Pink sheet stocks, also known as over-the-counter (OTC) stocks, are stocks that are traded outside of the major stock exchanges, such as the New York Stock Exchange (NYSE) and the Nasdaq. They are typically issued by smaller, less established companies that do not meet the listing requirements of the major exchanges.
Pink sheet stocks are traded through a network of dealers, rather than through a central exchange, which means that the prices and trading volume of these stocks can be less transparent and more volatile than stocks traded on major exchanges. Additionally, the companies that issue pink sheet stocks are not required to file financial reports with the Securities and Exchange Commission (SEC), which means that there is less information available to investors about these companies.
Due to the lack of regulatory oversight, the lack of liquidity and the lack of information available to investors, pink sheet stocks can be considered more risky than stocks traded on major exchanges. It’s important to conduct thorough research and to understand the risks involved before investing in pink sheet stocks. Additionally, it’s important to use caution when investing in pink sheet stocks, as they can be subject to manipulation and fraud.