A private company that publishes the bid and ask price of stocks of very small companies that trade on the over-the-counter (OTC) market (as opposed to one of the major stock exchanges). Pink sheet companies derive their name from the color of paper they historically were listed on. Market makers who commit to buying and selling the securities of OTC issuers can publish their prices in the pink sheets. Pink Sheets began in 1904 as the National Quotation Bureau, which began as a paper-based inter-dealer quotation service.
Companies whose stock is listed on the pink sheets tend to have little trading volume. They don’t meet the minimum listing requirements for a national exchange and many are small enough that they aren’t required to file reports or audited financial statements with the Securities and Exchange Commission. Because of this lack of disclosure, purchasing shares of these companies can be very risky.