SEC suspends trading of 15 ‘penny stocks’ that exploded in value after ‘social media manipulators’ pumped up their prices by creating fake Twitter accounts with bogus company news
- The SEC on Friday suspended trading for 15 penny stocks through March 11
- Regulators say social media manipulation was used to pump up their prices
- All appear to be defunct companies that had been trading at $0 before spiking
- Scammers appear to have created fake Twitter profiles for some of the firms
- Touted bogus company news to generate interest in the worthless stocks
- It is similar to the plot of Wolf of Wall Street with a social media twist
- Comes amid concern about ‘meme stocks’ such as GameStop surging in price
The U.S. Securities and Exchange Commission has suspended trading in 15 so-called penny stocks, saying social media manipulators tried to fraudulently pump up their share prices.
The order on Friday freezes trading in shares of 15 little-known companies, all of which appear to be defunct, and which until recently had been trading at $0 in over-the-counter markets.
Penny stocks are shares of small companies that are more loosely regulated than major public companies, and typically trade with high volatility. The Wolf of Wall Street film centered on a similar scheme to pump up penny stocks in the 1980s.
In this case, an investigation by DailyMail.com suggests that unknown parties created fake Twitter accounts claiming to represent the defunct companies, issuing bogus corporate news with the aim of jacking up the share prices.
Shares of Ehouse Global jumped from effectively $0 on February 23 to as high as $0.0013, after apparent social media manipulation. The stock has been frozen by the SEC
The Twitter handle @EHOS14 purported to represent Ehouse Global
In one case, the Twitter handle @EHOS14 purported to represent Ehouse Global, a cannabis sector acquisition vehicle that was founded in 2005 and is by all appearances defunct.
Ehouse Global’s website is offline, the company’s strip mall headquarters address in San Diego is now a bank branch, and according to the SEC it has not filed any financial statements in over a year.
But earlier this month, a Twitter account was registered purporting to represent Ehouse and promising exciting new corporate news.
Shares of Ehouse Global jumped from effectively $0 on February 23 to as high as $0.0013 this week — still a tiny amount, but offering a potentially huge gain to anyone holding a large number of shares.
The @EHOS14 account no longer exists on Twitter, and its creators could not be identified by DailyMail.com. The SEC did not confirm which social media platforms were involved in the alleged social media scam.
Ehouse Global’s website is offline, the company’s strip mall headquarters address in San Diego is now a bank branch (seen above), and it has not filed any financial statements in over a year
Some Twitter users were skeptical of the authenticity of the @EHOS14 account
‘We proactively monitor for suspicious trading activity tied to stock promotions on social media, and act quickly to stop that trading when appropriate to safeguard the public interest,’ said Melissa Hodgman, Acting Director of the SEC’s Division of Enforcement, in a statement.
‘We also remind investors to exercise caution and do their diligence before investing generally, including in companies promoted on social media,’ she added.
The new order freezes trading in shares of: Bebida Beverage Co. (BBDA); Blue Sphere Corporation (BLSP); Ehouse Global Inc. (EHOS); Eventure Interactive Inc. (EVTI); Eyes on the Go Inc. (AXCG); Green Energy Enterprises Inc. (GYOG); Helix Wind Corp. (HLXW); International Power Group Ltd. (IPWG); Marani Brands Inc. (MRIB); MediaTechnics Corp. (MEDT); Net Talk.com Inc. (NTLK); Patten Energy Solutions Group Inc. (PTTN); PTA Holdings Inc. (PTAH); Universal Apparel & Textile Company (DKGR); and Wisdom Homes of America Inc. (WOFA).
Trading in the 15 stocks is suspended through the end of March 11, the SEC said in the order.
Blue Sphere Corporation (BLSP) also jumped up from $0 after alleged manipulation
MediaTechnics Corp. (MEDT) was another penny stock frozen in Friday’s order
Under the federal securities laws, the SEC can suspend trading in a stock for 10 days and generally prohibit a broker-dealer from soliciting investors to buy or sell the stock again until certain reporting requirements are met.
‘Today’s action follows the recent suspensions of the securities of numerous other issuers, many of which may also have been targets of apparent social media attempts to artificially inflate their stock price,’ the agency said in a statement.
‘The SEC continues to review market and trading data to identify other securities where the public interest and the protection of investors require trading suspensions.’
It follows an explosion of interest in stock trading from small investors using platforms such as Robinhood, with many turning to social media to seek tips or share their trading strategies.
In recent weeks, the frenzy over ‘meme stocks’ such as GameStop has drawn concern from regulators and politicians, after shares of the struggling video game retailer soared wildly due to interest on Reddit.