Microcap Securities Attorney

What Are Microcap Securities?

Microcaps are the small public companies with securities quoted on the OTC Bulletin Board (OTCBB) or the OTC Markets OTCQX, OTCQB and Pink Sheets.  This can include development stage companies with zero revenue as well as household names that are eligible to become listed on the NASDAQ or NYSE MKT if they so choose.

Microcap securities are generally priced below $5 and are sometimes called “penny stocks” even though many OTCBB or Bulletin Board and OTC Markets Pink Sheets trade regularly at much higher prices.  Likewise, some microcap OTC Issuers have stock that trades below a penny.

Where Are Microcap Securities Quoted?

Microcap securities usually trade in the “over-the-counter” market.  Their stock is quoted on the OTCBB or OTC Markets.  Many microcap Issuers that meet certain revenue, asset or market cap requirements can make the move to the NADAQ or to the NYSE MKT, which was formerly known as the AMEX.  When that happens, their securities will still be quoted on OTCMarkets.com, but their shares will also be “listed” on a national exchange.

OTC Bulletin Board (OTCBB)

The OTCBB is FINRA’s electronic inter-dealer quotation system.   The Bulletin Board displays quotes, last-sale prices, and volume information for many OTC equity securities that are fully reporting under the Securities Exchange Act of 1934.  These Issuers must also be sponsored by a market maker to become quoted on the OTCBB.

Not all fully reporting public companies choose to be listed on the OTCBB, though all are quoted by OTCMarkets.com.  OTCQB is the market tier that is basically the equivalent of an OTCBB.  However, because the OTCBB has been around longer, many industry professionals still use the term  “bulletin board” to describe a fully reporting Issuer even if the stock is not actually quoted on the OTCBB.


OTC Markets is an electronic inter-dealer quotation system that displays quotes, last-sale prices, and volume information like the OTCBB. However, OTC Markets.com also provides broker-dealer subscribers a system to send and receive trade messages, that allows them to negotiate trades.  For this reason, OTC Markets has taken over most of the market share in the quotation system space from the OTCBB, as the vast majority of public Issuers that qualify for quotation on the OTCBB elect instead to be an OTC Markets OTCQB.

Pink Sheets

OTC Markets Pink Sheets is an open marketplace for equity securities.  The Pink Sheets has no stated minimum financial standards.  Pink Sheet Issuers are not required to file forms 10-Q, 10-K and 8-K with the SEC, and their financials are not required to be audited.  Instead, the Pink Sheet Issuers on OTCMarkets.com subscribe to OTC Market’s OTCIQ system which allows them to post Quarterly and Annual financial reports as well as Information and Disclosure Statements, which together can provide investors with the same level of detail typically found within SEC Form 10 filings.

Pink Current

Pink Sheets that are “fully reporting” under the Alternative Reporting Standard are known as Pink Current.  Pink Current Issuers file timely Quarterly and Annual Financial Reports that include an unaudited balance sheet, profit and loss statement and statement of cash flows.  Pink Current Issuers also file detailed Information and Disclosure Statements at least annually, and a securities attorney reviews this information and issues a Current Information legal opinion which must also be posted at least every year.

Pink Limited Information (Yield Sign)

When Pink Sheets are late posting their Quarterly Reports or Annual filings OTC Markets designates this delinquency with the Yield Sign symbol.  This alerts management that they have a limited amount of time to bring their filings current.  After another Quarter has passed, OTC Markets will bump the Issuer down another notch, indicated by the Stop Sign.

Pink No Information (Stop Sign)

These Pink Sheets are identified by the Stop Sign.  They have become delinquent posting their reports and disclosures on OTC Markets and are labeled Pink No Information (Pink Stop Sign).  This is not a sign of wrongdoing, and many Pink Sheet Issuers temporarily find themselves as Stop Signs until a management brings in a securities lawyer with experience bringing Pink Sheets current.  Once a securities attorney is brought on board as corporate counsel, it is just a matter of time before the past due filings are posted and the Pink Sheet is once again Pink Current.


OTCQB is the OTC Markets tier reserved for the securities of public companies that are current in their SEC filings under the Securities Exchange Act of 1934.  These are “fully reporting companies” and if they chose, could also be listed on the OTC Bulletin Board, although most do not choose the OTCBB.   QB Issuers have PCAOB audited financials, although no minimum asset or revenue level is required to be an OTC Markets OTCQB company.  When OTCQB Issuers fall behind on their SEC filings, they are designated as Yield Sign stocks until those filings are current.


OTCQX is the OTC Markets tier that is reserved for the securities of public Issuers that meet eligibility standards set by OTC Markets for net tangible assets or average revenue.  OTCQX companies have audited financial statements, and partner with a third-party securities attorney or investment bank, known as a Designated Advisor for Disclosure  or “DAD” that reviews disclosures and serves as a professional advisor to the Issuer.  These Issuers are currently reporting to the SEC like OTCQB or they are current under the OTC Markets’ Alternative Reporting Standard.

Matt Stout, microcap securities attorney represents all microcap public companies, from Caveat Emptor, all the way to those OTCQB companies that are filing to become listed on the NASDAQ or the NYSE MKT national stock exchanges.