It was an incredible week for shareholders of Monarch Services Inc., a little Maryland company that fell victim to what looked a lot like an Internet penny-stock scam.
On Wednesday Monarch's sleepy stock exploded, jumping from $1.20 a share to $4.64 -- a 287 percent jolt.
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The Baltimore company's stock is usually so somnolent that days can go by without a single share changing hands. But on Wednesday, 3.4 million shares were traded -- 1,700 times the daily average.
What happened at Monarch to cause that kind of trading?
Absolutely nothing, said chief executive Jackson Dott. No merger talks. No buyout. No bid deal in the works. Just business as usual for Monarch, which publishes a little magazine called Girls' Life and runs a restaurant called Peerce's Plantation.
"It's a bunch of day traders profiting at everybody's expense," said Dott, who has seen spikes like last week's in his company's stock before, but never on such a scale.
The Securities and Exchange Commission does not comment on whether it is investigating trading in a stock, nor does the NASD, which monitors the market.
But SEC officials said that what happened to Monarch stock last week had all the symptoms of a scam.
"Whenever you are witness to a surge in volume and a surge in price of a microcap issue, there is almost always an intricate network of promoters and others at work, whose motives might not be genuine and who may even have an agenda to line their own pockets," said John Reed Stark, director of the Office of Internet Enforcement.
The name of the game is "low-float running." The object: Start a stampede of ignorant penny-stock traders into the stock of some small company that has few shares available for trading -- a "low float" in stock-trading jargon.