Are We Working Against Ourselves?
May 7th, 2008
SEC Rules are the sources of protection for investors in the market. In spite of the existence of these sources, investors don’t watch them until it was too late.
Penny stocks generally are quoted on the OTC Bulletin Board or in the Pink Sheets under high lows and regulations. Laws in penny stocks are represented by SEC which has its strict rules such as:
SEC rules force the broker to give real-time information about stocks, prices, the current market quotation, and risks in written documents to the investor then obtain a written agreement from investor in order to approve the transaction. That will save investors’ rights from fraud by the seller or broker whether in the sale or purchase processes.
Also, SEC requires the broker to send monthly account statements showing the market value of each penny stock held in the investor’s account. That shows the whole picture of investor’s movements and helps him to make the right decisions at the right time.
Smart brokers should implore investors to leave the market with fewer losses before they lose their whole investment. That requires choosing an expert broker who has great experience allowing him to figure out the market’s movements in the future. In the same time, investors should be prepared for the possibility of loss and see if they can afford it before doing investments.
SEC has a rule of choosing the best brokers because it provides investors with all information about brokers. That will be very useful and make investors’ job easier to choose the most expert one.
Who is required to get information? Brokers or investors themselves? In fact, both are required to get information because each one has an interest to complete any process taking place in penny stocks. Brokers do their homework in order to get their commission and investors do their best to gain more returns from pennies. Therefore, information is the best tool for investors to invest wisely.
After supporting all information above, we can notice that for reassuring, ALL transactions must be in writing. There is an important advice we must take into consideration which is leaving the market with fewer losses is better than leaving it with high losses.