the investors and traders with the knowledge of how many trades are taking place for a particular penny stock, buy and sell volume in real time and the direction of the trade.
Upto 1997, companies were not required to file its quaterly and yearly financial reports with SEC. So many companies kepy on trading without disclosing much of their financial information. This lack of information about the financials of a company made it difficult for analysts, potential investors and traders to research penny stock companies. OTCBB was made permanent by SEC in 1997 with some modifications.
An investor was hamstrung and was forced to rely on the press and communication with the company for information. A company would issue a press release that it made $50 million quarterly earnings with no information on its debt or expenses. This made it difficult for many investors to invest in these companies. Many investors stayed away from what could have been a lifetime opportunity.
SEC realizing this lack of public disclosure instituted the Eligibility Rule. What the Eligibility Rule stipulated was that all companies that traded on OTCBB were now mandated to report their financial informtion to SEC. If a company failed to report its financial statements to SEC, a small e was added to the penny stock ticker symbol of that company on OTCBB so as to alert the investor and traders about the lack of public disclosure. That company was given a grace period of 30 days to report its financial statements to SEC. If still some companies did not comply, they were delisted from OTCBB. Now their stocks could only be traded on the Pink Sheets.
Now, Pink Sheets are for those stocks that do not fulfill the Eligibility Rule of OTCBB. Pink Sheets do not have many rules or much oversight. This makes the Pink Sheets just like the era of Wild West. Still, Pink Sheets have many hidden gems listed on them and if you do your research right, you can uncover these hidden gems!
Author's Resource Box
Mr. Ahmad Hassam has done Masters from Harvard. Get these 3 FREE Great Investing Reports & discover a Stock Trading Course that can make you rich. Learn this 10 minutes a day highly profitable Swing Trading Strategy that works for stocks, forex and futures!
Article Source:
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Tags: penny stock, penny stock trading, penny stock investing, over the counter bulletin board, otcbb, pink sheets
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Submitted : 2010-01-12 Word Count : 1 Popularity: 475 Times Viewed: 31
