What are Pink Sheet and OTCBB stocks?

Answer 1

while i agree with everything David E said, i just wanted to clarify what he said about the risks associated with these stock.

While he is coorect that there are some very important requirements to be listed and so you should beware,he almost seemed to imply that they could not be trusted.

This is not the case most ofthe time.

The number one reason stocks trade on the bulliten board and not on an exchange is due to stock price. The nasdaq, where many of these stocks would be listed has a requirement that the stock trades above $2 per share. If it trades below that for an extended period of time, it is automatically delisted and put on the bulliten boards.

An example of this is Lucent, one of the biggest companies in the country. After the collapse ofthe market in 2001 Lu was within a few days of being delisted when it recovered.

The major risk with these stock, also called penny stocks, is that they are highly speculative. They are not making money and may never make money, so there is high risk and high reward.

Like David E said, dont invest in these unless you do rigorous research first. There are some jems to be found, but there are many more dud destined for bankruptcy (of not already there).

Answer 2

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Answer 3

They are both referring to essentially the same thing: companies which have not met the requirements for listing on a regular stock exchange (like the New York Stock Exchange, or Nasdaq for example)

.Since these unlisted companies were not traded on an exchange, they were called "Over The Counter" stocks (OTC), because you would have to buy them like you would at a store, the brokers would sell them to you, and you in turn would have to find someone to buy it from you if you wanted to sell.
Eventually, this trading in Over The Counter stocks got organized into lists, printed on pink paper, and became known as the Pink Sheet stocks. Finally, this became organized into a Bulletin Board system, and so you have the OTCBB (Over the counter Bulletin Board) which keeps track of the buying and selling in these unlisted companies.

However, it should be noted in case you are thinking of buying one of these, that they are unlisted for very good reason; the exchanges have important listing requirements including good accounting practices, regular reporting of financial results, and share liquidity among other things that ensure investors are not conned out of their money. Buying any unlisted company is highly risky unless you are intimately familiar with the business in all aspects. Caveat Emptor. Hope this helps!

Answer 4

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Answer 5

OTCBB are stocks which are not listed on the NASDAQ. Over-the-counter-bulletin-board stocks

Pink Sheets offer information as to the status of OTCBB stocks.