SEC Suspends Trading of 26 Companies to Combat Corporate Hijackings
 
March 24, 2008
 

On March 13, 2008, the SEC suspended trading, for 10 business days commencing on March 13, 2008, in the securities of 26 companies to combat corporate hijackings, which occurs when the identity of a defunct or inactive publicly-traded corporation is usurped. In this instance, certain persons appear to have incorporated each of the 26 companies using the same name as a then defunct or inactive publicly-traded corporation,. They then usurped the CUSIP numbers and ticker symbols of the securities of the defunct or inactive publicly-traded corporations for use by the newly-incorporated entities. They then obtained new CUSIP numbers and ticker symbols for use by the newly-incorporated entities by claiming to be officers, directors or agents of the original publicly-traded corporation.

The SEC ordered the suspensions because of concerns regarding the accuracy and adequacy of information relating to the companies’ status as publicly-traded companies. The suspensions are part of the SEC’s efforts to address fraud involving microcap, or non-exchange traded securities. Linda Chatman Thomsen, Director of the SEC’s Division of Enforcement, stated:

“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.”

http://www.sec.gov/news/press/2008/2008-41.htm