SPNGE - SEC Suspends Trading Because..... Well It's A Penny Stock.

In suspending trading of SPNGE the SEC has validated their ineptitude at protecting the money of investors all these years.  You either let the game continue as it has,or you halt the entire penny stock market.  If the SEC decided to hold the rest of the penny stock arena to the same standards they have just given SPGNE, then we would see 85% of penny stocks suspended from trading.

The SEC  suspension letter sounds somewhat like a press release from a penny stock.  "it appears"????

How do you start with "it appears?"  Don't you know for sure?  Here is an excerpt from the suspension:

It appears to the Securities and Exchange Commission that there is a lack of current and accurate information concerning the securities of SpongeTech Delivery Systems, Inc. ("SpongeTech”) because questions have arisen regarding the accuracy of assertions in press releases to investors and in periodic reports filed with the Commission concerning, among other things: (1) the amount of sales and customer orders received by the company; (2) the company’s investment agreements; and (3) the company’s revenues as reported in its financial statements. In addition, SpongeTech has not filed any periodic reports with the Commission since the period ended February 28, 2009.
The Commission is of the opinion that the public interest and the protection of investors require a suspension of trading in the securities of the above-listed company.

Protection?  So when the stock opens for trading on October 17th how will you have protected shareholders?  The stock will undoubtedly be down 50%.  Is that protection?  SPNGE is clearly not the worst of your problems.  To many investors it has been a money maker.  EWRC, EVFL, there are numerous others that continue to suck investors dry while SPNG has pulled a 60 bagger for some.  Let's focus on the criminals first.  Then again it did take the SEC decades to land a $50 billion fraud in Madoff. 

The most translucent stocks trading in the pennies are there for a reason.  The most irresponsible stocks are there because they write misleading, pump press that garners the sucker investor into buying shares.  It also gets the savvy penny stock trader to buy, but only for an hour or so before the wheels begin to come off the bus.  Sometimes those wheels, like SPNGE, don't come off the bus.  The stock continues to soar.  There are the few times where the price per share, the story, and the 10-k align.  It does happen sometimes.

But for the most part penny stocks are to be traded not held.  If the SEC wants to suspend trading in SPNGE then I suggest every penny stock trader watches their back, because there is no telling what stock(s) will be next.

SPNGE is the epitome of a penny stock.  Great story, amazing following, and a real tried and true product. The stock soared from intial sub-penny levels and still stood a full 8 bagger from its year lows.  SPNGE was a highly liquid stock that still held value amidst the recent 8-k revealing the SEC investigation.  If the SEC was truly looking out for investors they would have been quicker to the trigger, instead of doing it now.

I'd call this a huge blow to penny stocks.  The SEC has declared war and the next salvo could be at a penny stock near you.