The Pink Sheets Tries to Change Its Colors

As Stock Marketplace Seeks to Broaden Its Mandate, Its Regulator, Finra, Pursues Grab in Its Data Business

 

NEW YORK—The Pink Sheets operator won't be pink much longer.
The nation's biggest marketplace in shares of companies that don't list on exchanges is expected to drop "Pink" from its name, going from Pink OTC Markets Inc. to OTC Markets Group Inc. by early next year. The change, subject to shareholder vote, comes as the company strives to show it has evolved from its reputation of a stomping ground for murky enterprises to a broader firm where respectable companies want their shares to trade.
The firm now quotes nearly 10,000 stocks, including roughly 3,000 that also are quoted on its main competitor, OTC Bulletin Board. It has broken its listings into tiers, ranking companies by how forthright they are in divulging information and affixing graphics, such as a skull-and-crossbones, for issuers it maintains merit more caution. Unlike the Bulletin Board, a quote-listing service, Pink for several years has allowed electronic trading, after investing in technology upgrades.
Still, a major player isn't ready to cede Pink all the OTC territory, and that player is the Financial Industry Regulatory Authority, or Finra, the Wall Street regulator that is sole overseer of the over-the-counter market.
Finra owned Pink competitor OTC Bulletin Board before agreeing in September to sell the Bulletin Board's website and trademark to Rodman & Renshaw Capital Group. The firm, which has an investment bank, said it plans to use the Bulletin Board to diversify its product base.
Finra isn't bowing out of the space altogether. Instead, it is gunning for a lucrative corner of the market where Pink competes—supplying OTC data.

Finra last year proposed to the Securities and Exchange Commission a plan that would require Finra members, such as brokerages, to supply Finra in real time with their best quotes on over-the-counter stocks. Those quotes would become part of a Nasdaq OMX data feed that Finra supplies with Bulletin Board quotes; Finra currently reaps about $8 million a year for that service, it says.
Finra said its statutory obligations as a regulator mean it should be corralling the best prices for all unlisted stocks to provide investors information.
It also noted the expanded feed would help it oversee the market, though Pink already submits all its quotes to the regulator daily for surveillance purposes.
But adding a fuller range of OTC quotes to data nearly everyone already purchases would threaten about half of Pink's market-data business, a business that represents an estimated 40% of Pink's revenue, said R. Cromwell Coulson, chief executive of Pink OTC Markets.
"It is very hard for a bakery to make money selling bread if there is a policeman forcing every patron who walks in to buy a loaf of bread that the policeman has confiscated from the bakery," Mr. Coulson said.
The regulator says it has no plans to compete with Pink. The nonprofit's revenues go to cover the cost of regulation, said Steven Joachim, executive vice president of transparency services at Finra. While currently Pink is the only other OTC marketplace besides the Bulletin Board, that could change, making a comprehensive data feed more important, he said. And, he notes, Finra's data feed won't include prices far from the best bid and offer, which Pink supplies.
The industry has widely come out on Pink's side, in numerous comment letters to the SEC. "The vast majority of the volume takes place on the Pink Sheets right now," said Leonard Amoruso, general counsel at Knight Capital Group, one of the most active OTC market makers, in an interview. Finra's proposal would generate information "already being provided by the Pink Sheets."
SEC staff is considering comments and preparing a recommendation for the commission, an agency spokesman said.
As for stringency of oversight, Mr. Coulson acknowledged that investors should be wary of some OTC issuers. Pink allows some listings to trade without SEC registration, though it alerts investors of that status; the Bulletin Board requires issuers it lists to be registered with the SEC.

Earlier this month, the SEC filed a lawsuit against Larry Wilcox, who played Officer Jonathan "Jon" Baker on the 1970s-1980s television show "CHiPs," alleging a kickback scheme involving a company traded on the Pink Sheets. A lawyer for Mr. Wilcox didn't respond to a request for comment.
Mr. Coulson said most companies that Pink quotes don't deserve a shaky reputation. That is the main reason, Mr. Coulson said, that in early 2011 the business will be rechristened OTC Markets Group.
No longer will the company's downtown Manhattan office look like "Barbie's playhouse," he said. The pink M&Ms in the reception area will be joined by orange and green ones.
As for his office, he said, it will have "a pink photo my wife gave me for Christmas, an orange rug and a green painting."




http://online.wsj.com/article/SB10001424052702303550904575562430948706738.html

Friday's Stocks To Watch - EIGH, AWYI, PCFG, HESG

EIGH I noted in my chat room this afternoon that today's EIGH press release was a positive one. EIGH ran from sub $.06 to $.085 before pulling back. Compared to the canceled dividend press release, this one actually gives you hope that this stock will rebound back to $.10+. I think its at least heading back over $.10.

AWYI another great day for shareholders. There is a lot to like about this stock. Could it see its old high of $.012? I don't think so, but I think short term $.001 is not out of the question.

PCFG I think we see this stock come back tomorrow and post a better session. Gold is just too hot right now.

HESG I'm not ready to jump back into this stock quite yet, but due to its history of posting big gains, I think it is worthy of some attention heading into the weekend.

AWYI - Right On the Cusp Of A Big Breakout

AWYI for the sixth straight session made some positive strides toward a price breakout. The volume has been decidedly on the buy side, meaning people are either holding there shares or selling them judiciously on the offer. This makes for a very healthy run.

The big question from here on out is can AWYI break the resistance at $.0005? If so I think AWYI will see $.001 come in short order.

These stocks can get a mind of their own and when the money flow picks up there is no telling just how high a stock can go.

With AWYI still being active, I think any company update will send this stock much higher than it is trading at today. That is what investors are trading on today. The potential of this stock and the history of its price. This was a $.012 stock from these same levels.

AWYI a break of $.0005 tomorrow should be a sign of more significant gains on the horizon.

Penny Stocks Can Make You Rich And/Or Make You Broke

The penny stock market is a cruel animal. It can take away all your money in an instant. It can also turn a small investment into an amazing sum of money.

Last month Pennystockguru Subscriber turned $199 into $7,000 in the span of a few hours trading CMGR. CMGR, as I have noted before, is not a stock you want to hold, but it shows how even the worst stocks can make you a lot of money. The chart above show's the day Boxer made his 3,500% gain and the previous 3 months of CMGR trade.

For Boxer and the few out there who successfully traded CMGR for a huge profit, there are many out there who did just the opposite and are sitting on huge losses. I imagine there are people still buying this stock in the hopes of landing a 3,500% gain. I hate to break the news to you, the odds are not in your favor. If you had bought CMGR at anytime outside that one day phenomenon you would have lost a lot of money.

Look at this chart after CMGR went from sub $.01 to $.24.



That is a scary chart and the reason why you should never hold these stocks for too long. Tkae your profits or cut your losses.

There is a very small window with most penny stocks. Experience, research, and luck will help you find that window, for the rest of the retail traders out there, you might as well be throwing your money out that window. Which is why you should never invest with money you can not afford to lose.

Chart of the Day - DYER

Thursday's Stocks To Watch - AWYI, IGSM, HTLJ, HMIT

AWYI this stock is gaining some serious momentum.  At this rate AWYI could see $.001 before the weekend. This is a stock that went from these same levels to $.012 a share.  Could this be the start of a similar rally?  We will soon find out.

IGSM this stock continues to see support and I expect company updates will help propel this stock to a new level.

HTLJ the stock was under pressure in the morning.  I think the current prices offer a great opportunity. 

HMIT I think this stock could start heading higher again and test recent highs.  If that were to happen you are looking at at least a 300% gain from today's close.

Chart of the Day - SAEI