Another Classic Penny-Stock Tale

Today, it trades on what is known as OTC Pink, where the higher level of trading efficiency makes a move like the one seen last week possible. The OTC Pink marketplace has no financial standards or reporting requirements, though it does categorize stocks by the level and timeliness of the information they make available to investors.

Dig into the accountant’s statement in Medbox‘s most recent financials, filed Nov. 1, and you will find that Management has elected to omit substantially all of the disclosures required by accounting principles generally accepted in the United States of America. Management isn’t slacking or doing anything nefarious though the accounting statement rightly recognizes that if the omitted disclosures were included they might influence the users conclusions about the company’s financial position.

It’s just doing the same thing as thousands of other small, up-and-coming (or down-and failing) companies trying to minimize their regulatory burdens as they work their way into the mainstream of Corporate America. For average investors, however, the realm of OTC Pink or its sister, the OTCQB where companies must be registered with the SEC or a U.S. regulatory agency but where there are no financial or qualitative standards for being listed is the Wild, Wild West.

It’s the territory of fantastic stories of companies supposedly destined to be Americas next great financial success. It is the place where a stock tout can easily acquire a lot of shares, and then spend money to promote the company to unsuspecting investors whose purchases wind up fueling the promoters gains.

To read more, visit http://www.marketwatch.com/story/marijuana-dispenser-a-classic-penny-stock-story-2012-11-21

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