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Penny Stocks: Hazards Effecting Activities In The Penny Market

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Penny stocks are of course cheaper than regular stocks but are much more risky. Penny stocks, of course do not trade for pennies but a very low share price. These stocks are so risky that Congress prohibited broker-dealers from effecting transactions in penny stocks unless they comply with the requirements of Section 15(h) of the Securities Exchange Act of 1934 (“Exchange Act”) and the rules thereunder (Penny). What these rules insure, is that the broker-dealer must approve the buyer, obtain a written agreement from them, then supply a disclosure statement telling the hazards involved. After that, they are required to divulge to the buyer, the present-day market price for the penny stock, amount of compensation, the broker-dealer will

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