Blue Sheets – What Are They and Why Are They Called “Blue Sheets”?
In the stock market and investing world, when someone mentions “blue sheets,” it is common knowledge that they are not talking about bedroom linens. Instead, when those two words are used together in reference to the stock market, it is referring to questionnaires that the SEC sends out requesting information regarding all of the information relating to trades like the name of the security, the price of the trade, the date the trade took place, and all of the parties involved in the trade in question. As you can see, the Blue Sheets hold a lot of information for a single trade that is done on the stock exchange.
Just like the Pink Sheets were on pink paper, the Blue Sheets were on blue paper. These days, however, these questionnaires are usually done electronically because of the sheer number of trades that takes place on the stock exchange on a daily basis. These electronic questionnaires are done through the Electronic Blue Sheets system, or EBS for short.
A Blue Sheets request is a serious matter. If a stockbroker or trader either does not respond to a Blue Sheets request or they refuse to supply the information requested, it can have serious consequences. As with anything else related to regulatory agencies, refusing to submit all information requested can result in fees and jail time, among other penalties. The fact of the matter is that, if a stockbroker or trader does not readily submit this information when asked, it demonstrates that there is something they are trying to hide. Also, it is a sign of bad recordkeeping if the information requested is not readily available. All of these things will be monitored closely by the regulatory agency in order to determine if there are any red flags relating to the trade in question.
Some people may think that requiring disclosure of information that is requested on Blue Sheets is a bit ridiculous. The truth of the matter is that these regulatory agencies are entrusted with the act of making sure the stock exchange is a safe environment to trade in. People should not have to worry any more than they already do when they invest their money into a company or stock. By providing this full disclosure that the Blue Sheets requires, people who are investing can feel a little better about the stocks they are investing in on the stock market.