SEC Lashes Out At Wolves Of Wall Street- Suspends 225 Companies
Courtesy of Joao Peixe of OilPrice.com
The US Securities and Exchange Commission (SEC) has suspended 255 shell companies from trading until 14 February to prevent “pump and dump” fraud, and stocks will not be relisted if companies fail to prove they are operational.
The suspension took hold at the start of trading on 3 February and will end at 11:50 p.m. on Feb. 14. Suspended stocks can’t be relisted unless the company can prove it is still operational, a requirement that the SEC said was “extremely rare.”
The SEC suspension covers shell companies in 26 US states and two unnamed foreign countries, with the US regulator describing the targets as “ripe for abuse”.
These “pump and dump schemes” being targeted by the SEC generally occur when violators talk up a thinly traded microcap stock through false and misleading statements about the company to the market. The violators buy up the company’s shares cheaply and the pump up the stock price by creating the appearance of market activity and then dump the stock for a massive profit.
This activity was made famous through the 2014 Hollywood movie, The Wolf of Wall Street, which is based on the true story of former US stockbroker Jordan Ross Belfort, who served 22 months in prison for causing investors to lose $200 million through a pump and dump scheme.
The SEC moved to suspend 61 other shell companies in June last year, along with 379 shell companies in 2012. This is part of the SEC’s ongoing initiative dubbed “Operation Shell-Expel,” which was launched in 2012.
The suspension will end at 11:50 p.m. on 14 February, and according to the SEC, the “trading suspension essentially renders the shells worthless and useless to scam artists.”
Because these shells all too often are used by those looking to manipulate stock prices, we will continue to protect unwary investors by suspending trading in shells,” Andrew J. Ceresney, director of the SEC’s enforcement division, said in a statement.
Benefit From the Latest Energy Trends and Investment Opportunities before the mainstream media and investing public are aware they even exist. Click here to learn more about the Free Oilprice.com Energy Intelligence Report.
via Zero Hedge http://ift.tt/1ju9LSJ ilene