Today, the Securities and Exchange Commission (SEC) issued a Press Release announcing that as a result of its micro-cap fraud-fighting initiative they named “Operation Shell-Expel”, they suspended trading in 255 dormant shell companies in 26 states and 2 foreign countries, they designated as “ripe for abuse in the over-the-counter market.
The complete list can be found Here: 34-71465
Operation Shell Expel began in 2012, although shell companies have faced scrutiny for years, particularly when used in connection with “reverse-mergers.” As the SEC said, Pump-and-dump schemes are among the most common types of fraud involving microcap companies. Perpetrators will tout a thinly-traded microcap stock through false and misleading statements about the company to the marketplace. After purchasing low and pumping the stock price higher by creating the appearance of market activity, they dump the stock to make huge profits by selling it into the market at the higher price.
The suspension took hold at the start of trading on Monday 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.”
Author: Jennifer Trowbridge, Stoecklein Law Group, LLP