After warning about penny stock “pump and dump” scams earlier in the year, the Securities and Exchange Commission (SEC) is proactively suspending trading on 128 inactive penny stocks to ensure they don’t become the tool of a fraudster.

In a press release today the securities regulator launched the latest in its microcap fraud-fighting initiatives under the SEC’s “Operation Shell-Expel.” Through the SEC Enforcement Division’s Office of Market Intelligence, regulators utilize technology to scan the over-the-counter (OTC) marketplace in order to identify dormant companies that are “ripe for abuse.”

Ongoing SEC program to combat penny stock fraud, protect investors

“Operation Shell-Expel continues to be an efficient way to combat microcap fraud by denying fraudsters the empty nests they need to hatch their schemes,” Andrew J. Ceresney, Director of the SEC Enforcement Division, said in a statement. Earlier in 2014 the SEC launched an aggressive effort to stop “Wolf of Wall Street” copycats following pump and dump scams depicted in the movie of the same name.  “We are getting increasingly aggressive and adept at ridding the microcap marketplace of dormant shells within a year of the companies becoming inactive.”

In May of 2014, penny stock scams accounted for 16 percent of unwanted spam email and since 2012 the SEC has instituted trading suspensions on more than 800 microcap names, over 8 percent of the total OTC market. Today’s effort identifies dormant shell companies that were located in 24 states and Canada.

CYNK, the penny stock whose valuation hit $6 billion with only one employee

As reported in ValueWalk, an example of a penny stock pump and dump case was on display in the rags-to-riches story of CYNK Technology Corp that was up 36,000 percent in price this summer alone.

Last September U.S. federal prosecutors announced they had filed money-laundering and stock manipulation charges this week in federal court in New York against a group of people working on the same floor of a Belize office building where Cynk was supposedly headquartered.  It was all a scam, however, as the company had no revenues, profits or business model to speak of. Owners of the stock made money by selling a work of fiction.  The company, with one employee, nonetheless enjoyed a market capitalization of more than $6 billion for around an hour in mid-July this year.

[See the complete list of suspended stocks here.]