In an effort to prevent pump-and-dump schemes, the Securities and Exchange Commission on Monday shut off trading in 61 micro-cap shell companies — at least one of them based in Denver.
The annual move, called Operation Shell Expel, is designed to prevent the manipulation of dormant over-the-counter stocks that are ripe for fraud.
The SEC suspended trading last year on 379 shell companies as part of the same efforts to stop fraudulent stock offerings.
Micro-cap companies are thinly traded. Once dormant, they have great potential to be hijacked by people who hype the stock to portray it as a thriving company.
The delisting lasts until June 14 and will remain until a company can provide updated public filings with the SEC.
Denver-based Devonshire Consolidated Inc., trading as DVNO, was temporarily delisted, with no discernible activity on its stock since it began trading in February at 16 cents a share.
The company was located in the Cherry Creek area of Denver, was purportedly engaged in the design and manufacture of “interactive laser tag game systems” and at one time boasted 45 employees.
Records filed with the SEC show the company originally was called Laser Storm, with nearly $6 million in assets in April 1996, when it first went public at $4 a share.
By 1997, the company was operating at a loss, quickly shuttering locations and battling lawsuits by investors, SEC filings show.
Laser Storm officially closed in March 1998, according to SEC filings. Robert Cooney was listed as its last president and CEO.
Cooney could not be located Monday.
“Stock manipulators crave empty shell companies that they can use to conduct pump-and-dump schemes and line their pockets with illicit trading profits by taking advantage of unsuspecting investors,” Andrew Ceresney, co-director of the SEC’s division of enforcement, said in a statement.
