This page is designed to provide you, the beginning investor, with general information about penny stocks and the markets in which they are traded. Because there is so much fraud involving penny stocks, this page serves mostly to warn potential investors against becoming involved with penny stocks. The trick is to be able to spot the potential fraud. We hope this page will help you do just that. There is no set, accepted definition of penny stock.
Some people define it as stock priced under one dollar, some under five dollars.
The NQB's securities lists and price information, printed on pads of long, narrow sheets of pink paper, have, for all practical purposes, no meaningful listing standards, and price information is sometimes difficult, if not impossible, for the small investor to obtain. Obviously, small investors do not have access to those traders and must rely on their stockbroker for accurate price information. In most securities transactions, your broker-dealer acts as your agent, arranging a transaction directly between you and a third party. In compensation for arranging that trade, you pay your broker-dealer a commission. In some instances, the broker-dealer has the security you seek to purchase in inventory, or wants the security you wish to sell.