Courtesy of ZeroHedge. View original post here.
Submitted by Tyler Durden.
Over six weeks ago we were the first to bring the investing world's (and SEC's) attention to CYNK technologies – a revenueless, assetless 'social network' shell that rapidly exploded in price and market cap soared to $6 billion. Since then it has come crashing back to 'sanity' levels – i.e. worthless – and now, as WSJ reports, The Securities and Exchange Commission is investigating. Their initial findings show a number of 'repeat offenders' linked to several stocks that suffered suspicious trading – just as we noted here…
Even in the boom-and-bust universe of penny stocks, Cynk was a supernova—soaring 36,000% before the SEC suspended trading, then losing almost all of the gains after the halt was lifted.
Cynk's eye-popping valuation—given it reported no assets and only one employee—briefly made it the talk of Wall Street. But the affair also highlighted a complex web of people who were connected to Cynk and other microcap companies that have soared and sagged.
Peter Messineo, a 53-year-old accountant from Palm Harbor, Fla., is the auditor being scrutinized. He is one of a number of "repeat players" linked to several stocks that suffered suspicious trading who are being looked at by the SEC, as it shifts its tactics in its battle against penny-stock fraud, the people said.
The SEC is looking at whether some lawyers and accountants are liable for helping to enable penny-stock frauds, either by signing off on phony information or simply not asking the right questions, said people close to the agency.
…
Mr. Messineo, who hasn't been accused of any wrongdoing, said he was just a "bystander" at the Cynk stock blowup and there is no reason he should come under scrutiny. "The SEC should look into whatever they want to, that's their job. But I had no connection to any suspicious trading and I stand by my audits," he said.
The Public Company Accounting Oversight Board, which polices auditors, said its routine 2011 inspection of Mr. Messineo showed "deficiencies" in his audits.
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The SEC still is investigating what happened with Cynk, said people close to the agency. It isn't clear who, if anybody, made significant profits from the stratospheric stock increase. A representative of Cynk couldn't be reached for comment.
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In summary – you're welcome SEC. But, of course, all the time the Fed is encouraging the dash-for-trash trade with its ever increasing put strike, this kind of fraud will continue to find willing get-rich-quick investors to to fuel the insanity.
