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Stories of Interest
- Sarah ten Siethoff is New Associate Director of SEC Investment Management Rulemaking Office
- Catherine Keating Appointed CEO of BNY Mellon Wealth Management
- Credit Suisse to Pay $47Mn to Resolve DOJ Asia Probe
- SEC Chair Clayton Goes 'Hat in Hand' Before Congress on 2019 Budget Request
- SEC's Opening Remarks to the Elder Justice Coordinating Council
- Massachusetts Jury Convicts CA Attorney of Securities Fraud
- Deutsche Bank Says 3 Senior Investment Bankers to Leave Firm
- World’s Biggest Hedge Fund Reportedly ‘Bearish On Financial Assets’
- SEC Fines Constant Contact, Popular Email Marketer, for Overstating Subscriber Numbers
- SocGen Agrees to Pay $1.3 Billion to End Libya, Libor Probes
- Cryptocurrency Exchange Bitfinex Briefly Halts Trading After Cyber Attack
- SEC Names Valerie Szczepanik Senior Advisor for Digital Assets and Innovation
- SEC Modernizes Delivery of Fund Reports, Seeks Public Feedback on Improving Fund Disclosure
- NYSE Says SEC Plan to Limit Exchange Rebates Would Hurt Investors
- Deutsche Bank faces another challenge with Fed stress test
- Former JPMorgan Broker Files racial discrimination suit against company
- $3.3Mn Winning Bid for Lunch with Warren Buffett
- Julie Erhardt is SEC's New Acting Chief Risk Officer
- Chyhe Becker is SEC's New Acting Chief Economist, Acting Director of Economic and Risk Analysis Division
- Getting a Handle on Virtual Currencies - FINRA
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NEWSLETTERS & ALERTS
It’s Best to Avoid Thinly-Traded Stocks
by Howard Haykin
The Securities and Exchange Commission (“SEC”) recently took action against 18 traders – primarily based in China – who, from 2013 to present, manipulated the prices of more than 3,000 thinly-traded securities. By creating the false appearance of trading interest and activity, these traders artificially boosted or depressed stock prices of selected stocks, enabling them to make over $31 million in illicit profits – at the expense of small 'mom and pop investors'.
HERE’S HOW A TRADING SCAM WOULD GO DOWN. Using different brokerage accounts, traders would place several small sell orders to depress the stock price. They then would buy larger amounts of that stock through other brokerage accounts - all at the low prices they created. AT THAT POINT, THE TRADERS FLIPPED THE SCRIPT - placing several small buy orders (to artificially raise the share price) and then unloading their share positions at the artificially high prices (to reap large profits).
Mom and pop investors in these thinly-traded stocks are the unwitting victims in these scams by buying shares at high prices and selling shares at low prices.