Nothing Micro About Microcap Fraud

(NAPSI)—Major events and times of uncertainty are often exploited to perpetrate fraud, with microcap securities remaining a primary tool for such schemes. The COVID-19 pandemic is no exception. 

Since news of the virus first broke, the U.S. Securities and Exchange Commission has suspended trading by several dozen issuers for potentially misleading COVID-19-related claims, many involving microcap securities. 

Microcaps Explained

Microcap securities are low-priced securities issued by small companies with low market capitalization. While these securities can represent real businesses, bad actors have a history of engaging in price manipulation and other fraud in the microcap sector. However, even in the absence of fraud, microcap securities can present higher risks than larger companies. Microcap companies may not file reports with the SEC, making it difficult for investors to get facts about the company’s management,…