The Pink Sheets Exchange lists stocks that don't qualify for traditional exchanges.
The Pink Sheets Exchange is an over-the-counter securities exchange that lists securities that are not qualified to be listed on a traditional exchange, such as stocks of very small companies or securities with low trade volume. Pink quotation system is run by Pink OTC Markets Inc., a private company that is not a broker-dealer and is not registered with Securities and Exchange Commission. The Pink Sheets Exchange lists quotes published by "market makers" and broker-dealers.
Instructions
1. Research the stocks you plan on buying. Because these stocks are so closely held, many of them are not listed on any other exchange and are not traded very often. So they are much riskier than stocks listed with New York Stock Exchange or the National Association of Securities Dealers Automated Quotation System. If the company issues an annual report, try to find it on the company's website, or request one from the company.
Check company reputation on the Pink OTC Markets website (see Resources section). The Pink Sheets market is broken into tiers: current information, limited information, no information, gray market and caveat emptor. The current information tier lists securities with sufficient level of disclosure, and the caveat emptor tier lists those that might belong to fraudulent companies. You can also contact your state's securities regulator to request some information about the company and its owners or check out the Securities and Exchange Commission's Electronic Data Gathering and Retrieval database.
2. Talk to your financial adviser. You will need the services of a Series 7 and Series 66 licensed professional. Request some information about the issuer of the stock you plan to purchase. Under the Securities Act of 1934, certain broker-dealers are required to furnish investors some information about the issuer. If you don't already have a brokerage account, you'll need to open one before you can buy stocks traded on the Pink Sheets Exchange.
3. Buy stocks. Review the "ask" prices for your desired security with your financial adviser and have her enter your order. The markets for Pink Sheets are open until 4 p.m. Eastern Standard Time; be sure to make decisions and notify your financial professional on time. Confirm the order and call your adviser in a week or so to verify that the order has been settled.
