In order to reduce the likelihood of fraud, we encourage you to become more knowledgeable about the OTC market, your rights as an investor, and the companies in which you are investing.
Who is Protecting You?
The OTC market and broker-dealers’ activities in the market are regulated by The Financial Industry Regulatory Authority (FINRA), the U.S. Securities and Exchange Commission (SEC) and various state securities regulators. In addition, companies with SEC-registered securities are regulated by the SEC. OTC Markets Group does not regulate the OTC marketplace. It is neither a stock exchange nor self-regulatory organization (SRO) and is not itself regulated by FINRA or the SEC.
OTC Markets organizes and disseminates price and company information making the marketplace more transparent, efficient and investor friendly. We have created the OTC market tiers to motivate OTC companies to provide more information to investors and we offer companies products and services to help them get their information out on our network for all investors to find.
Risk Warnings
Does it sound too good to be true? Then it probably is. You should never make a decision about investing your money in a particular company solely on the basis of a "hot tip" or someone's advice. It is important that you make an informed decision based on your thorough research which includes the company's annual report, current financial statements and material news.
Many OTC securities are relatively illiquid, or "thinly traded," which tends to increase price volatility. Illiquid securities are often difficult for investors to buy or sell without dramatically affecting the quoted price. In some cases, the liquidation of a position in an OTC security may not be possible within a reasonable period of time.
Many OTC equities are Penny Stocks. Penny Stocks Can be Very Risky. Due to the high level of risk involved in investing in Penny Stocks, brokers cannot sell a Penny Stock to any person unless it has approved that person's account for penny stock transactions and the broker/dealer has received agreement to the transaction in writing from the customer. See: Penny Stock Definition, Schedule 15g.
Before You Invest - Do Your Research, We Can Help
The OTC market is not suitable for unsophisticated or novice investors. You should gain a thorough understanding of your rights as an investor and investigate the background of the issuing company, individual broker, and brokerage firm before you invest. Some good investor rights & education links, include:
- OTC 101 – OTC Markets Group's overview of OTC market structure, participants and processes
- SEC Investor Information – SEC Office of Investor Education and Advocacy
- FINRA Investor Information – FINRA Investor Education Site
- Microcap Fraud -- Information about microcap fraud from the SEC.
- FINRA BrokerCheck® -- Check the Background of Your Investment Professional
- How to Avoid Problems With Your Broker -- Prevent potential problems and resolve disputes.
- Invest Wisely -- FINRA's tools to better understand the markets and basic principles of saving and investing.
- NASAA Investor Education -- Primer on the most common types of schemes, scams, and fraud about which investors and entrepreneurs need to know.
Obtaining Financial Information on OTC-Traded Companies
Investors should always carefully review the financial information of issuers before making investments. Many OTC equities are issued by small companies with limited histories or in economic distress.
SEC Reporting Companies - SEC filings are available on this website under a company's "Financials" tab and on the SEC's website. Some OTC-traded companies do not have filing or reporting requirements with the SEC. For a detailed explanation of registration and reporting requirements and the exemptions available from those requirements, please see the SEC's Small Business Question and Answer Page.
Non-SEC Reporting Companies - Although they may not be required to make financial information available to the public, many OTC-traded companies do so voluntarily. You can search our Financial Reports to obtain the reports of any issuer that has voluntarily provided their financials and other disclosure to investors via the OTC Disclosure and News Service. Investors should be aware that the accuracy or completeness of such information has not been verified by OTC Markets or reviewed by any regulatory body. Investors should regard such information as merely a starting point for their own research in evaluating the investment potential of OTC securities.
Make a Complaint
If you believe that you have been defrauded by a publicly traded company, please visit:
- The SEC Center for Complaints and Enforcement Tips
- North American Securities Administrators Association (NASAA) will help you find Your State Securities Regulator. NASAA has an e-mail address for investors to report suspected Internet fraud. It is cyberfraud@nasaa.org. When sending a complaint, investors should forward the suspect message, give the Web site, if appropriate, and include the name of the state in which they live.
If you believe that you have been defrauded by a broker, securities firm, investment advisor, or other securities market participant, please contact:
