SEC Lashes Out At Wolves Of Wall Street- Suspends 225 Companies

AppId is over the quota
AppId is over the quota

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.

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How Wall Street Manipulates Everything: The Infographics

Courtesy of the revelations over the past year, one thing has been settled: the statement "Wall Street Manipulated Everything" is no longer in the conspiracy theorist's arsenal: it is now part of the factually accepted vernacular. And to summarize just how, who and where this manipulation takes places is the following series of charts from Bloomberg demonstrating Wall Street at its best - breaking the rules and making a killing.Foreign ExchangesRegulators are looking into whether currency traders have conspired through instant messages to manipulate foreign exchange rates. The currency rates are used to calculate the value of stock and bond indexes.Energy TradingBanks have been accused of manipulating energy markets in California and other states.LiborSince early 2008 banks have been caught up in investigations and litigation over alleged manipulations of Libor.MortgagesBanks have been accused of improper foreclosure practices, selling bonds backed by shoddy mortgages, and misleading investors about the quality of the loans.* * *And in the latest news on manipulation, according to the FT, "The UK’s financial regulator is probing the use of private accounts by foreign exchange traders amid allegations they traded their own money ahead of clients orders, in a serious twist in the global probe into possible currency market manipulation. The Financial Conduct Authority has asked several banks to investigate whether traders used undeclared personal accounts, two people close to the situation said."Investors and foreign exchange traders have been speculating for a while that less scrupulous colleagues might have used private accounts at spread betting firms to gain advantages from their inside knowledge. Hiding personal accounts is viewed as a clear breach of the rules. “If someone was [using a PA] to sell or buy ahead of the fix, I have no sympathy for him,” said one trader.Personal accounts – or “PAs”, as traders call them – generally have to be declared to the bank and usually to a trader’s boss. Each individual trade then also has to be declared – often through an automatic email that is sent out when a trade is made.Regulators are focusing their investigations on possible manipulation of a crucial benchmark, the 4pm WM/Reuters fix, in an affair that is echoing the Libor benchmark rate-rigging scandal. Guess what they are going to find...Average: Your rating: None Average: 5 (15 votes)