Miami Penny Stocks Attorney
The term “penny stock” generally refers to a security issued by a very small company that trades at less than $5 per share. Penny stocks often have very little market and trade infrequently, which means that it may be difficult to sell penny stock shares at a fair price once you own them. Penny stocks are generally considered highly risky and speculative investments because they can fall in price very rapidly.
Investors in penny stocks should be warned about the risks and that they may lose their whole investment. Penny stocks are not suitable for most investors. Contact our Miami investment attorneys to learn more about penny stock investments.
Because of the speculative nature of penny stocks, Congress prohibited broker-dealers from effecting transactions in penny stocks unless they comply with the requirements of Section 15(h) of the Securities Exchange Act of 1934 (“Exchange Act”) and the rules thereunder. These SEC rules provide, among other things, that a broker-dealer must (1) approve the customer for the specific penny stock transaction and receive from the customer a written agreement to the transaction; (2) furnish the customer a disclosure document describing the risks of investing in penny stocks; (3) disclose to the customer the current market quotation, if any, for the penny stock; and (4) disclose to the customer the amount of compensation the firm and its broker will receive for the trade. In addition, after executing the sale, a broker-dealer must send to its customer monthly account statements showing the market value of each penny stock held in the customer’s account.
Carlson & Associates, P.A. has experience in handling cases involving penny stocks. Contact our Miami investment fraud law firm today.