Generally, low-priced (below $5) speculative equity securities of very small companies. While penny stocks generally trade over-the-counter (OTC), such as on the OTC Markets or the Over-the-Counter Bulletin Board Market, they may also trade on securities exchanges, including foreign securities exchanges. In addition, penny stocks include the securities of certain private companies with no active trading market. For the SEC definition of penny stock, see Rule 3a51-1 under the Exchange Act.

Because penny stocks are considered to be speculative and high-risk due to their limited liquidity and other factors, penny stock issuers may not be able to rely on certain safe harbors and other accommodations available to other issuers (see, for example, Summary of Research Report Rules: Chart and Practice Note, Free Writing Prospectuses).