Over-the-counter (OTC) refers to securities not traded on a formal exchange; they must be traded "over the counter" or through a dealer network. In a broader sense, OTC has come to mean low-priced, or penny, stocks or stocks of small companies. Either way, selling OTC stocks can be a challenge without a centralized exchange market.
Instructions
1. Determine your security type. OTC can be bonds, derivatives, penny and pink sheet stocks. While OTC stock can be illiquid, it may still have a market. Your challenge is finding the market.
2. Contact the OTC Bulletin Board (OTCBB) (see Resources). This is a good place to find prices for OTC stock through an electronic quotation system with real-time quotes, last-sale prices and volume information. If your stock isn't listed here, you will need to find a market.
3. Define your market. OTC stocks are synonymous with micro-cap stock. What you are lacking is public information on your company. Start with the company itself. Then go to EDGAR (see Resources), a financial database sponsored by the Securities and Exchange Commission (SEC), to see if you can locate any information filed with the SEC on the company you're trying to sell.
4. Find a buyer. Contact the State Security Regulator (see Resources). While a company may not have to register securities with the SEC, there may be different rules at the state level. They can also tell you about the legal status of a company. Bloomberg, Dun & Bradstreet and Lexis-Nexis are also good resources.
5. Find a broker-dealer that deals in OTC stock. SEC rules require a more stringent process for micro-cap sales. The SEC requires brokers to approve customers per transaction and receive a written agreement to the transaction as well as a customer document describing the risk of micro-cap stock.
