Can you sell Pink Sheet stocks short?

Answer 1

Yes - the SEC permits it. In fact, as of July 3, 2006, the SEC will require reporting of short interest in Pink Sheet stocks under a new rule.

There are 2 difficulties, however, in selling Pink Sheet stocks short:

1) finding a broker that will do it; and

2) finding an inventory of shares that can be loaned for short sale.

Many brokers will not permit short sales of Pink Sheet stocks because of the risk that volatility in the stock will result in a large negative equity position that the investor cannot cover. Then, the brokerage would be required to buy in the shares to close the position - and if the investor could not come up with the money, the brokerage firm is on the hook.

"Naked" short sales are not allowed, which means every short sale must be accompanied by "borrowing" the stock from an owner with a long position to sell. Pink Sheet stocks often are not very liquid - there are not a lot of investors with these shares, so many brokerage firms will not have any inventory.

Bottom line: yes, it can be done and it is done - but it may be difficult to do in practice.

Answer 2

In general, stocks available for shorting are rather large, established companies, that have been around awhile. I don't think you are talking about the IPO pink sheets, which wouldn't be available for shorting, since there isn't any stock to borrow.

Since you haven't gotten any answers, I'll try to answer your question somewhat.

If you have an account, and trade, you can call your broker, and he will know which stocks can be sold short.

I got the definition of Pink Sheets from Wikipedia so you'll know why we're confused a little with your question. Are you talking about companies listed on that particular quote system?

Pink Sheets is an electronic system, published by Pink Sheets LLC, to display bid and ask quotation prices. The name "Pink Sheets" stems itself from an earlier paper-based system, which was printed on pink paper. It is mainly used by stock brokers trading OTC securities.

You might want to restate your question a little more clearly.

Answer 3

I wish I could. I would be a millionaire by shorting the stocks - mostly pink sheet stocks - that people tout as the next big thing in my email box. On average these "hot picks' are down 80%. None are up. If I could have shorted them I would have an 80% return.

Answer 4

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Answer 5

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Answer 6

Normally, you can't. Brokers don't keep loanable inventories of those...