A corporate stock that trades for less than eight dollar per share or less (sometimes, it is put at five or even one dollar or less). Penny stocks are normally issued by companies which don’t meet listing requirements for stock exchanges and are traded on the over the counter (OTC) market (bulletin board). Companies traded on the over-the-counter bulletin board (OTCBB) are subject to minimal listing requirements, rendering their issues less secured for public investors. By nature, penny stocks are volatile, speculative, and occasionally fraudulent.

Historically, specifically in the 1980s, some penny stocks were known as “blank check” or “blind pool” offerings. These were issues by companies which had no business plans or operations, but were simply raising capital to acquire some unspecified asset or to invest in some undisclosed businesses.