The U.S. Securities and Exchange Commission today suspended trading in the securities of 26 companies that it says appear to have usurped the identity of defunct or inactive publicly-traded corporations using a tactic known as corporate hijacking.
The commission said it ordered the suspensions because of questions regarding the adequacy and accuracy of information pertaining to their status as public companies. The trading suspensions will last for 10 business days, starting today.
The SEC acknowledged the assistance of the RCMP and the Ontario Securities Commission in the case; along with the U.S. Attorney’s Offices in New Jersey and Florida, the Newark and Tampa field offices of the U.S. Secret Service, and the Financial Industry Regulatory Authority.
The commission says that the trading suspensions are part of its stepped-up effort to address fraud involving the securities of microcap, securities.
“Microcap investing involves thousands of companies and hundreds of thousands of investors. Keeping this tier of the market honest and free of fraud is every bit as important to investor confidence as our regulation of the world’s largest companies and exchanges,” said SEC chairman Christopher Cox. “These trading suspensions demonstrate the SEC’s intensified commitment to eradicating microcap fraud. The trading suspensions, and the actions that will follow, should leave no doubt that the Commission will use all of the weapons in its arsenal to combat those who threaten the integrity of our markets.”
Linda Chatman Thomsen, director of the SEC’s Division of Enforcement, added, “Hijackings are a burgeoning problem, and a type which the Division’s microcap fraud working group was created to address. Today’s trading suspensions are squarely aimed at putting the market on notice about the risks associated with acquiring non-operational or ‘shell’ companies, and with investing in microcaps. This is a first step. We will continue to vigorously investigate those involved.”