Too good to be true? A company with just one employee, no assets, and no revenue saw its penny stocks rocket to a $6 billion valuation this summer—enough for the SEC to shut down its trading and launch an investigation, the Wall Street Journal reports. The company, Cynk, runs a website called Introbiz.com designed to help connect people with celebrities and various kinds of professionals. Fair enough—until its stock leaped by 25,000% since June, notes Business Insider. Worse, the company address in Belize City, Belize, is inaccurate (Cynk apologized) and the company's shares have swapped hands three times over six years, always between people who were the CEO and sole employee. More details:
- Business Insider found someone matching CEO Javier Romero on Facebook and called him up. He answered to Javier until the reporter identified herself, when he said he was really Jason. Javier is "actually out right now," he said. "I don't really want to disclose his business. I can definitely get a number for you guys."
- Stock manipulation in the penny market is "extremely common" and hard to regulate, an expert tells Bloomberg. Another says that "one percent" of investors would trade in a company like Cynk—but stock promoters hardly helped, raving on Twitter that the stock "keeps surging higher!!" and "this could be EPIC!!"
- The SEC probe is part of its recent crackdown on penny-stock fraud. Over the past two years, the commission has halted trading in over 1,300 companies.
- The blog Zero Hodge drew attention to the stock this week, quipping, "Lord Overstone said it best. 'No warning can save people determined to grow suddenly rich.'"