We might be better off in a pure caveat emptor system where investors do not suffer from the delusion
Oh but that is the current system, and justification used for the continued existence of penny scams: You should know they are high risk. Online brokers require their clients to electronically sign off on it. Then after that buyer beware. The SEC apparently can't pr-empt the scam. They always wait for an insider dump as part of the pump, before suspending. Where insiders have profited by selling stock. Even after a SEC suspension it's buyer beware. Which means insiders can outright lie to the stockholder afterwards: The suspension was about a blog cartoon the SEC didn't like, and 3rd party promotional outfits still with skin in the game can continue to pump it, in order to wiggle out. More damage to stockholders - but hey buyer beware.
Of course one has anal-ysts in blue chips pitching stocks based on their own firm's position in the stock. But you also have completing anal-ysts trying to prove their PTs, and EPSs are more accurate than the other guy so as to lure in clients to their firm. In penny stocks the only completion between 3rd parties is which can time the pump the best for their subscribers. On the TSX information from insiders to the Hedgies and Tutes leaks like a sieve. Frustrating for the retail investor to be kept in the dark as a stock runs or crashes unexpectedly, but at least the information is real, when the company issues a PR. In the penny world you have the company creating imaginary information, and coordinating the P&D with outsiders. Guess I just don't see your argument the greys are similar to NYSE stocks - they seem quite different in vivid color.
The real problem is penny stocks are already caveat emptor. Where if 0.2% of retail investors get screwed in penny land, it's not going to even register as a pixel on the Congressional radar screen. Perfect stealth. Who cares in Washington!? Congress isn't investing in penny stocks. They certainly don't need to entertain themselves dreaming penny land dreams. If they want entertainment they can always play card games on their iPOD while debating about Syria or sumpthin. Outside of AARP descending on Washington screaming "save the grannys", it's quite unclear if anything substantial will ever be done to tighten up on the pinkies.
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