Talk:Penny stock

October 2006

There is no benefit from this attempted cleanup, in my opinion. The article is not long enough to require Bold Headers after every third sentence. "Penny Stock" is a very North American term, the article indicates Penny Shares in the UK are a similar but since different laws apply; Penny Shares should have a separate article. However reverting link edits constantly inserted by penny stock promoters is welcome and needed. --Valwen 05:11, 14 October 2006 (UTC)

Prohibited external links

As the editor above noted, penny stock promoters constantly insert external links to their promotion site, some of which attempt to look informational and may not be picked up by those who monitor recent changes. Removing/reverting them contributes to the integrity of Wikipedia. This article needs frequent surveillance. OccamzRazor (talk) 03:43, 27 September 2009 (UTC)

I do agree with OccamzTalk. However InvestingPennyStock.com seems like a good resource site about penny stock investing. It got loads of information about topics like penny stock, penny stock scams, risks, discussions. So I think this is a good site to be added as a external link in this page. Just removing links to good resource sites in the external links section without much clarification does not help a reader who is after more information.

It might be informative to read-up on WP's list of links to be avoided. OccamzRazor (talk) 20:17, 27 September 2009 (UTC)

It seems to be a resource site with loads of information on penny stock. It does not promote any companies or what ever. However it seems that they do run google ads, but I have seen few other wiki pages linking to them as authority sites. I think its good if you could give a reconsideration for the best of the readers, or perhaps you can edit the wiki in such a way that it got all the information about penny stock to the extent which this site does

InvestingPennyStock.com got loads of information about penny stocks, much more than wikipedia offers. And it does not promote any companies as such. So I think it’s a good resource to be included as an external link. If it’s considered as a site which cannot be accepted as an external link, please make a valid explanation as this seems to fit the wikipedia external linking criteria. Triangletriangle (talk) 7:18, 2 October 2009

Please improve the article citing qualifying reliable sources rather than continuing to post a spam link to an external commercial website. Another user was recently blocked indefinitely for repeatedly adding this same link (see here). OccamzRazor (talk) 16:46, 2 October 2009 (UTC)

USA Point of view only.

This article represents an almost entirely US point of view, and this is made worse by repeated edits by user at IP 89.80.194.201 . Rather than get into an edit war with someone who keeps reverting my own edits, I thought I'd bring it here for discussion. The term Penny Stock is not limited to the USA and the article should reflect this.--Dmol (talk) 11:44, 10 July 2010 (UTC)

You seem to misunderstand. The article as it was reads:

"A penny stock, also known as a micro cap equity, refers to a share in a company which trades for less than $5.00. While this is the official definition, and is used by the Securities and Exchange Commission".

This presents the situation in the USA as if it is universal. In the UK, for instance, a penny share is one than costs under £1, there is no 'official definition', and there is no such organisation as the 'Securities and Exchange Commission'. The article should be written on the lines of "A penny stock is xxxx. In the USA yyyy. In the UK zzzz. In country x.... " Simply presenting the status quo in the USA as if it applies everywhere is misleading. Incidentally,it was you who kept reverting my edit, not vice versa. 89.80.194.201 (talk) 11:51, 10 July 2010 (UTC)

Penny stocks per the Securities Lawer's Deskbook

Rule 3a51-1 Definition of a penny stock Securities Lawyer's Deskbook

                        published by The University of Cincinnati College of Law   

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General Rules and Regulations promulgated under the Securities Exchange Act of 1934

Rule 3a51-1 -- Definition of "Penny Stock"

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For purposes of section 3(a)(51) of the Act, the term "penny stock" shall mean any equity security other than a security: •That is an NMS stock, as defined in Rule 242.600(b)(47), provided that:

1.The security is registered, or approved for registration upon notice of issuance, on a national securities exchange that has been continuously registered as a national securities exchange since April 20, 1992 (the date of the adoption of Rule 3a51-1 by the Commission); and the national securities exchange has maintained quantitative listing standards that are substantially similar to or stricter than those listing standards that were in place on that exchange on January 8, 2004; or

2.The security is registered, or approved for registration upon notice of issuance, on a national securities exchange, or is listed, or approved for listing upon notice of issuance on, an automated quotation system sponsored by a registered national securities association, that:

i.Has established initial listing standards that meet or exceed the following criteria:

A.The issuer shall have:

1.Stockholders� equity of $5,000,000;

2.Market value of listed securities of $50 million for 90 consecutive days prior to applying for the listing (market value means the closing bid price multiplied by the number of securities listed); or

3.Net income of $750,000 (excluding extraordinary or non-recurring items) in the most recently completed fiscal year or in two of the last three most recently completed fiscal years;

B.The issuer shall have an operating history of at least one year or a market value of listed securities of $50 million (market value means the closing bid price multiplied by the number of securities listed);

C.The issuer�s stock, common or preferred, shall have a minimum bid price of $4 per share;

D.In the case of common stock, there shall be at least 300 round lot holders of the security (a round lot holder means a holder of a normal unit of trading);

E.In the case of common stock, there shall be at least 1,000,000 publicly held shares and such shares shall have a market value of at least $5 million (market value means the closing bid price multiplied by number of publicly held shares, and shares held directly or indirectly by an officer or director of the issuer and by any person who is the beneficial owner of more than 10 percent of the total shares outstanding are not considered to be publicly held);

F.In the case of a convertible debt security, there shall be a principal amount outstanding of at least $10 million;

G.In the case of rights and warrants, there shall be at least 100,000 issued and the underlying security shall be registered on a national securities exchange or listed on an automated quotation system sponsored by a registered national securities association and shall satisfy the requirements of paragraph (a) or (e) of this section;

H.In the case of put warrants (that is, instruments that grant the holder the right to sell to the issuing company a specified number of shares of the company�s common stock, at a specified price until a specified period of time), there shall be at least 100,000 issued and the underlying security shall be registered on a national securities exchange or listed on an automated quotation system sponsored by a registered national securities association and shall satisfy the requirements of paragraph (a) or (e) of this section;

I.In the case of units (that is, two or more securities traded together), all component parts shall be registered on a national securities exchange or listed on an automated quotation system sponsored by a registered national securities association and shall satisfy the requirements of paragraph (a) or (e) of this section; and

J.In the case of equity securities (other than common and preferred stock, convertible debt securities, rights and warrants, put warrants, or units), including hybrid products and derivative securities products, the national securities exchange or registered national securities association shall establish quantitative listing standards that are substantially similar to those found in paragraphs (a)(2)(i)(A) through (a)(2)(i)(I) of this section; and

ii.Has established quantitative continued listing standards that are reasonably related to the initial listing standards set forth in paragraph (a)(2)(i) of this section, and that are consistent with the maintenance of fair and orderly markets;

•That is issued by an investment company registered under the Investment Company Act of 1940;

•That is a put or call option issued by the Options Clearing Corporation;

•Except for purposes of section 7(b) of the Securities Act and Rule 419, that has a price of five dollars or more;

•For purposes of paragraph (d) of this section:

•A security has a price of five dollars or more for a particular transaction if the security is purchased or sold in that transaction at a price of five dollars or more, excluding any broker or dealer commission, commission equivalent, mark-up, or mark-down; and

•Other than in connection with a particular transaction, a security has a price of five dollars or more at a given time if the inside bid quotation is five dollars or more; provided, however, that if there is no such inside bid quotation, a security has a price of five dollars or more at a given time if the average of three or more interdealer bid quotations at specified prices displayed at that time in an interdealer quotation system, as defined in Rule 15c2-7(c)(1), by three or more market makers in the security, is five dollars or more.

•The term "inside bid quotation" shall mean the highest bid quotation for the security displayed by a market maker in the security on an automated interdealer quotation system that has the characteristics set forth in section 17B(b)(2) of the Act, or such other automated interdealer quotation system designated by the Commission for purposes of this section, at any time in which at least two market makers are contemporaneously displaying on such system bid and offer quotations for the security at specified prices.

•If a security is a unit composed of one or more securities, the unit price divided by the number of shares of the unit that are not warrants, options, rights, or similar securities must be five dollars or more, as determined in accordance with paragraph (d)1 of this section, and any share of the unit that is a warrant, option, right, or similar security, or a convertible security, must have an exercise price or conversion price of five dollars or more;

•

1.That is registered, or approved for registration upon notice of issuance, on a national securities exchange that makes transaction reports available pursuant to Rule 242.601, provided that:

i.Price and volume information with respect to transactions in that security is required to be reported on a current and continuing basis and is made available to vendors of market information pursuant to the rules of the national securities exchange; and

ii.The security is purchased or sold in a transaction that is effected on or through the facilities of the national securities exchange, or that is part of a distribution of the security;

iii.The security satisfies the requirements of paragraph (a)(1) or (a)(2) of this section;

2.A security that satisfies the requirements of this paragraph (e), but does not otherwise satisfy the requirements of paragraph (a), (b), (c), (d), (f), or (g) of this section, shall be a penny stock for purposes of section 15(b)(6) of the Act (15 U.S.C. 78o(b)(6));

f.That is a security futures product listed on a national securities exchange or an automated quotation system sponsored by a registered national securities association; or

•Whose issuer has:

•Net tangible assets (i.e., total assets less intangible assets and liabilities) in excess of $2,000,000, if the issuer has been in continuous operation for at least three years, or $5,000,000, if the issuer has been in continuous operation for less than three years; or

•Average revenue of at least $6,000,000 for the last three years.

•For purposes of paragraph (g) of this section, net tangible assets or average revenues must be demonstrated by financial statements dated less than fifteen months prior to the date of the transaction that the broker or dealer has reviewed and has a reasonable basis for believing are accurate in relation to the date of the transaction, and:

•If the issuer is other than a foreign private issuer, are the most recent financial statements for the issuer that have been audited and reported on by an independent public accountant in accordance with the provisions of Rule 2-02; or

•If the issuer is a foreign private issuer, are the most recent financial statements for the issuer that have been filed with the Commission or furnished to the Commission pursuant to Rule 12g3-2(b); provided, however, that if financial statements for the issuer dated less than fifteen months prior to the date of the transaction have not been filed with or furnished to the Commission, financial statements dated within fifteen months prior to the transaction shall be prepared in accordance with generally accepted accounting principles in the country of incorporation, audited in compliance with the requirements of that jurisdiction, and reported on by an accountant duly registered and in good standing in accordance with the regulations of that jurisdiction.

•The broker or dealer shall preserve, as part of its records, copies of the financial statements required by paragraph (g)(3) of this section for the period specified in Rule 17a-4(b).

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Regulatory History

57 FR 18032, April 4, 1992, as amended at 58 FR 58101, Oct. 29, 1993; 70 FR 40614, 40631, July 13, 2005; 70 FR 46089, 46090, Aug. 9, 2005. —Preceding unsigned comment added by 107.29.61.141 (talk) 18:44, 29 April 2011 (UTC)

Language

From the feedback on this article: "Try to lower the linguistics a bit for the newbie. Make a paragraph for one in the kow and one for the new to penny stocks. This way we can all benefit." I think the anonymous commenter has a point there. There are terms that are incomprehensible to someone who doesn't already know a bit about the stock market, e.g. "thinly traded" and the text tends to use longer or less common words instead of words that are more easily understood. IMO.Sjö (talk) 07:45, 15 September 2012 (UTC)

Merger proposal

I'd like to work on this topic, but I feel a bit blocked because any content I add could easily fit into either article. I propose microcap stock as the main article, which can have a section discussing penny stocks. Microcap is better because penny stock definitions vary - regulations in USA are $4 per share and below, but in other countries it's different. Microcap companies can easily adjust their share price with reverse splits, but they remain microcaps regardless. II | (t - c) 08:07, 6 September 2020 (UTC)

• Comment I am opposed to the merge if no work is done before the merge. As it looks like, from the basic definitions given in each article, they are not exactly the same thing. Micro-cap stocks are defined as stock whose company have a market capitalisation of 50M to 300M, while penny stocks are those that "trade for less than one dollar per share". While it looks like there is a lot of overlap between these two categories, the Microcap stock article makes a distinction between them and Nano-cap stock. As such, Micro-cap stocks are a subcategory of Penny stocks, with the exception of some highly volatile anomalies.
• @ImperfectlyInformed: Due to the low level of interest for this discussion, no one is stopping you from merging the two articles unilaterally if the resulting article is coherent and organized. You should get to work on this if you are still interested. However, I would advise you use "Penny Stock" as the main article, precisely because of its shifting definition will allow you to discuss more things, and per WP:COMMONNAME. It's clearly the most consulted article and the most Google searched term between the two. Mottezen (talk) 05:20, 3 February 2021 (UTC)

Closing, given the lack on consensus for any particular action, with stale discussion. Klbrain (talk) 09:08, 5 September 2021 (UTC)