Low-Priced Securities Alert

Low Priced Securities Trading Risk Alert


The term "penny stock,” or “low priced security,” generally refers to low-priced shares issued by a company that are not traded on an exchange or quoted by NASDAQ. Low priced securities generally are quoted over-the-counter, such as on the OTC Bulletin Board (or OTCBB, which is a facility of FINRA) or OTC Links LLC (which is owned by OTC Markets Group, Inc., formerly known as Pink OTC Markets Inc.). Low priced securities may, however, also trade on exchanges. In addition, the definition of low-priced securities can include the securities of certain private companies with no active trading market. Low priced securities are considered speculative investments and customers who trade in low priced securities should be prepared for the possibility that they may lose their entire investment, or an amount in excess of their investment if they purchased on margin. Before investing in a low-priced security, you should thoroughly review the issuer and be aware of the certain risks associated with trading low priced securities.

Low Priced Security Risks:

Risk of Low Liquidity: Low priced securities may trade infrequently, which means that it may be difficult to sell the shares once you own them. Because it may be difficult to find quotations for certain low-priced securities, they may be difficult, or even impossible, to accurately price.

Risk of Higher Volatility:

Due to low liquidity, low priced securities are subject to greater volatility and price swings. A customer order to purchase or sell a low-priced security may not execute or may execute at a substantially different price that was quoted in the market at the time the order was placed. In addition, the market price of any low-priced security you purchased can vary significantly over time.

Risk of Lack of Public Information:

Most large, publicly-traded companies file periodic reports with SEC that provide information relating to the company’s assets, liabilities and performance over time. In contrast, information about low priced securities can be extremely difficult to find, making them more likely to be the subject of an investment fraud scheme and making it less likely that quoted prices in the market will be based on full and complete information about the company.

Risk of Scams:

Low priced securities are frequent vehicles for scams and/or market manipulation due to their generally lower prices and less stringent listing requirements. You should be wary of advertisements, unsolicited emails, newsletters, blogs or other promotional reports that emphasize the potential for large profits in in these securities. These promotional materials are often used to manipulate or “pump up” the price of lowpriced securities before selling a large volume of shares, a.k.a “dump”. Customers are therefore strongly encouraged to do their own due diligence with respect to any low priced securities they invest in and not rely on any outside promotional materials.

Further Reading:

Before you consider investing in the stock of any small company, you may want to review the low-priced securities rules outlined in Exchange Act Section 15(h) and Exchange Act Rules 3a51-1 and 15g-1 through 15g-100 as well as the SEC brochure Microcap Stocks: A Guide for Investors (https://www.sec.gov/reportspubs/investor-publications/investorpubsmicrocapstockhtm.html ).

Webull Minimum Order Size Requirement for Low Priced Securities:

Size Tier: For stocks trading below $1, the following are minimum order sizes to open a new position:

Last Sale Price Minimum Order Size To Open Position on Webull APP

Less than $0.01 No Open Position orders are accepted in this stock price tier.

$0.01 to $0.099: Minimum Order Size = 1000 shares

$0.10 to $.999: Minimum Order Size = 100 shares

At or Above $1.0: No minimum Order Size limit.