Prof. Tyler yamazaki

The Classifications System
As mentioned before, the Pink Sheets system has a classification for each of
the companies that trade using it. This makes it easier to determine whether

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a company is high risk or low risk and you can make your decisions based
on this. Some of the tiers that are found inside of the classification system
include:
Trusted Tier
Inside the trusted tier in Pink Sheets, you will find the international as well
as American companies that are considered trustworthy and investor
friendly. The companies that are from other countries are going to be on the
international exchange, but they can still fit into this trusted tier. The
companies that are in this tier have not met the requirements to be on the
regular Stock Exchange, but this is usually because of one or two small
issues since the Stock Exchange is so strict.
However, even though these companies were not able to get onto the Stock
Exchange, they were able to pass an independent audit. This list sometimes
does include companies in American that pass the standards needed for
NASDAQ but they aren’t submitting SEC reports and so they would be
moved over to Pink Sheets instead.
Transparent Tier
This is a tier that will send in SEC reports and sometimes will also include
those that are in Over-the-Counter Bulletin Boards. These are highly trusted
companies because you will be able to see some of their financial reports as
well as other information that is required for them to be good with the SEC.
You will be able to do your research on these companies because it is
provided to you and can save a lot of guesswork and hassle when choosing
the Penny Stocks you want to work with.
Distressed Tier
Companies that are inside of this tier of Pink Sheets are ones that provide
limited information for the investor to look at and often they are not
following the guidelines that are set out by Pink Sheets. These companies
may not even send out updated information to the SEC like they should, but

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some them will work with the OTC disclosures. Not all of these are bad to
work with, but sometimes you need to be wary because they aren’t sending
out the right information and some of them have gone bankrupt.
Dark Tier
This is the tier that you will really need to watch out for because it could
cause some issues. Companies that are inside of this particular tier aren’t
sending in any information about their business. They aren’t filing
information with either the SEC or the OTC Disclosure service and they
haven’t done so over at least the last six months, making it really hard for
the investor to have any idea how this Stock is doing. There are some
companies that get into this tier that are also failing with transparency in the
market or they don’t have a market marker.
Toxic Tier
As a new investor or any investor for that matter, it is best to stay out of the
toxic tier. Companies that are in this tier will often rely on marketing
strategies that are fraudulent such as using promotions that are questionable
or sending out a lot of spam to name a few. These can also include some
companies that are subjected to large corporate events that disrupt them or
they may have a suspension by the government. In some cases, these will
not actually have their own business operations and can be really dangerous
to send your money to.
Taking a look at these different types of tiers inside this system can help
you to make a more informed choice when it comes to working the Pink
Sheets. You will be able to see these rankings with any of the companies
that you choose to go with and if you pick the one with the highest
reputation, it becomes easier to get good returns on investments.