Based on an analysis by the SEC’s Microcap Fraud Working Group, the US market regulator banned the trading of securities of microcap companies, as these can be used by fraudsters to deceive the investors.
The suspension of trading will force the companies to update their financial information, in order to confirm that they are still operational.
SEC enforcement division co-director Andrew Ceresney said, "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."
"We will aggressively suspend trading in such empty shells to take away a tool of their trade and help rid our markets of fraud."
Through its "Operation Shell Expel", the SEC has suspended trading in 379 companies in a single day last year before they could be manipulated for fraudulent activity to harm investors.
