OTC Markets' Warning Symbols Explained

The OTC Markets, which are divided into three tiers: the OTCQX Best Market, the OTCQB Venture Market, and the Pink Market, trade over 10,000 securities.

The Pink Market trades a wide range of firms, including overseas corporations with limited disclosure in the United States, penny stocks and shell companies, as well as troubled, delinquent, and dark companies who are unwilling or unable to offer information to investors. The amount of publicly available data varies from firm to company.

OTC Markets has designed investor protection symbols to warn against firms that may entail greater risk than others, in order to assist investors to better understand the risks connected with these securities and to give more transparency.

On otcmarkets.com, numerous of these symbols may show on a corporate quote page.

Here's a breakdown of what each one represents.

BANKRUPTCY

This indicator denotes that the firm has filed for bankruptcy or has indicated its intention to do so. This would exclude securities from trading on the OTCQX and OTCQB marketplaces.

CAVEAT EMPTOR

This caution, which literally means “Buyer Beware,” informs investors that the corporation is involved with a public interest matter. The Caveat Emptor flag might be triggered by a spam campaign, dubious stock marketing, known investigation of fraudulent activities performed by the firm or insiders, regulatory suspension, or disruptive corporate action.

CONTROL DISPUTE

When many parties claim ownership of a firm, a Control Dispute arises. Control conflicts are often preceded by upheaval in a company’s leadership structure, which can have a negative influence on its stock.

DARK OR DEFUNCT

Because the corporation is unable to give transparency to the public markets, investors are likely to have little to no information.

DELINQUENT

The corporation has not met its reporting responsibilities under Section 13 or 15(d) of the Securities and Exchange Commission Exchange Act.

PROHIBITED SERVICES PROVIDER

This flag indicates that a corporation has an active relationship with a service provider that the OTC Markets Group has designated as forbidden.

PROMOTION RISK

This symbol signifies that OTC Markets has cause to suspect securities is undertaking dubious public stock marketing at the moment. To put it another way, false information is being broadcast through some channel (social media, newsletters, etc.) in order to manipulate the market in some way.

SHELL RISK

Based on a review of the firm’s major yearly financial data, the Shell Risk label cautions that a company exhibits traits typical to shell corporations. Shell corporations have few or no assets and operations.

UNABLE TO CONTACT

This badge denotes that OTC Markets Group was unable to validate this company’s contact information.

Comments

OTC stocks more difficult to trade and deposit

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S1 Registration

A Form S1 represents the opening registration that a US firm must submit with the SEC prior to an Initial Public Offering. The Securities Act requires a registration statement, otherwise known as Securities and Exchange Commission Form S1, previous to security can be issued on a public exchange such as the NASDAQ, NYSE, or other exchanges. Foreign corporations can register with the SEC, but they must do so using the SEC Form F1. Corporations must fill out Form S1 to outline their intended use of capital proceeds, a description of their current business strategy and competition, and a brief prospectus for the new security, including offering pricing mechanism and any other dilution to other listed stocks. The SEC also mandates that any material business conducted between the corporations and its directors and external counsel be disclosed. Investors can access S1 filings online in order to do due diligence on new offers before they go public. As a result, businesses can use t...

Market Trends

When we speak about market trends that actually refers to anything that alerts the market your corporation operates in. So, there’s a good chance that different market trends are having an impact on your company’s operations simultaneously at this very moment. This imposes the following question- why would it be necessary to stay up-to-date on market trends and developments? That’s the way you evolve and remain competitive. Maybe you can’t take a race with the velocity of change connected with technology or legislation, but there is one thing you can do - take actions that can help you to expand in parallel with all those changes. So, there is no need for spending hours a week tracking trends research. It’s enough just to comprehend the diverse market trends which can help you identify what is actually appropriate for your company. This kind of in-depth research enables you to quickly adjust to dynamic market conditions and maintain your competitiveness. According to this an...

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