SEC Microcap Fraud Task Force Acts

The SEC is stepping up their effort to combat microcap fraud related to stock-touting websites, twitter users, and often anonymous individuals posting to Internet message boards that hype small companies who have not met SEC filing obligations or that trade on the Pink Sheets.

As stated in the SEC release 2011-120, June 7, 2011:

The trading suspensions spring from a joint effort by SEC regional offices in Los Angeles, Miami, New York, and Philadelphia; its Office of Market Intelligence; and its new Microcap Fraud Working Group, which uses a coordinated, proactive approach to detecting and deterring fraud involving microcap securities.

The Microcap Fraud Working Group is a joint initiative of the SEC’s Division of Enforcement and Office of Compliance Inspections and Examinations. The Working Group is pursuing a strategic approach to combating microcap fraud by focusing on recidivists and insiders, and on the attorneys, auditors, broker-dealers, transfer agents and other gatekeepers that facilitate a large volume of the fraud in this sector. The Working Group is comprised of staff from the SEC’s headquarters in Washington D.C., each of its 11 regional offices, and from the Office of Market Intelligence, Division of Corporation Finance, Division of Risk, Strategy, and Financial Innovation, Office of General Counsel, Division of Trading and Markets, and the Division of Investment Management.
As a firm that represents legitimate smaller companies fully complying with securities laws to raise capital to reach their business objectives or that have gone public for other legitimate reasons, we applaud these efforts to clean up our corner of the market.

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