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Friday, November 24, 2006

What’s The Difference?

Nevertheless, there are many things that you need to take into consideration. One of them is the difference in the penny stocks that we have been talking about, which are those that are on the secondary market as well as those that are on the Initial Public Offering market. There is a difference.

What you should realize, then, is what makes the difference. When a company decides that it will begin to offer its shares on the penny stock market, the first thing it needs to do is to seek out the Securities Division. In doing that, it will need to go through some pretty heavy workouts by the Division.

The goal of the guidelines offered by the Securities Division is that of providing for some information to the general public about the company and the risk involved.

If you remember, we talked about how with most penny stocks, the markets do not have strict restrictions on what and who can be sold on these markets. Therefore, it can be tricky for the average person to determine if the penny stock they are considering investing in is a good idea or not. But, with Initial Public Offerings, there is a difference.

Since this is the first time that the stock is on the market, the IPO, or Initial Public Offering, will be done will have many more restrictions applied to it. The Division is looking to insure that the penny stocks out there are actually offering something that is fair to the investor, something that is just to the investor and that it is equitable to the investor.

There is no way to know for sure if in fact all of the companies that go through the IPO are actually high quality companies, it is harder to get through a bad company or a scam in this manner. These guidelines do help to keep fraudulent offerings out of the picture.

They will not allow those companies that are found to be fraudulent or those that are not legitimate in some other manner will not be provided with registration and therefore can not be sold as penny stocks.

Therefore, those that are investing in Initial Public Offerings will have less of a chance of getting the bad guy.


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