Can I buy a pink sheet stock and an OTC stock?

**zengmin** Tue Nov 15, 2005 2:47 pm

Blast,
What's the difference between a pink sheet stock and an OTC stock? And can insiders buy/sell an pink sheet stock without reporting?
thank you

**xxyygorich** Tue Nov 15, 2005 2:54 pm

Please don't ask Blast this kind of question. It is wasting his time.

Just do gooling.

Over-the-Counter

A security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, etc. The phrase "over-the-counter" (OTC) can be used to refer to stocks that trade via a dealer network as opposed to on a centralized exchange. It also refers to debt securities and other financial instruments such as derivatives, which are traded through a dealer network.

The reason that a stock is traded over-the-counter is usually because the company is small, making it unable to meet exchange listing requirements. Also known as "unlisted stock", these securities are traded by broker-dealers who negotiate directly with one another over computer networks and by phone.

Although Nasdaq operates as a dealer network, Nasdaq stocks are generally not classified as OTC because the Nasdaq is considered a stock exchange. As such, OTC stocks are generally unlisted stocks which trade on the Over the Counter Bulletin Board (OTCBB) or on the pink sheets. Be very wary of some OTC stocks, however; the OTCBB stocks are either penny stocks or are offered by companies with bad credit records.

Instruments such as bonds do not trade on a formal exchange and are, therefore, also considered OTC securities. Most debt instruments are traded by investment banks making markets for specific issues. If an investor wants to buy or sell a bond, he or she must call the bank that makes the market in that bond and asks for quotes.

Pink sheets

A daily publication compiled by the National Quotation Bureau with bid and ask prices of over-the-counter stocks, including the market makers who trade them. Unlike companies on a stock exchange, companies quoted on the pink sheets system do not need to meet minimum requirements or file with the SEC. Pink sheets also refers to OTC trading.

The pink sheets got their name because they were actually printed on pink paper. You can tell if a company trades on the pink sheets because the stock symbol will end in '.PK'

zengmin wrote: Blast,
What's the difference between a pink sheet stock and an OTC stock? And can insiders buy/sell an pink sheet stock without reporting?
thank you

**blast_investor** Tue Nov 15, 2005 3:04 pm

Well the best place for this kind of question is in
beginners thread of VIF forum, this topic is not suitable for BIRTP private club.

VIF Forum can definately be used for helping out this kind of issues.

**zengmin** Tue Nov 15, 2005 3:14 pm

Thanks for the info, but it still not clear to me what is the difference between them, that's why I'm asking. Are they refering the same thing? then why some stock get an .PK ticker and some got .OTC? Also are there some restrictions for insiders to buy/sell such stock. thanks.

**blast_investor** Thu Dec 01, 2005 4:39 pm

Hi zengmin,

Sorry for the late answer for you, I did not realize your question was not answered.

OTC and Pink stocks are not exactly same in terms of location of trading. OTC stocks have slightly higher standard in terms of filing and information sharing where pink sheet stocks do not have any obligation to share any thing out there.

However, they are similar enough that investors usually treat them same.

These kind of stocks do not have any obligation for insiders to file any information, such as insider buying or insider selling. In other words, they are pretty much like a private company, the only difference is that their stocks are traded at pinksheet or OTC market while a pure private company will not have its stocks traded in exchange publicly. By the way, although private company stocks or ownership is not traded, owners of private company can always sell their ownership or stocks by ways of newspaper ads or words of mouth to another person.

However, in order to help investors, quite many OTC and pinksheet stocks do share information such as quarterly earning or annual report. Lots of company in pinksheet or OTC market actually file 8-K (like news or press release) as way of information sharing. There is no obligation for them to do that, but they do that any way.

**zengmin** Sun Dec 04, 2005 8:40 pm

That is exactly the answer I want :) Thank you very much, blast

**blast_investor** Thu Jan 19, 2006 10:57 am

Almost any broker in US can trade pink sheet or OTC stocks just like regular listed stock. Just name a few, Ameritrade, Etrade, TD Waterhouse, etc.

Only IB (interactive broker) is reported to have difficulty in trading pink sheet stocks.