(Bloomberg) – U.S. regulators are working on the stock market’s version of a slap-for-the-mole – to rush to suspend shares of companies with questionable prospects posted on social media on the moon.
In a Friday statement, the Securities and Exchange Commission said it had temporarily halted trading in 15 companies due to concerns that their share prices had been artificially inflated. One of the companies, a penny stock called Blue Sphere Corp., was recently highlighted in a Bloomberg news release after the value rose after an avalanche of messages on online messages.
“We proactively monitor suspicious trading activities related to stock promotions on social media, and act swiftly to stop trading when appropriate to protect the public interest,” said Melissa Hodgman, acting director of the SEC’s enforcement department. said in a statement.
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 unprofitable companies, on lightly regulated brokerage networks is perhaps the most extreme example of speculative excess in the 2021 market, a landscape that also includes the SPAC craze and rising cryptocurrencies.
In February, an average of 90 billion shares changed hands every day in places like those run by OTC Markets Group – often referred to as an over-the-counter or ‘pink sheet’. It picked up about 1.7 billion shares this month, according to data compiled by Bloomberg Intelligence. In December, for the first time in a decade, the total exceeded 1 trillion.
Blue Sphere is one of the many stocks that ranged from obscurity to viral sensation – and on any given day, there were a dozen similar stories. Chats on social media sites like Stocktwits and Twitter and other online chat rooms are held regularly. This is because retailers equipped with zero commissions at brokers increased to 23% of stock trading, up from 20% last year, according to Bloomberg Intelligence.
A phone call to Blue Sphere was sent to voicemail.
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.
Here are the stocks the SEC has suspended:
Blue Sphere Corp.Bebida Beverage Co.Ehouse Global Inc.Eventure Interactive Inc.Eyes on the Go Inc.Green Energy Enterprises Inc.Helix Wind Corp.International Power Group Ltd.Marani Brands Inc.MediaTechnics Corp.Net Talk.com Inc.Patten Energy Solutions Group Inc.PTA Holdings Inc.Universal Apparel & Textime CompanyWisdom Homes of America Inc.
(Updates with background on OTC trading)
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