I bought some shares in a penny stock a few years ago, but now they don't trade and are worth $0.0001 per share. I want to get rid of them, but a) market orders don't work because the shares have no volume, b) limit orders don't work because the lowest price for a limit order is $0.0001 a share and the stock is already priced there, and c) my broker won't buy them from me, which is what the answer to the similar question says to do. How do I get rid of these shares?
A few years ago, I bought about $200 worth of shares in a penny stock. The share are still listed on the OTC market, but they haven't traded in years and are practically worthless ($ 0.0001/share).
I've tried to sell them at any price (with a market order) and claim a loss that way, but they don't sell because there is zero volume. Also, I can't set a limit order for a lower price and dump them that way, because $0.0001/share is the lowest price possible for a limit order with my broker and the shares are already priced at that price point.
The answer to this question says:
Generally, to be able to write off worthless securities, you need to show that they're indeed worthless. It's not necessarily easy, as you need to prove that there's no way they will regain any value in the future.
What is usually done, instead, is very simple: you sell them. Many brokers are aware of this problem and will assist by buying these securities from you at a nominal price (E*Trade, for example, for $0.01, ScotTrade for $0.00), and providing a proper trade confirmation. This is a bona fide sale, so if the stock does regain value - it will be a profit for the broker. In this case - you just report it as a sale at loss.
Check with your broker if they support such a solution.
I contacted my broker (Fidelity), and this was their response:
We can only remove securities from your account that have been deemed worthless.
A security can be declared legally worthless only in the cases given below:
- The bankruptcy court has declared the company bankrupt under Chapter 7 or 11
- The company has no shareholder equity
A security cannot be declared worthless for any of the following reasons:
- The company is currently in Chapter 7 or 11 proceedings
- The company has no transfer agent
- The security has no bid, but the company is still viable
- The customer owns less than the minimum quantity to sell, set by the market maker
- The security is held in escrow
At this time, your stock has not been coded as worthless. I apologize for the inconvenience. Once you see a "No Stockholder Equity" status on your positions page, you can have the worthless shares removed from your account.
In 2014, the stock was temporarily suspended by the SEC, so even though the suspension was lifted a few months later, it's still a good sign that it's not a worthwhile investment anymore.
Basically, the answer to the other question says that your broker can buy them from you. However this isn't true for every broker, so that answer doesn't apply to this situation at all. Does this mean there's nothing I can do?
I spoke with my broker, and they said that not all companies issue physical stock certificates anymore, and for those that do, it costs $100 to get the physical certificate. The company I invested in does not, however, so there's no way to get a physical stock certificate that I can sell to a friend, shred, etc.
It appears that these shares are impossible to get rid of.
- I can't sell them on the market because there is no volume.
- I can't sell them to my broker for nothing (or a penny) because my broker doesn't support that.
- I can't transfer them to another broker who will buy them because their penny stocks, and most brokers (including all of those I have accounts with) won't accept the transfer of penny stocks.
- I can't get the physical stock certificate and sell them to a friend or shred it because the company doesn't issue physical stock certificates. Furthermore, since it appears that the company was basically a stock dilution scam, there isn't a way to contact them directly.
Yep. These shares are mine forever, or at least until the company is actually declared worthless.