Pennystock

As a penny stock refers to shares whose value is less than one unit in local currency. In the euro area, this therefore includes shares that have a value less than 1 EUR. In the U.S., the use of language, however, is different because there are stocks that are trading below USD 5 as penny stock.

Due to the often very low trading volume on the stock exchanges those shares are often the object of speculators and have a high volatility.

In the wake of the bursting of the speculative bubble on the Neuer Markt in 2000 and 2001 the number of penny stocks rose sharply. So in July 2001 listed about 40 of the 343 traded on the Neuer Markt stocks just above or below one euro.

Due to stricter delisting rules (DAX, MDAX, TecDax, SDAX ) are penny stocks in the leading indices of Deutsche Börse only rarely encountered. So were found on 18 April 2005 in the DAX and for the tecDax no penny stocks, in the MDAX and the SDAX only one each. On September 30, 2005, only to be found in the SDAX a penny stock.

In contrast, there is the unregulated free trade ( " Open Market "), a very large number of such shares. A "Listing " in the open market costs relatively little. A prospectus must not be published, the publication of annual reports and balance sheets is also not mandatory. The investor protection associated with the German Securities Trading Act applies to listed on the Open Market Pennystocks only with restrictions. This is the one for small companies easily, on the other hand, abuse is possible. Especially with penny stocks of foreign issuers violations of the insider guidelines ( § 20a German Securities Trading Act ) difficult to detect.

Due to their very low trading volume, each small number of shares traded and the lack of transparency Pennystocks be abused since 2006 increasingly for stock spam.