January 15, 2006
Stock manipulation enters cell-phone era
The U.S. Justice Department has found evidence that stock manipulators have formed "virtual boiler rooms," using mobile phones and brokers from multiple firms to evade detection, and it may pursue criminal cases against them, a government prosecutor said, according to the Philadelphia Inquirer.
David Esseks, head of the U.S. attorney's securities-fraud task force in New York, said his office was responding to a "resurgence" of efforts by brokers to influence the prices of rarely traded stocks that are not listed on any exchange, as well as shares listed on the Nasdaq Stock Market.
The practice of artificially inflating little-known companies' shares and then selling them was depicted in the 2000 film Boiler Room. Salesmen in the movie worked the phones in a Long Island brokerage firm, using high-pressure sales tactics to cajole investors into buying often worthless stocks.
Esseks did not say whom his office was investigating and declined to say when any charges might be announced.
The Securities and Exchange Commission is pursuing similar cases, Linda Thomsen, chief of enforcement at the agency, told attendees at the conference."
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