A Penny For Your Stock
Sometimes I long for the days when I could drive to the Egghead Software store and buy computer programs on floppy disks.
Well, no. Not really. Egghead, founded in 1984, was once the nation's largest software retailer. It went bankrupt in 2001. Amazon.com (AMZN) eventually picked up its pieces.
I had no idea Egghead stock still traded. It boasts a 52-week high of 34 cents a share, according to data provided by FactSet. This is an amazing performance for a technology-focused retailer that hasn't actually existed for more than a decade.
In 1999, Egghead filed a form with the Securities and Exchange Commission to terminate its securities registration. And now that it's 2013, the agency has decided to suspend trading of Egghead shares in a move it calls "Operation Shell Expel." Egghead, in fact, was one of 61 shells that the SEC halted on Monday.
Penny stocks are the departed souls of dead companies, and they often enjoy an afterlife in the hands of con artists.
"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," explained the SEC's Andrew Ceresney in a press release. "We will aggressively suspend trading in such empty shells to take away a tool of their trade and help rid our markets of fraud."
Anyone who would buy Egghead is a blockhead. Nevertheless, the SEC is out to "aggressively" protect them in what it dubs the "second-largest trading suspension in history" following last year's crackdown on 379 shady shell stocks in a single day.
The SEC bragged that it detected these shells "using enhanced intelligence technology in the Enforcement Division's Office of Market Intelligence." I'm pretty sure the agency didn't buy this program at Egghead. Maybe it got it from Ron Popeil.
Ronco Corp. hasn't filed documents with the SEC in more than five years. This entity was sliced and diced into some of the famous TV pitchman's other companies in 2005, according to documents filed with the SEC a really long time ago. Nevertheless, its 52-week high is at 17 cents, performing even better than Mr. Popeil's "Inside-The-Shell Egg Scrambler."
You probably remember the Veg-O-Matic and the Pocket Fisherman. You probably remember "Mr. Microphone," the Popeil product that transmitted your voice over any FM radio. You probably remember the TV commercial featuring a dork in a convertible who uses his Mr. Microphone to catcall: "Hey, good lookin', we'll be back to pick ya up later!"
But you probably don't remember the Audiorave, a thumb-drive MP3 player, by a company called Pogo! Products Ltd. Pogo filed its securities registration termination form in 2005. But its stock was still trading. Its 52-week high is at 2 cents. I guess the SEC has finally become concerned that anyone with a Mr. Microphone could pump it to 4 cents.
Another schlock stock on the SEC suspension list is CBR Brewing Co.., which once had a license to market Pabst Blue Ribbon beer in China. The company hasn't filed with the SEC since 2004. You'd think if someone could get urban hipsters in the U.S. drinking this skunk water, the Chinese could learn to like it, too. But it would have taken 3,000 to 5,000 shares of CBR Brewing's stock to buy just one can of Pabst.
The SEC is also saving us all from buying PopMail.com Inc., which hasn't filed with the SEC since 2007. PopMail ran the long-shut "Cafe Odyssey" restaurants at the Mall of America in Bloomington, Minn., and in Denver, Colo. It also ran an email service for radio stations to provide for their listeners. It had a 52-week high of 3 cents a share. Oh, yes. PopMail was a bubble about to pop.
You would think the ticker symbol for American Utilicraft Corp. would be warning enough for any investor: AMUC. Here's what AMUC reported in an SEC filing when it was running amuck in--eh-hem--2001:
"We continue to be a development stage...company, and with no product to sell, no revenue stream, significant operating losses and negative cash flow from operations. Our ability to continue as a going concern is subject to continued sales of stock."
A pump and dump is never as explicit as this. Good thing the SEC suspended trading...a dozen years later.