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Know All About Penny Stocks And Over The Counter Bulletin Board (OTCBB)

Penny Stock Investing is sometimes highly profitable. Have you ever thought of trading penny stocks? You must have heard a lot about penny stocks. So where do you find penny stocks? Penny stocks are listed on OTCBB ( Over The Counter Bulletin Board) and Pink Sheets. Sometimes you can find real gems on OTCBB and Pink Sheets. You never know. Penny stocks have risen from a few cents like $0.1 to $100 in just matter of days. Those who learn how to spot the right penny stock that is poised to shoot up make a lot of money within a short span of time.

So what is this OTCBB ( Over The Counter Bulletin Board)? OTCBB was started on trial basis in 1990 as a result of the Penny Stock Reform Act of 1990! Penny Stock Reform Act of 1990 manadated the Securities and Exchange Commission (SEC) to start an electronic system that could provide real time price quotes of penny stocks. For three years, this electronic system was tested on trial basis.

This electronic system was started to provide investors and traders to have the spread of price quotes and trade transaction information. In 1993, all firms whose stocks got traded as domestic Over The Counter Equities were required to report the trades on ACT ( Automated Transaction Service) within 90 seconds of the transaction. This mandatory requirement was meant to provide the investors and traders with the knowledge of how many trades are taking place for a particular penny stock, buy and sell volume in real time and the direction of the trade.

SEC approved the operation of the OTCBB on a permanent basis with some modifications in 1997. Up to that time a company was not required to file its quarterly and yearly financial reports. So many companies traded without disclosing any financial information. This made it difficult to research these companies.

An investor was hamstrung and was forced to rely on the press and communication with the company for information. A company would issue a press release that it made $50 million quarterly earnings with no information on its debt or expenses. This made it difficult for many investors to invest in these companies. Many investors stayed away from what could have been a lifetime opportunity.

To overcome this problem, SEC instituted the Eligibility Rule. This rule mandated all non reporting companies to report their financial information to SEC. If the company still did not report a small e was added to the end of it ticker symbol on OTCBB. A grace period of 30 days was given to that company to report and if not done within that period, it was delisted from OTCBB and relegated to pink sheets.

Those stocks that do not fulfill the Eligibility Rule of OTCBB get traded on the Pink Sheets. This small market represents the era of the Wild West with no rules and no oversight. Pink Sheets can provide exciting opportunities if you do your due diligence and research before you decide to invest in stocks listed on the Pink Sheets! You can find some hidden gems on the Pink Sheets!

Doug Baker, CEO of Applied Nanotech (OTCBB: APNT) interview


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