On Monday morning, the Securities and Exchange Commission escalated its efforts to root out microcap fraud and, with a national sweep, suspended trading in 255 dormant shell companies it says were ripe for abuse in the over-the-counter market.

According the SEC, pump-and-dump schemes are among the most common types of fraud involving microcap companies. Perpetrators will tout a thinly-traded microcap stock through false and misleading statements about the company to the marketplace. After purchasing low and pumping the stock price higher by creating the appearance of market activity, they profit by selling it into the market at the higher price. Since the SEC's Operation Shell-Expel began in 2012, the Enforcement Division's Office of Market Intelligence has suspended trading in several hundred dormant shell companies in an effort to be one step ahead of fraudsters who could manipulate them.

Th latest sweep involved dormant shell companies in 26 states and two foreign countries. Once a stock has been suspended from trading, it cannot be relisted unless the company provides updated financial information to prove it is still operational. “It is extremely rare for a company to fulfill this requirement, so the trading suspension essentially renders the shells worthless and useless to scam artists,” an SEC statement says.