Posted May 04, 2007 02:05 pm CDT
A legal opinion that a newly issued stock can be traded right away may be an essential part of “pump and dump” fraud, in which scam artists sell stock in new, worthless companies.
Yet the Securities and Exchange Commission apparently is not targeting lawyers who issue such opinions unless they also profit from the fraud, according to a column by Floyd Norris published in the New York Times (sub. req.).
The CEO of an electronic trading system for unregistered companies told Norris he has identified eight lawyers with a history of issuing dubious opinions in such cases. He did not disclose their names.