Why is investing in over-the-counter companies described as highly risky?

1. The over-the-counter markets are those other than the organized exchanges, namely the Over-the-Counter Bulletin Board and the Pink Sheets. 2. They generally list small companies and have no listing or maintenance standards. 3. That makes them attractive to young companies looking for funding. 4. Companies traded there do not have to file with the SEC or follow the costly provisions of Sarbanes-Oxley. 5. An investor therefore gets neither the vetting of a listing standard nor the disclosure that securities law compels elsewhere. 6. For that reason investing in over-the-counter companies is highly risky and suited to experienced investors only. _Source: OpenStax Introduction to Business (CC BY 4.0), Ch 16 "Understanding Financial Management and Securities Markets", section 16.7 Buying and Selling at Securities Exchanges_