Editing Pump and dump (section)

==Regulation==
One method of regulating and restricting pump-and-dump manipulators is to target the category of stocks most often associated with this scheme. To that end, penny stocks have been the target of heightened enforcement efforts.

In the United States, regulators have defined a [[penny stock]] as a security that must meet a number of specific standards. The criteria include price, [[market capitalization]], and minimum [[shareholder|shareholder equity]]. Securities traded on a national [[stock exchange]], regardless of price, are exempt from regulatory designation as a penny stock,<ref>{{cite web|url=https://www.sec.gov/rules/final/34-51983.pdf|title=SECURITIES AND EXCHANGE COMMISSION|publisher=sec.gov}}</ref> since it is thought that exchange-traded securities are less vulnerable to [[market manipulation|manipulation]].<ref>{{cite web |url=https://www.sec.gov/news/press/2009/2009-117.htm |title=SEC Charges Eight Participants in Penny Stock Manipulation Ring |date=May 21, 2009 |publisher=U.S. Securities and Exchange Commission}}</ref> Therefore, [[Citigroup]] (NYSE:C) and other NYSE listed securities which traded below $1.00 during the market downturn of 2008–2009, while properly regarded as "low priced" securities, were not technically "penny stocks". Although penny stock trading in the United States is now primarily controlled through [[rulemaking|rules]] and [[regulation]]s enforced by the [[Securities and Exchange Commission]] and the [[Financial Industry Regulatory Authority]] (FINRA), the genesis of this control is found in state securities law.

The [[State of Georgia]] was the first state to [[codification (law)|codify]] a comprehensive penny stock securities law.<ref>{{Cite news |url=https://www.latimes.com/archives/la-xpm-1990-03-20-fi-532-story.html |title=Georgia to OK Tough Law for Penny Stocks |date=March 20, 1990 |author=Stan Darden |work=Los Angeles Times |agency=[[United Press International]]}}</ref> Secretary of State [[Max Cleland]], whose office enforced state securities laws,<ref>{{cite web |url=http://www.sos.ga.gov/securities/ |title=Georgia Secretary of State &#124; Securities |publisher=Sos.ga.gov |access-date=2012-12-18 |archive-date=2013-12-21 |archive-url=https://web.archive.org/web/20131221152936/http://www.sos.ga.gov/securities/ |url-status=dead }}</ref> was a principal proponent of the legislation. Representative [[Chesley V. Morton]], the only [[stockbroker]] in the [[Georgia General Assembly]] at the time, was a principal sponsor of the bill in the [[Georgia House of Representatives]]. Georgia's penny stock law was subsequently challenged in court. However, the law was eventually upheld in [[U.S. District Court]],<ref>{{Cite news |url=http://www.deseretnews.com/article/111783/GEORGIA-LAW-WONT-HURT-BROKERS-JUDGE-RULES.html?pg=all |archive-url=https://web.archive.org/web/20131203021814/http://www.deseretnews.com/article/111783/GEORGIA-LAW-WONT-HURT-BROKERS-JUDGE-RULES.html?pg=all |url-status=dead |archive-date=December 3, 2013 |title=GEORGIA LAW WON'T HURT BROKERS, JUDGE RULES |date=July 11, 1990 |work=Deseret News}}</ref> and the [[statute]] became the template for laws enacted in other states. Shortly thereafter, both FINRA and the SEC enacted comprehensive revisions of their penny stock regulations. These regulations proved effective in either shuttering or greatly restricting brokers/dealers, such as Blinder, Robinson & Company, which specialized in the penny stocks sector. Meyer Blinder was jailed for securities fraud in 1992, after the collapse of his firm.<ref>{{Cite news |url=https://www.nytimes.com/2003/02/16/business/penny-stock-fraud-from-both-sides-now.html?pagewanted=all&src=pm |title=Penny-Stock Fraud, From Both Sides Now |author=Diana B. Henriques |date=February 16, 2003 |work=The New York Times}}</ref> However, sanctions under these specific regulations lack an effective means to address pump-and-dump schemes perpetrated by unregistered groups and individuals.