Kraig Biocraft Laboratories Inc (KBLB)

[trainer2]

Some info on brokerages selling stocks costing less than 5.00.



Congress decided that it needed to make it harder for individual investors to buy bad stocks, deciding to make $5 the dividing line between "good" and "bad" stocks. And with new rules in place, it immediately became all that much harder for brokers to pitch stocks that trade for less than $5 per share.

According to the Securities and Exchange Commission, brokers can't process trades in stocks worth less than $5 without following a laundry list of rules and processes. Before transacting in penny stocks, brokers must first:

Approve the customer for the transaction
Receive a written agreement for the transaction
Provide the customer a disclosure statement that describes the risk of investing in penny stocks
Disclose the current market price for the stock
Disclose how much the firm and broker will receive for processing the trade
The rules are reflective of the times in which they were adopted. In the 1980s and 1990s, commissions were generally assessed on a per-share basis, rather than on a flat fee basis that is the standard today. Thus, brokers made more by selling 2,000 shares of a $1 stock than 10 shares of a $200 stock, which is why penny stocks were commonly pitched by the sleaziest of stockbrokers, and why Congress targeted penny stocks with legislation.