How they can get away with it is a simple one. Numbers.
Look at the OTC/Pinksheets. there are literally THOUSANDS of scams. Some outright, blatant scams. some more subtle. Some just where the insiders have cut some corners and made some deals for themselves.
Some are scams of 10's of millions of dollars like spongetech and some of the Chinese reverse mergers. Some are just a few guys churning an inactive shell for beer money. But in total, thousands of scams.
Each one takes manpower and time to prosecute. Tens or hundreds of thousands of dollars of government resources. Some upwards of millions. For EACH pennystock case. The numbers are staggering.
There are only a few hundred SEC investigators looking at the big picture. Probably the same amount of specialists who check for punctuation in SEC filings.
The job is staggering in scope. I've toured field offices. They can't even familiarize themselves with a fraction of the scams in their regions let alone prosecuting them. I was told that they are like the Alligators in the river and the scams are the wildebeasts. The alligators are brutally efficient in getting a few of the wildebeats. But tens of thousands will cross the river unscathed.
What is needed is a scam that puts itself on the radar. Like putting your logo in centerfield at a Mets game. Or doing TV shows criticizing the FDA. Or going from pennies to dollars on no news.
Usually what makes the scam effective is what brings them down
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