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viernes, 26 de septiembre de 2014

What are the Pink Sheets in the stock market?

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The Pink Sheets is a system where a trader can buy and sell stocks that are not listed on an stock exchange in the United States.

Formerly known as the "Pink Sheets," the OTC Markets Group, Inc. is a privately held company that provides trading services in the stock market for shares that are not listed on an organized exchange. According to the SEC, the Pink Sheets is not a stock exchange. The company simply facilitates the exchange of shares ​​between independent brokers.

The company was founded in 1913 as National Quotation Bureau (NQB). For decades, the NQB reported  quotes for both stocks and bonds, the publication of quotations on the Pink Sheets and Yellow Sheets, respectively, where they received their names from the color of paper they are printed on.

The Pink Sheets is not a stock exchange. To be quoted by the Pink Sheets, companies do not have to meet any requirements (eg filing financial statements with the SEC). With the exception of foreign issuers, represented by ADRs, the companies which are traded on the Pink Sheet tend to be very small, illiquid or bankrupt. Most of these companies do not meet the minimum requirements for admission to be included on a stock exchange such as the NYSE. Many of these companies have no regular reports or financial statements with the SEC, making it very difficult for investors to find reliable, unbiased information on businesses.

For these reasons, the SEC says that companies listed in the Pink Sheets are among the most risky investments and advises potential investors to carefully research before investing in these shares.

There is concern of public interest related to Pink Sheets. This may include a campaign of fraud of the promotion of dubious shares which can lead to a investigation of fraudulent activity committed by the company or its executives.

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