FYI regarding grey sheets...
Lots of misinformation being bantered about here.
Here are some facts regarding trading the greys....
Risks of Grey Sheet Trading...
Grey Sheet Trading is inherently risky for the following reasons:
•If Gray Sheet stocks register to offer public shares, then you can only trade them through a broker that agrees to participate in that stock transaction. Such agreement is verbally expressed between the buyer and seller and is based on mutual good will.
If such agreement is broken by either participant before the transfer of shares occurs, there is little, if any, legal recourse to make the participant comply. Broker commissions for such transactions are far higher than for other securities - the broker's cut for services rendered.
•No way to track bids and asks and difficult to figure what the stock is actually worth.
•Very difficult to impossible to find good fundamental and technical information on these stocks.
•Such stocks mostly have very little history and may fold any time.
•Many of these stocks are likely companies in name only with little to show.
•Most of these stocks are very illiquid - difficult to buy and may be more difficult to sell.
•Management has more control over the shares.
Risks are Limited in some important areas:
The SEC has established certain regulations for Gray Sheet stocks that limit risks to investors, as follows:
•The stock may not be solicited or advertised - so pump-n-dump scams by broker, mail, fax, etc are limited.
•Grey Sheet stocks that do have a public offering of shares cannot be shorted. This is a benefit in that unreasonable plunges in share values are minimal because broker-dealers and other investors and scam artists cannot short the stocks by law.
Gray sheet stocks usually trade higher than they would when officially traded on one of the exchanges considering the size of the company, but that is mostly because so few shares exist with such low market cap - less than $1 million usually - in comparison to publicly traded companies.
Whoever is careless with the truth in small matters cannot be trusted with important matters.
– Albert Einstein
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