What are the penny supplies?

Stocks or shares are a type of security that denotes ownership in corporation. The shares holder's own entitlement to the percentage of the company's earnings and assets. Penny shares are shares that usually trade for less than $ 1, often for penny. For example, in the United States, Penny Stock Companies does not have to issue audited financial records. In general, shareholders have virtually no verifiable information about the internal functioning of these companies. As a result, it is much easier for initiates to act against shareholders' interests and the low price for sharing reflects this increased risk of fraud. Main exchanges such as New York Stock Exchange and Nasdaq National Market do not mention Penny stocks; Instead, they are included in Secondary Markets such as pink leaves. Liquidity, how easy it is to buy and sell stocks is much lower in secondary markets than for large companies. Lack of liquidity is particularly important for penny traders; Given the low price for sharing is not unusual that it isThe Dnotlivans hold hundreds of thousands or even millions of shares. When liquidity disappears, it is impossible to leave such large positions without drastically affecting the price of the shares.

Penny Stocks have a well -deserved reputation of fraudulent activities and over the years has developed a color vocabulary to describe different schemes. One common technique is known as the front run or pump and statement . A small group of traders quietly buy a large block of shares in inactive Penny events. Once their positions are loaded, they begin to spread extremely positively sounding Rumors about society in an effort to increase the price. Theoretically, it will allow them to sell for great profit. The trick of Converse, which spreads false rumors in an effort to reduce the price, is known as poop and sccoop .

Instructions for Sub-1 is not a hard and fast rule. A number of legitimate and fully reporting companies have found their shares awarded after the 2000 Big Market marketé in the pennies. While technically penny shares, the main exchanges usually provided short -term exceptions to such companies that allowed them to remain listed if they continued to meet the SEC reports.