About the Pink Sheets
The Pink Sheets is an electronic trading system owned by Pink Sheets, LLC. The purpose of the system is to display bid and ask quotations on a variety of securities. The Pink Sheets "exchange" is mainly used to trade over the counter (OTC) securities.
Historically, brokers had traded these securities on paper - pink paper - which led to the naming of the system as we know it today. These days, the pink sheet exchange is known as being one of the riskiest investment instruments as the securities listed on it are not registered nor overseen by the Securities and Exchange commission (read their statement here). Therefore, the companies listed do not submit annual reports or any other data to any oversight organization. Above even that, the pink sheets do not require companies that it lists to meet any requirements for listing what-so-ever. Proper care and due diligence is required of anyone looking to invest in a pink sheets security.
Securities on the pink sheets are usually closely held and trade with relatively low volume. In recent years, there have been efforts to make trading these securities more difficult. Some securities are restricted to sale in only some states. These movements have begun because of the high level of fraud and email scams that have been increasing in number year over year.