Scottoo re: Richard's question and the Pink Sheets.
You are correct, I'm sure Richard was confused about the terms used. PABN plans to make the move "up" to NASDAQ, not "down" to the Pink Sheets.
There are a lot of misconceptions about the different "levels" at which stocks are traded. I'm not an expert, but I have looked into this a bit.
nqb.com
NQB (National Quotation Bureau) is a service which provides information regarding OTC (Over-The-Counter) securities.
In order to be traded OTC a sponsoring Market Maker submits a Due Diligence (DD) package (or a registration), in compliance with Rule 15c2-11 to the NASD which reviews the information and asks for more information, or explanation, and then eventually grants (or denies) approval for the Market Maker to quote the securities OTC. Based on the Form 211 application, that is either OTCBB, or OTC Pink Sheets or OTC Yellow Sheets.
The real difference in levels has been more or less moot until recently (the past couple of years) when individuals started making their own trades online. The reporting requirements were and are identical for all OTC stocks until Jan 4, 1999. As of then BB stocks also had to become fully reporting to stay on the BB. If they don't become fully reporting by their due date they are "dropped" to the Pink Sheets. As of mid July that will be a virtually meaningless distinction because the Pink Sheets are going electronic (see below).
The difference between the Pink Sheets and BB really was how information about the quote was accessed (electronically or on paper) and the volume -- Pink Sheet stocks were thinly traded -- usually very thinly traded.
OTC is not an exchange like NYSE, NASDAQ, AMEX, or any of the regional exchanges. It is a quotation service only. Using a Baseball metaphor, OTC is not like the stadium where the game is played (like an exchange), it is like the radio station which reports the score. See for more info: otcbb.com
At this time, and for the next couple of weeks, only stocks quoted on the Bulletin Board have electronic quotation of their prices. Yellow and Pink Sheet quotes have been on paper only (colored yellow and pink respectively).
Later this month, the Pink Sheets are going electronic, like the Bulletin Board. nqb.com When this happens, those companies which were dropped from the BB because they did not become reporting companies, will be effectively back where they were. For investors who what to buy and sell these securities there will be no restriction to access as long as their online brokerage service subscribes to NQB's electronic quotation service.
The only real difference will be that MM's are not required to honor prices for a certain number of shares on the Pink Sheets. As you may recall when Barb or William posts the MM screens for PABN, there is a column which usually has "50x50" meaning 5000 shares x 5000 shares -- that means for BB stocks the MM will honor his bid for 5000 shares and honor his ask for 5000 shares. For more shares than that, he can change the quote if he wants to do so. On the Pinks, a sell order or a buy order, even if at the bid or ask, can just sit there until another person -- like you or me -- comes along to sell to a buyer or to buy from a seller -- the MM is not obligated to carry inventory, or to buy or sell anything as on the BB.
There is value in this kind of arrangement for small companies and certain investors who are interested in owning small companies. Becoming a reporting company is expensive. Not all companies resist becoming reporting because they are scams or want to defraud the public. Some are just too small to bear the cost (estimated at between $50,000 and $100,000 per year in legal and accounting fees!), nor do they have the staff or time available to stop doing the work of the business just to do paperwork. (I have GREATLY over-simplified this, but that's it in a nut shell.)
I know some who read this will take issue with what I've said here regarding the value of not being a reporting company. However, I did not set up this system, it was established by the Securities Acts of 1933 and 1934 (as amended) and with good reason -- to allow companies to start small so they can become big with reasonable levels reporting at reasonable levels of growth and different levels of trading. Not only that, but non-reporting companies do have to make available to the public a lot of information about themselves -- note the information the Market Makers must have on file, also note state laws requiring companies to allow shareholders access to the books and so on.
We all acknowledge the abuses that scam artists have employed to take advantage of the system in order to take advantage of investors. That does not mean all start up companies are scams.
In a sense this message has been OT since none of the above applies to PABN, but I thought it was important enough because of Richard's misconception to discuss it.
Again, I've condensed a lot of material, if anyone thinks I've left out anything important or have made any mistakes, please enlighten us! That is not an invitation to any of the bashers to deconstruct my layman's explanation. However, I'll do my best to answer any legit questions for clarification, etc.
hope this helps
PCM
GO PABN!!! |
