Market Makers

OTC trades are carried out within one, or between, trading departments of brokerage firms. These brokerages are called "market makers" when they carry an inventory of the stock and quote the prices at which they are willing to buy and sell securities. The market maker is a broker-dealer who is prepared to buy or sell 100 shares of the stocks in which it makes a market. When a transaction is proposed, the market maker will give a price at which it would be willing to buy or sell. Note that the market maker's price applies only to the first 100 shares. The greater number of market makers for a particular stock, the more likely will there be a more true market price for the stock. The names of the market makers of securities traded in the pink sheets are listed in the pink sheets.

We advise our readers to stay away from the OTC market because of the limited information that is available to investors and because the OTC has been the host of tremendous number of fraud and stock manipulation over the years. Most companies in the pink sheets or OTCBB are not there because of choice. Most cannot meet the listing requirements of the NASDAQ market or other exchanges.

If a promoter indicates to you that the stock he or she is promoting is a NASDAQ company, visit the NASDAQ exchange and conduct a search to determine whether the promoter is misrepresenting the company he or she is promoting.

If you encounter any impropriety, please file a complaint with us to warn others and the SEC.