Microcap Fraud Law and Legal Definition
Microcap stock fraud is a form of fraud on the securities. Microcap frauds are usually committed on microcap companies. Microcap companies are those companies with a market capitalization of under $250 million.
Microcap fraud includes several types of investor frauds:
1. Pump and dump;
2. Chop stocks;
3. Dump and dilute; and
4. Other unscrupulous brokerage practices, including bait and switch, unauthorized trading, and no net sales policies in which customers are prohibited or discouraged from selling stocks