Ever wonder what that STOP sign is next to a ticker? Know what a Caveat Emptor is? This guide will help you sort it all out!
OTC Markets Group designates certain securities as 'Caveat Emptor' and places a skull and crossbones icon next to the stock symbol to inform investors that there may be reason to exercise additional care and perform thorough due diligence before making an investment decision in that security.
The Caveat Emptor Designation may be assigned when OTC Markets becomes aware of one or more of the following:
- Promotion — The security is the subject of stock promotion that may be misleading or manipulative. Promotional activities may include news releases, spam email, and newsletters, whether they are published by the issuer or a third party. See OTC Markets Group's Policy on Stock Promotion.
- Investigation of Fraud or Other Criminal Activities — There is an investigation or other indication of fraudulent or other criminal activity involving the company, its securities or insiders.
- Suspension/Halt — A regulatory authority or an exchange has halted or suspended trading for public interest concerns (i.e. not a news or earnings halt).
- Undisclosed Corporate Actions — The security or company is the subject of a corporate action, such as a reverse merger, stock split, or name change, without adequate current information being publicly available.
- Other Public Interest Concern — OTC Markets Group may determine that there is a public interest concern regarding the security. Such concerns may include but are not limited to promotion, spam or disruptive corporate actions even when adequate current information is available.
Indicates companies that are not able or willing to provide current disclosure to the public markets - either to a regulator, an exchange or OTC Markets Group. This category includes defunct companies that have ceased operations as well as 'dark' companies with questionable management and market disclosure practices. Publicly traded companies that are not willing to provide information to investors should be treated with suspicion and their securities should be considered highly risky.
Designed for companies with financial reporting problems, economic distress, or in bankruptcy, that make the limited information they have publicly available. Companies in this category have limited financial information not older than six months available on www.otcmarkets.com or on the SEC's EDGAR system.
Companies may qualify for Current Information by making disclosure available pursuant to one of the following Reporting Standards:
- SEC Reporting Standard — Companies are in compliance with their SEC reporting requirements
- U.S. Bank Reporting Standard — Companies are in compliance with their Bank Regulator reporting
- International Reporting Standard — Companies are traded on a Qualified Foreign Exchange
- Alternative Reporting Standard — Companies that do not met one of the above standards may make information available directly to investors on www.otcmarkets.com. Companies that choose to provide current information must publish their disclosure, including financial reports, as well as either an Attorney Letter or an Audit Opinion for review by OTC Markets Group's Issuer Compliance prior to being designated as "Current Information." For more information, please see the Pink Basic Disclosure Guidelines.
The Pink Open Market provides brokers a platform for transparent trading and best execution in any security. There are no financial standards or disclosure requirements. A wide spectrum of companies are traded on this market, including foreign companies that limit their disclosure in the U.S., penny stocks and shells, as well as distressed, delinquent, and dark companies not willing or able to provide information to investors.
The Pink Market is for professional and sophisticated investors with a high risk-tolerance for trading companies with limited information available and limited regulatory oversight. Investors are strongly advised to proceed with caution and thoroughly research companies before making any investment decisions.
OTC Markets Group segments Pink companies based on the information they provide to investors.
Are you looking for an OTC stock trading mentor? Or want to learn more about OTC market stock trading? Brad is an OTC stock trading mentor and you can join his mentorship here : https://wetradehq.com/mentors/OwnTheChaos