“It’s all only a pool full of sharks,” stated Urska Velikonja, a legislation professor who research securities regulation at Georgetown College Legislation Middle. “It’s the place the unwary go to get eaten.”

Penny inventory booms are likely to happen throughout raging bull markets, when greed abounds. They had been scorching within the Nineteen Eighties, when the arrival of low cost, long-distance phone service gave rise to brokerage corporations that specialised in high-pressure, cold-call pitches of nugatory shares.

That was the specialty of Blinder, Robinson & Firm, which was led by Meyer Blinder, a New York dealer with a flamboyant popularity. Within the mid-80s, it grew to become the most important penny inventory brokerage within the nation. However by 1990 it had been liquidated, and by 1992 Mr. Blinder had been convicted of racketeering and securities fraud. After his conviction was introduced, he lunged at a prosecutor, threatening to kill him.

However stock-touting know-how adjustments with the occasions. Chilly-calling went out, adopted by faxes and e mail spam. In the present day, social media websites like Twitter and Reddit, which powered the rise of GameStop and different meme shares, are the popular methodology for constructing unwarranted hype.

Based on a civil grievance filed this month by the S.E.C., Andrew Fassari of Irvine, Calif., used his Twitter account — OCMillionaire — to pump up the value of Arcis Assets, an organization that has not carried out enterprise since no less than 2016, however whose inventory nonetheless trades. Mr. Fassari, regulators stated, purchased 41 million shares of the corporate after which posted deceptive info, together with fictitious emails from the corporate’s purported chief government about enlargement plans. Over 9 days in December, the share value skyrocketed greater than 4,000 p.c — to slightly over a nickel. Mr. Fassari’s good points had been $929,000, in keeping with the company.

Mr. Fassari’s lawyer, Jessica C. Munk, stated he denied wrongdoing. “It seems Mr. Fassari has been hit with fallout from the GameStop, Robinhood, Reddit controversy,” Ms. Munk stated in an announcement, together with a reference to the Robinhood buying and selling app. She additionally famous the S.E.C. motion’s “lightning tempo.”