As part of its ongoing efforts to fight fraud in the microcap market, U.S. securities regulators have suspended trading in nine penny stocks.
The U.S. Securities and Exchange Commission (SEC) Thursday announced a new series of trading suspensions, citing its analysis of heavily-promoted microcap issuers as justification for the temporary trading halts.
“These trading suspensions are part of the SEC’s continued focus on surveying the penny stock market for suspicious activities,” said Andrew Ceresney, director of the SEC’s division of enforcement. “Using various tools at our disposal including trading suspensions, we will persist in our efforts to combat microcap fraud.”
The SEC created a Microcap Fraud Task Force last year in an effort to combat abusive trading and fraudulent conduct in microcap securities, especially involving companies that do not regularly publicly report their financial results. The regulator can suspend trading in a stock for 10 days, and prohibit brokers from soliciting investors to trade that stock again, until certain reporting requirements are met.
“Trading suspensions provide the SEC with a means to immediately neutralize potential threats to investors when questions have arisen pertaining to the accuracy and adequacy of information about publicly traded companies,” it says.