Penny Stocks Sec
penny stocks sec
Why You Must Create Your Own List of Good Penny Stocks
Penny stock trading is an intense and competitive field of investment and good penny stocks are not easy to find. If you think all the people on blogs, forums and distributing newsletters are providing good penny stock picks out of the kindness in their hearts, I’ve got some beach front property to sell ya.
Unfortunately, penny stock fraud is rampant and pervasive. The penny stock market has been a thorn in the SEC’s side for decades and the Internet has only made it worse (SEC stands for the United States Securities and Exchange Commission).
Because most penny stocks are traded via Over-the-Counter quotation services like the Pink Sheets and the OTCBB (Over-the-Counter Bulletin Board), many of them don’t need to file with the SEC and aren’t legally required to provide a certain set of public data. How do you know a penny stock really deserves to be considered a good penny stock if there is no verifiable data on it?
This makes it easier for unscrupulous brokers and fraudsters to contrive and manipulate data on penny stocks. It also makes it difficult for novices to obtain substantial, verifiable data on the companies whom these penny stocks represent. Thus we have several micro cap fraud schemes to watch for when we engage in penny stock trading.
Some examples are the pump and dump and the chop stock. The pump and dump is usually the origin of a stock someone on a forum is hyping and is very often the purpose of a penny stock newsletter. They artificially hype an unknown stock so that a crowd of novices will buy it up fast, temporarily inflating its value. But as soon as they successfully manage to cause its value to jump, they dump it. This is possible with penny stocks because their values are so low to start with and in general their values are highly volatile compared to blue chip stocks.
The chop stock is when an unscrupulous broker buys shares of an ultra low value nano stock at a discount then turns around and puts the hard sale on a novice investor. The investor thinks the broker is just executing his or her trade, when in fact the broker is scoring a profit off of the poor newbie penny stock trader.
So you see why you must learn to do your own research and due diligence in creating your own list of good penny stocks. You can make money from home with good penny stocks; but despite what hype you may come across, it isn’t an overnight shortcut to get rich. It involves real work.
Penny Stocks and SEC Rules?
I hold a small position in USGA. In February and again in April the former CEO disposed of 22 million and 21 million shares. By my count each transaction is approimately 10% of the outstanding shares. They were not sold on the open market. Doesn’t the recepient or buyer have to be disclosed? I heard there were different rules for penny stocks?
No the buyer doesn’t have to be disclosed. It’s extremely possible that they were sold on the third market which is a seller to buyer market. This is done commonly at a price slightly lower than the market. The reasons behind this is USGA has a very wide range of volume anywhere from about 20K to 2.5MM per day. If he sold 22 Million shares into the market it would have the potential to drive the price down (it’s somewhat possible). If a stock had some value such as a dollar it would be more obvious. This happens fairly frequently.
http://www.nasd.com/Resources/Glossary/NASDW_011169
third market- Over-the-counter trading of exchange-listed securities among institutional investors and broker/dealers for their own accounts (not as agents for buyers and sellers). Stock exchange members or non-members may trade large blocks of stock off the floor to avoid the transaction’s unsettling effect on the market, or avoid paying a commission on the sale. (See dealer market , fourth market , institutional investor , secondary market ).
You can probably figure out which broker handled the transaction but not what happened to it.
Penny Stock SEC Filing-What To Look For #1
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