When markets turn down, inevitably certain stocks will fall from grace. To get listed on the major stock exchanges such as the New York Stock Exchange (NYSE) and the Nasdaq, a company must meet certain capital requirements. Companies must pay an application and listing fee which can be over $100,000, have minimum stockholder's equity and a minimum number of shareholders. When companies fall below these requirements, they become delisted. On the Nasdaq, the delisting process occurs when a company trades for more than 30 business days below the minimum threshold for bid price or market cap. Buying delisted stock, while risky, isn't hard; the challenge is knowing where to go.
Instructions
1. Research your investment. Delisted stocks are riskier than stocks listed on major exchanges. Look up the ticker. Research the stock with your broker. You can can also go to any Website providing financial research tools such as Yahoo! Finance or MSN Finance.
2. Go to the Over the Counter Bulletin Board (OTCBB). This is an electronic trading exchange offered by the Financial Industry Regulatory Authority (FINRA, formerly the NASD).
3. Go to Pink Sheets. This is riskier than OTCBB as they don't require companies to register with the Securities and Exchange Commission (SEC).
4. Choose a Broker. Open an account with a brokerage. You can open a full service, discount or on-line broker account. Online brokers offer the least expensive way to trade. Before you set up your account, make sure the firm accepts orders in Pink Sheets.
5. Place a limit order with your broker. Avoid selling or buying at a price lower or higher than what you want by placing a limit order. A limit order is an order to buy or sell a security at a specific price. A regular market order does not allow you to control the price.
