TD Ameritrade 300

Vanguard Penny Stocks


Vanguard penny stock commission and fees charged for buying pink sheets/OTCBB/stocks priced under $1 in 2017. Is Vanguard good for (offers) penny stocks trading?


Does Vanguard Offer Penny Stocks?


Yes, Vanguard customers can trade penny stocks. Traders can search for over-the-counter equities using the broker’s handy stock screener. It has the ability to look specifically for securities that trade in the OTC marketplace. Strangely, it only returns 39 choices. The screener cannot search for any stock that is priced under one penny. The handful of results that are displayed can be sorted by some important criteria, including market cap, shares outstanding, and number of employees. Curiously, some OTC stocks have zero employees.


Vanguard Penny Stock Fees


Vanguard as well as companies in the Best Penny Stock Firms list do not have penny stock/pink sheets/OTCBB fees and surcharges.

To see all Vanguard brokerage commissions, fees as well as account charges go to Vanguard Fees article.


OTC Equities Available at Vanguard


After running a screen, just click on a ticker symbol to read more about the stock on its profile page. Because these are over-the-counter securities, the information on them may be incomplete or even alarming compared to regular equities.

One stock that appears in Vanguard’s search results is Acusphere, Inc. The ticker symbol is ACUS, and its last trade price was just 2¢. The day before it was trading at 1¢, so it experienced a 100% gain in one day. There is no news available for the stock, and no earnings have been reported.

A second example is BNNP, the Bank of Napa. This stock has a much higher share price—$13. But like the previous stock, BNNP has no reported earnings. There are no analyst reports available, and the bank’s financial statements are patchy and incomplete.


Common Risks in the OTC Marketplace


Obviously, the over-the-counter environment is very different than the New York Stock Exchange. America’s major exchanges have strict listing requirements and stringent government regulation. The OTC markets, however, don’t provide this level of protection. Volatility tends to be high among OTC stocks, and bid-ask spreads are frequently very large. Liquidity can also be a problem.


Buying a Penny Stock on Vanguard


If you’ve decided that you are able to take on the extra risk that is inherent in the OTC marketplace, you can submit an order just as you would for a major stock. Clicking on ‘I want to trade this stock’ on the profile page will produce an order form. Vanguard only accepts limit orders for penny stocks. Some OTC equities may not be available for on-line trading at Vanguard.

The broker’s regular commission schedule applies to OTC securities. The trading fee is $0 to $20, depending on account size and trading frequency. Most traders will pay $7.

Comparison


While Vanguard’s screener can search by exchange, it doesn’t generate a lot of results. Fidelity’s screener displays 940 over-the-counter stocks, while TD Ameritrade shows 4,622. E*Trade’s screener cannot search for securities on specific exchanges.

Vanguard’s policy not to charge anything extra for penny stocks is much better than WellsTrade, who charges a minimum of $34.95 for OTC trades, with a maximum of 3.5% of trade value. Scottrade clients must pay 0.5% of principal value for trading any stock priced under $1, in addition to the broker’s $6.95 commission.


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Updated on 3/23/2017.





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