Some Tarnished Pennies

No investment was hotter in 1980 than the so-called penny stocks—speculative shares in new companies priced at $1 or less and traded primarily over the counter in places such as Denver or Salt Lake City. Suddenly, though, the pennies have tarnished. High-interest rates now make other investments more attractive, and many investors have grown suspicious about the low-priced stocks.

Faced with heavy losses on those issues, three brokerage houses specializing in underwriting or trading penny stocks have been forced to close their doors within the past five weeks. Jerome Wenger, publisher of Penny...

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