(Bloomberg)-US regulators are participating in the stock market version of the rat war-racing to suspend the stocks of companies with suspicious prospects, which are hyped up on social media.
The Securities and Exchange Commission said in a statement on Friday that the company temporarily suspended trading of 15 companies due to concerns that its stock price was artificially elevated. One of the companies, a penny stock called Blue Sphere Corp., was recently highlighted in a Bloomberg News report that the company’s stock price soared after posting a large number of posts on its online message board.
Melissa Hodgman, acting director of the SEC’s enforcement department, said in a statement: “We will proactively monitor suspicious trading activities related to stock promotions on social media and take prompt action when appropriate to prevent This transaction is to protect the public interest.”
The SEC’s repressive measures have exacerbated the impact of the GameStop Corp. frenzy, in which a group of day traders gather to push stocks that people have long neglected to the sky. Fearing that retail investors will suffer losses, the regulator usually tries to withdraw companies that are on the brink of bankruptcy from the exchange, but in this year’s crazy trading, this effort has accelerated.
In Friday’s action, regulators are further stepping into one of the worst performing regions in the market, with the goal of pushing a penny of stocks into a price and trading volume frenzy through increasing social media placements. Frequent trading of often unprofitable companies on a loosely regulated network of brokers may be the most extreme example of market speculative excess in 2021. This situation also includes the SPAC boom and skyrocketing cryptocurrency.
In February, an average of 90 billion shares changed hands every day at venues operated by the OTC Markets Group-often referred to as “over-the-counter” securities or “pink sheets.” According to data compiled by Bloomberg Intelligence, the company’s stock has increased by approximately 1.7 trillion shares this month. In December, the total amounted to more than ten years, exceeding USD 1 trillion for the first time.
Blue Sphere is one of many stocks that went from obscurity to virus infection-there are more than a dozen similar stories on any given day. Often, chatting on social media sites such as Stocktwits and Twitter, and other online chat rooms heralds takeoff. According to Bloomberg Intelligence data, this happens when retail brokers’ zero-commission trading has soared from 20% last year to 23% of stock trading volume.
The call to Blue Sphere on Friday was sent to voicemail.
Two weeks ago, the SEC suspended SpectraScience Inc.’s transactions. SpectraScience Inc. soared 633% in 2021 before it stopped trading, which is only two-tenths of an increase. The SEC order stated that although the company has not filed a report for many years and its phone number does not work, “social media accounts may have been involved in a coordinated attempt to artificially influence its stock price.” In late January, SpectraScience’s trading volume exceeded 3.5 billion shares, and the stock soared 167%.
None of the companies that were suspended from trading on Friday have submitted any information to the U.S. Securities and Exchange Commission (SEC) for more than a year. Under the federal securities laws, the SEC can ban trading for 10 days and prohibit broker-dealers from requiring investors to buy and sell stocks again until certain reporting requirements are met.
The following are the stocks suspended by the SEC:
Blue Sphere Corp. Bebida Beverage Co. Ehouse Global Inc. Eventure Interactive Inc. Eyes on 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 Company PTA Holding Company General Apparel and Textile Company American Wisdom House Company
(Background update on over-the-counter transactions)
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