More Transparency On Pink Sheet Stocks
In the financial markets information is everything. Those with information make smarter moves quicker and are better placed to make sound investment and trading decisions. Some of the leading stock trading and investment firms have whole buildings devoted to their research teams. Some of the brightest minds from some of the best schools are at work in deciphering every morsel of news and information that is out in the open and even more care is taken to extract information that is not out in the open.
Long considered an extremely risky market, the OTC (Over-The-Counter) or the penny-stock market has developed and is in the process of streamlining its disclosure process. What had been a market where public information was meager as compared to what the company insiders and handlers knew, has now embarked on attempts to help the average person get more information about the company one is interested in.
The OTC market will still not be on par with the information that is publicly available for the publicly traded and listed companies on the major exchanges. However, the first step in the right direction is being taken as beginning in May 2007, more classification and delineation is being made available to the general public.
Among the categories under which penny-stocks may be classified include Emerging Equities, SEC Current, Current Information and so on. Based on the disclosure to the public and the level of adherence to SEC guidelines and the GAAP accounting principles, the pink-sheet stocks will be appropriately classified. This allows far more disclosure and openness for the OTC market participants, whether as a company official or as an investor or a trader. Moreover, the classification helps narrow one’s focus down to only those companies that meet certain criteria as considered to be important by the user. For example, a trader who wants to deal only with those companies that are rather open in their disclosure can look under the Emerging Equities list and can do so with ease. On the other hand, those that are looking only for distressed companies but have offered some information in the most recent six months can look up the list of “Limited Information” classification.
While the research that goes into one’s decision is not eased much by such new classification categories, one’s focus is now greatly limited and one can use one’s resources and time more wisely and effectively. In a market where time and resources are very valuable, this move definitely is the right step forward in the right direction.