The over-the-counter (OTC) market for securities, often referred to the microcap market, is designed for and comprised of companies with small amounts of assets and low stock prices. More than 10,000 companies have shares that trade on the OTC market’s two inter-dealer quotation systems: the OTC Bulletin Board (OTCBB) and OTC Markets Group, Inc. (f/k/a Pink Sheets). While companies that trade their stocks on major exchanges undergo a formal application process and must meet minimum listing standards, companies quoted on the OTCBB or the OTC Markets do not have to apply for listing or meet any minimum financial standards.
Frequently Asked Questions
Watch out for these “Red Flags” when investing in Microcap Stock
What if I Want to Invest in Microcap Stocks?
To invest wisely and avoid investment scams, research each investment opportunity thoroughly and ask questions. These simple steps can make the difference between profits and losses:
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- These data are based on analysis by the Division of Economic and Risk Analysis (DERA) of over 4,000 litigation releases over 2003 to 2012 (available at http://www.sec.gov/litigation/litreleases.shtml).
- The x-axis depicts the first year of the alleged violation period.
- Groups are based on the primary classification of the alleged violation.
- This chart includes alleged violations committed by parties unrelated to the OTC-traded issuer.
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