Microcap penny stocks are especially risky due to the lack of liquidity, public information, and extreme volatility. Many microcap companies are new and don’t have any proven track record.
When there’s a sudden influx of orders for certain microcap security, it triggers an investigation for market manipulation from regulators and liquidity providers. This could lead to a potential suspension of the stock
Even when there’s no evidence of misconduct, brokers have to take care that the traded volumes are not disproportionate to normal activity.
Based on the above, we have to temporarily suspend the purchasing of penny stocks that are highly illiquid and have a market cap in the tens of millions. If we don’t do so, we risk being suspended by both the relevant exchanges and market makers.
The huge inflow of new retail investors is an unprecedented phenomenon for the financial markets. Brokers, market makers, regulators, and even exchanges are still trying to navigate this new environment. We will continue pushing forward to provide as much trading freedom as possible within the regulatory framework.
A notice indicating that the purchasing is suspended will be placed on each of the affected stocks.