When you buy low-priced shares of a small company (e.g., you buy a stock that trades in the “over-the-counter” (also called OTC) market), you likely are investing in penny stocks or microcap stocks. Microcap stocks are particularly vulnerable to fraudulent investment schemes because there is often limited publicly-available information about microcap companies. Be cautious if you see red flags of potential microcap fraud such as: •SEC trading suspensions (the SEC has suspended public trading of the security) •E-mail and fax spam recommending a stock •Insiders own large amounts of stock •False or exaggerated press releases
Even in the absence of fraud, microcap stocks are among the most risky: • Information about microcap companies can be extremely difficult to find, making it less likely that quoted prices in the market reflect full and complete information about the company. • Many microcap companies are new and have no proven track record. Some microcap companies have no assets, operations, or revenues. Others have products and services that are still in development or have yet to be tested in the market. • The stock prices of microcap companies historically have been more volatile than the stock prices of larger companies. Since low-priced stocks trade in low volumes, any size trade can have a large percentage impact. • The stock of microcap companies are often quoted on the OTC Bulletin Board (also called OTCBB) or OTC Link LLC (also called OTC Link). OTCBB and OTC Link do not require companies to apply for listing or to meet any minimum financial standards. Most of these companies do not meet the minimum listing requirements for trading on a national securities exchange, such as the New York Stock Exchange or the Nasdaq Stock Market.
News 
Market Data 
Discover 
AI
