(MoneyWatch) The Securities and Exchange Commission on Monday halted trading in the shares of 61 companies, part of a crackdown in so-called empty shell companies.
The SEC’s “Operation Shell Expel” is intended to tackle manipulation of small, publicly traded companies that are dormant and thus become ripe for fraud. Because such firms are so thinly traded, crooks can more easily manipulate their stock price by hyping the companies as ongoing concerns, gulling investors to buy shares.
“Stock manipulators crave empty shell companies that they can use to conduct pump-and-dump schemes and line their pockets with illicit trading profits by taking advantage of unsuspecting investors,” said Andrew Ceresney, co-director of the SEC’s division of enforcement, in a statement. “We will aggressively suspend trading in such empty shells to take away a tool of their trade and help rid our markets of fraud.”…read full article