SK3 Group Inc. (SKTO)

[Ed the Trader]

SAMSUNG is a gray sheet company...are they a scam?

Samsung is one of the largest corporations on the planet. The Samsung Group consists of roughly 80 different principal subsidiary and affiliate companies. Because Samsung is a South Korean corporation, not an American corporation, its companies are not listed on American stock exchanges. Nineteen of these are listed on the Korean Exchange (KSC), including: Ace Digitech, Cheil Industries, Cheil Worldwide, Credu, Imarket Korea, Samsung Card. Samsung C&T Corporation, Samsung Electro-Mechanics, Samsung Electronics, Samsung Engineering, Samsung Fine Chemicals, Samsung Fire, Samsung Heavy Industries, Samsung Life Insurance, Samsung SDI, Samsung Securities, Samsung Techwin, Shilla Hotels and Resorts, and S1 Corporation.

Because American investors often do not have access to trading on foreign stock exchanges, American stock brokers will often list popular foreign stocks as gray market stocks to facilitate trading of foreign market stocks by American investors. This sort of access is provided by American stock brokers as a convenience for American investors to save them the trouble of figuring out how to gain a brokerage account in a foreign country to allow direct access to a stock exchange in another country, in this case, the Korean Exchange. Of course, American stock brokers also earn sizable additional commissions by providing this convenience to its customers.

Samsung has at least five different tickers that are traded on the gray market in this manner:

SSNXF - SAMSUNG CLIMATE CONTROL CO LTD SHS Common Stock
SSEMF - SAMSUNG ELECTRO MECHANICS CO SHS Common Stock
SSNLF - SAMSUNG ELECTRONICS CO LTD ORD Common Stock
SMSHF - SAMSUNG HEAVY INDUSTRIES CO SHS Common Stock
SSNNF - SAMSUNG ELECTRONICS CO LTD PFD SHS NON VTG Preferred Stock
SSDIF - SAMSUNG SDI CO LTD PFD SHS NONVOT Preferred Stock

You will notice that all foreign stocks have an "F" as the fifth letter of their ticker symbol. This a standard ticker suffix designation for stocks of foreign corporations.

Samsung Electronics (SSNLF) is probably the most popular of the Samsung stocks as Samsung Electronics is the corporation that produces all of the cell phones, televisions, and other popular consumer electronics.

However, like all of the other Samsung corporations that are traded as gray market stocks in the United States, its primary exchange is the Korean Exchange in South Korea.

None of this is remotely related to gray market stocks which are there as a result of a SEC suspension. SKTO is only (as of 6/20) traded in the American gray market. If the American gray market vanished, so would SKTO.

If the American gray market vanished, Samsung would hardly notice any difference in its trading volume because it is traded by people all over the world. In that case, the Americans that wanted to trade Samsung would simply obtain a brokerage account with a South Korean broker to continue trading.