U.S. regulators are working on the stock market’s version of whack-a-mole – and are rushing to suspend shares of companies with dubious prospects that are on the moon on social media.
The Securities and Exchange Commission said in a statement on Friday that it had temporarily halted trading in 15 companies due to concerns that their share prices had been artificially inflated.
“We proactively monitor suspicious trading activities related to stock promotions on social media, and act swiftly to stop trading when necessary to protect the public interest,” said Melissa Hodgman, acting director of the SEC’s enforcement department. said.
The SEC repression is contributing to the aftermath of the GameStop Corps frenzy, in which an army of day traders banded together to drive stocks that have long been ignored into the stratosphere. The regulator has regularly sought to remove morbid companies from the stock market because it is concerned about retail investors suffering losses, but the effort has come amid the wild trade this year.
In Friday’s action, regulators continue to wave in one of the market’s most sinister districts, focusing on penny stocks pumped by relentless social media in price and volume frenzy. Frenetic trading, often in lucrative companies, on lightly regulated brokerage networks is perhaps the most extreme example of speculative excess in the 2021 market, a landscape that also includes rising cryptocurrencies and the craze for acquiring special purposes.
Two weeks ago, the SEC traded SpectraScience Inc. suspended – a business that rose 633% in 2021 to just over two-tenths of a cent before the halt. The SEC’s commission notes that although the company did not submit reports years ago and that its telephone number did not work, ‘social media accounts’ may be artificially influencing the share price. SpectraScience volume exceeded 3.5 billion shares in one day at the end of January, as the share rose by 167%.
None of the companies suspended on Friday submitted information to the SEC for more than a year. Under federal security laws, the SEC can ban trading for ten days and prevent a broker-dealer from requesting investors to buy or sell the stock again until certain reporting requirements are met.