The Pink Sheets used to be printed on pink paper and contained the bid and ask prices of penny stocks which were not listed on major exchanges.
Today the Pink Sheets are operated online by OTC Markets Inc but fulfill the same role. The Pink Sheets will list penny stocks which may or may not be found on other micro-cap exchanges.
To be listed on the Pink Sheets, there are no listing requirements, such as cap-size; companies must only file one form and which provides some current financial information, but update information may not be required as time goes on, and hence companies listed only on the pink sheets are considered the most speculative and risky equity plays an investor can make.
Other over the counter exchanges, such as the OTC Bulletin Board, now require registration with the SEC and are overseen by FINRA, which has only been the case for the last few years. The Pink Sheets remain about as risky as they were before the rest of the OTC market became more regulated.
Stocks traded here are generally valued at less than $1 per share, and have relatively large bid-ask spreads, high liquidity risk, and low transparency. Such environments are rife with opportunities for fraudsters to pump-and-dump and engage in similar tactics to exploit the lack of information that investors are privy to.
The SEC has cracked down on some of that activity on the OTCBB, and will stop trading temporarily if conditions seem suspicious, but it is very hard with so much small activity to regulate everything.
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