The risks of penny stocks
February 28, 2008 7:10 pm BusinessIf you are thinking of investing in penny stocks, I would suggest that you thoroughly research the risks first. The most important thing to realise is that penny stocks are not the same as the stocks which are traded on the major markets (e.g. stocks on the NYSE). Penny stocks are OTC stocks - Over The Counter - and are privately traded - although in most circumstances, they are traded via a broker. Because they are not publicly traded, companies which issue penny stocks are not subject to the same sort of legislation that is applied to market publicly quoted stock. You must ensure that you have done all the research you can and are happy with the level of risk before you invest in penny stocks.