Monday, May 14, 2012

SEC Suspends Trading In 379 Microcap Companies In Fraud Crackdown

The Securities and Exchange Commission said it suspended trading in 379 dormant companies--the most companies the regulator has ever suspended in one day--in an effort to prevent the stocks from being hijacked by fraudsters.
The SEC's previous largest trading suspension was an order in September 2005 that involved 39 companies.
The suspensions are part of the SEC's ramped up efforts to crack down against fraud, such as pump-and-dump schemes, involving microcap shell companies that are dormant or delinquent in their public disclosures. Microcap firms typically have limited assets and low-priced stock that trades in low volumes.
An initiative called Operation Shell-Expel by the SEC's Microcap Fraud Working Group used various agency resources to scrutinize microcap stocks nationwide and identify clearly dormant shell companies in 32 states and six foreign countries that could be used for potential fraud.
"Empty shell companies are to stock manipulators and pump-and-dump schemers what guns are to bank robbers--the tools by which they ply their illegal trade," said Robert Khuzami, director of the SEC's Division of Enforcement. "This massive trading suspension unmasks these empty shell companies and deprives unscrupulous scam artists of the opportunity to profit at the expense of unsuspecting retail investors."
A pump-and-dump scheme is among the most common types of fraud involving microcap companies, the SEC said. Perpetrators will tout a lightly traded microcap stock through false and misleading statements. After purchasing low and pumping the stock price up by creating the appearance of market activity, they dump the stock to make a profit.

2 comments:

andrew fields said...

I this blog is really great. I’m glad that i found a place to get such good information. Keep up the good work!.



best penny stock alerts

andrew fields said...

Great job on this blog. I think that your perspective is deep, it’s just well thought out and really fantastic to see someone who knows how to put these thoughts down so well. Great stuff here.





top penny stock picks