Sadly, there is an irreconcilable tension between what we may feel are outright fraudulent stock scams as seen in the pennystock markets and the more subtle stock promotion that is built into even the most rigorous Big Board blue chips. It is a grayscale with no particular demarcations that would serve as bright lines for drawing rules to separate the "totally fake stock scams and rigs" from the "upstanding, legitimate" Fortune 100 and their forward-looking statements and creative but legal accounting manipulations.
One thing I have learned is that even with top underwriters and analysts, there is so much salesmanship (a.k.a. boolsheet) involved with pitches to institutions, corporate actions, and reporting that one could not formulate rules to exclude even MOST of the what we might consider most outrageous scams from "legitimate" companies.
IMO, this is why no amount of legislation or regulation can put a significant dent in stock scams without negatively impacting other companies that we might consider legitimate enterprises.
Silicon Valley runs on selling hopes and dreams, and is aided by more-than-willing i-banks that in many cases spin the stories more than the company management themselves.
The scamming of NOVICE individual retail investors by the penny stocks is in many ways not a whole lot different than what I have seen routinely in presentations by many/most Silicon Valley tech companies to institutions like Fidelity, T. Rowe, and Vanguard.
I have seen noted, reputable GS-level i-banks (without naming names) be much more interested in reworking a PowerPoint deck to make it sizzle to the institutions than to ensure the correctness or propriety of the content of the deck.
And this includes the Googles, Ciscos, Applied Materials, Oracles, and Intels.
It is all just a matter of degree. Salesmanship is largely clever lying, with the goals of walking the legal tightrope and having the buyer *never* discover that they have been creatively misled.
Ultimately, equities are all share-printing/PPS-pumping scams, and business valuation metrics are nothing more than a variety of illusionist tricks based on assumptions and guesses. Accountants employ standards and rules to provide the patina that their work is an accurate model of reality. However, even the most rigorous accounting reports are not to be treated with the reverence of empirical data in a hard science.
So I am sorry to report that efforts to purge fraud from the markets without significantly damaging investment in new products and services is largely, IMO, a fool's errand. We would be better served with a pure "caveat emptor" system than we would by a system preoccupied with squeezing out the pennystock frauds.
Of course we have an intermediate system now, so perhaps that helps, but maybe not. I run across many penny stock suckers who invested on the belief that the SEC was protecting them and only legitimate businesses could trade publicly. We might be better off in a pure caveat emptor system where investors do not suffer from the delusion that a listed (or unlisted) stock must be legit because "they can't lie or the SEC would throw them in jail, so the PR must be true unless they are crazy and want to be in prison".
Maybe depressing, but that is where I come out on this. Even though I enjoy seeing scammers sent to the BOP and uncovering the way the lower-level weasels con the rubes, we must also recognize that there are much more sophisticated and subtle levels of scamming that go on everyday in every equity issue to some degree.
Now, back to our regularly scheduled programming.
