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Investing? Check Pink Sheets first

Amy Scott Jul 27, 2007
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Investing? Check Pink Sheets first

Amy Scott Jul 27, 2007
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TEXT OF STORY

Lisa Napoli: Because of the lousy market conditions this morning, Cadbury’s said it was going to delay the sales of its drinks business. 7-Up, Snapple and Dr. Pepper are on the blocks.

All this as some major changes are being made to a sort of minor exchange, called the Pink Sheets. Amy Scott says they’re all about penny stocks.


Amy Scott: Starting next week, the Pink Sheets will label each stock according to how well the company discloses financial information to the public.

A check mark means everything’s up-to-date. A stop sign means no information available. An ominous-looking skull and crossbones symbol indicates a company may be involved in stock spam or suspected fraud.

James Angel teaches finance at Georgetown University and invests in Pink Sheet stocks. He says the new system will help investors separate the good eggs from the bad.

James Angel: Some of them are trash. There are some companies on there that literally went bankrupt decades ago. However, there are also a number of legitimate companies, but they’re really too small to trigger SEC registration requirements.

If a company is the subject of a spam campaign, the Pink Sheets website will block it unless it bears a check mark. A spokesperson says companies are already providing more information to avoid poor marks.

In New York, I’m Amy Scott for Marketplace.

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