Most companies that are traded in the US over-the-counter stock market do not have independent directors, but some do. Should the existence of independent directors in OTC companies be considered a good thing from the perspective of a retail investor?

For example, Computer Services, Inc. (CSVI) has at least two independent directors, while Fannie Mae (FNMA) does not. Should the existence or non-existence of independent directors affect my OTC stock investment decisions in any way?

1 Answer 1


Yes, the existence of independent directors should affect your OTC stock investment decisions. Having some or all independent directors is a principal of good corporate governance for multiple reasons. Those include avoidance of conflicts of interest and the opportunity to benefit from the guidance of experts, be they experienced businessmen or technical experts. OTC Markets (the operators of the Pink Sheets, OTCBB etc.) describes the benefits of having Independent Directors.

Fannie Mae stock isn't comparable to most OTC listings, as it isn't a penny stock, see the right side, top of the OTC QB page for FNMA. OTC designates it as penny stock exempt, which means that it is a larger company with more assets and higher trading volume.

I wouldn't compare FNMA to most listings on OTC exchanges, because Fannie Mae is a US government-sponsored enterprise chartered by Congress.

  • 1
    Plus Fannie is still in the conservatorship necessitated by the 2008 crash, which means FHFA can overrule the directors. (Freddie Mac also.) Commented Oct 15, 2021 at 4:28

Not the answer you're looking for? Browse other questions tagged .