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Investor Alert: Dormant Shell Companies – How to Protect Your Portfolio from Fraud

10/30/2014
FINRA and the SEC’s Office of Investor Education and Advocacy are issuing this alert to warn investors that some low-priced “penny” stocks that are aggressively promoted may in fact be stocks of dormant shell companies – companies that have no or nominal business operations or non-cash assets for an extended period of time. Many dormant shell companies that continue to trade in the over-the-counter (OTC) market are susceptible to market manipulation. This alert follows action by the SEC to suspend trading in 255 dormant shell companies in February 2014 and subsequent suspensions of other thinly traded penny stocks.

FINRA and the SEC’s Office of Investor Education and Advocacy are issuing this alert to warn investors that some low-priced “penny” stocks that are aggressively promoted may in fact be stocks of dormant shell companies – companies that have no or nominal business operations or non-cash assets for an extended period of time. Many dormant shell companies that continue to trade in the over-the-counter (OTC) market are susceptible to market manipulation.

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