Most investors are weary about the

Most investors are weary about the Over the Counter Bulletin Board (OTCBB). That’s understandable, considering the amount of bankruptcies, shell companies, and de-listings that occur in over-the-counter markets. But there is a very large misconception that is widely shared among investors: that no over-the-counter company has to report current financial information. That is the case with the Pink Sheets, but not so with the OTCBB.

You see, before 1990 the over-the-counter securities market was a wild-west show. Not complete lawlessness, but close to it. So that year, the SEC started the Over The Counter Bulletin Board as part of the Penny Stock Reform Act. The OTCBB’s main purpose was to bring more quotation and last-sale information. By 1999, the OTCBB had evolved to the point where every company had to report regular financial information. This sets it apart from others, specifically the Pink Sheets, which don’t have reporting requirements.

There are absolutely no requirements for Pink Sheet companies. They don’t have to file regular and current financial information (although a recent classification system is slowly changing that), they don’t have a strict minimum market cap requirement, and they certainly don’t have to pay the couple hundred thousand dollars just to be traded on a major exchange.

The OTCBB, on the other hand, is a much stricter form of the Pink Sheets. Over the Counter Bulletin Board companies have to keep up with regular financial reporting. This truly makes all the difference in the world.

Here’s an example: