Pink Sheets
This article is licensed under the GNU Free Documentation License. It uses material from the Wikipedia article "Pink_Sheets".

Pink Quote, informally known as the Pink Sheets, is an electronic quotation system operated by Pink OTC Markets that displays quotes from broker-dealers for many over-the-counter securities. Market makers and other brokers can use Pink Quote to publish their bid and ask quotation prices. Starting in 1913, and prior to the creation of the electronic system in 2000, these quotes were printed on pink colored paper by the National Quotation Bureau. The term Pink Sheets is also used to refer to a market tier within the current Pink Quote system.

The Pink Sheets is not a stock exchange. To be quoted in the Pink Sheets, companies do not need to fulfill any requirements (e.g. filing financial statements with the SEC). With the exception of foreign issuers, mostly represented by ADRs, the companies quoted in the Pink Sheets tend to be closely held, extremely small, or thinly traded. Most do not meet the minimum U.S. listing requirements for trading on a stock exchange such as the New York Stock Exchange. Many of these companies do not file periodic reports or audited financial statements with the SEC, making it very difficult for investors to find reliable, unbiased information about those companies.

For these reasons the SEC views companies listed on Pink Sheets as "among the most risky investments" and advises potential investors to heavily research the companies in which they plan to invest.

Buying Pink Sheets shares is supposed to be difficult. Broker-dealers are enjoined to weed-out unsophisticated investors who may get an e-mail or word-of-mouth tip about a small stock. Many Pink Sheets stocks may only be registered for sale in one state so that the only way to purchase the stock is to make a DRIP/business/unsolicited/accredited or other sophisticated form of investment. Many registered representatives do not even know how or if they can sell them.

OTCQX market tier

OTCQX is a premium market tier offered by Pink OTC Markets that aims to raise the visibility of OTC-traded companies that, although not traded on a stock exchange, have operating businesses and provide substantial disclosure to the marketplace. The Pink Sheets has provided online stock tracking for many companies in its long history of online stock trading. . Similar to companies quoted on the Pink Sheets, OTCQX companies are not required to be fully SEC reporting companies (i.e. current with all SEC filings). Despite this, OTCQX companies must provide audited financials and certain disclosures to Pink OTC Markets.

OTCQX has two subcategories, PremierQX, the highest tier, and PrimeQX for companies that are too small for PremierQX, but otherwise meet the reporting requirements. The two categories are further differentiated into International and Domestic (US) companies.

Pink Sheets market tier

Effective August 1, 2007, all Pink Sheets traded companies that are not able or willing to meet the standards of OTCQX will be placed in one of the following disclosure categories. Designed to increase the amount of information available in all Pink Sheets traded companies, the disclosure categories do not signify issuer quality or merit of any security. Categorization is based on the level and timeliness of a company's disclosure and any category can include speculative, distressed, or questionable companies. Investors are encouraged to use caution when considering these companies for investment. ^[1]

Current Information

Indicates reporting companies that submit filings to regulators with powers of review and that make the filings publicly available or non-reporting companies that make current information publicly available on the Pink Sheets News Service. The Current Information category is based on the level of disclosure and is not a designation of quality or investment risk. This category includes shell companies or development stage companies with little or no operations as well as companies without audited financial statements and as such should be considered extremely speculative by investors.

Limited Information

Is designed for companies with financial reporting problems, economic distress, or in bankruptcy to make the limited information they have publicly available. The Limited Information category also includes companies that may not be troubled, but are unwilling to meet Pink Sheets' Guidelines for Providing Adequate Current Information. Companies in this category have limited financial information not older than six months available on the Pink Sheets News Service or have made a filing on the SEC's EDGAR system in the previous six months.

No Information

Indicates companies that are not able or willing to provide disclosure to the public markets - either to a regulator, a stock exchange or Pink Sheets. Companies in this category do not make Current Information available via Pink Sheets News Service, or if they do, the available information is older than six months. This category includes defunct companies that have ceased operations as well as 'dark' companies with questionable management and market disclosure practices. Publicly traded companies that are not willing to provide information to investors should be treated with suspicion and their securities should be considered highly risky.

Caveat Emptor - Buyer Beware

This section may require cleanup to meet Wikipedia's quality standards. Please improve this article if you can. (September 2008)

There is a public interest concern associated with the company, which may include a spam campaign, stock promotion or known investigation of fraudulent activity committed by the company or insiders. During a spam campaign, any stock that is not in the Current Information category will also have its quotes blocked on pinksheets.com.

Other OTC markets

Main article: Over-the-counter (finance)

OTCBB

The OTC Bulletin Board (OTCBB) is a listing of securities similar to the Pink Sheets, but operated independently. Many OTCBB companies are also listed on the Pink Sheets.

Grey Market

Securities that are not listed on any stock exchange, the OTCBB, or the Pink Sheets are considered to be in the Grey Market. Transactions are processed independently and not centrally listed or quoted. Trades are reported to a Self Regulatory Organization (SRO) who then passes the data on to market data companies.

References

External links

• Official website
• SEC information about the Pink Sheets
• SEC Listing and Delisting Requirements
• OTC Market Tiers
• Pink Sheets Investment