By the time the government suspended trading in shares of Fantom Technologies last month, more than a decade had passed since the company filed mandatory reports telling investors and regulators how it was doing financially, according to the SEC.

The silence left potential buyers and sellers of Fantom stock in the dark about the business — and at heightened risk of making bad investment decisions.

Then again, there wasn’t much to say.

Fantom Technologies discontinued operations in 2002, former chief executive Allan Millman said in an interview.

By the following year, an anonymous scribe had posted a warning on the Internet: “Fantom Technologies is a Ghost!”

Fantom is one of many zombie stocks that have continued trading long after falling out of compliance with basic Securities and Exchange Commission disclosure requirements. Some have been delinquent since the 1990s, according to SEC records.

The SEC stepped up its attack on the zombies this year, linking them to several types of investor scams. About 1,200 companies are delinquent by more than a year, according to the SEC. But it takes time and effort for the SEC to stop the trading in these companies’ shares, even if they are on regulators’ radar.

The agency has “insufficient resources to get to all of them,” so it prioritizes on the basis of the threat to investors, giving highest priority to cases in which fraud appears ongoing or imminent, said SEC spokesman John Nester.

Investors vulnerable

Zombie stocks typically trade far removed from major markets such as the New York Stock Exchange. Actual sales may be few and far between. And when the stock changes hands, it may be for fractions of a penny per share. For example, Fantom Technologies’ shares last traded in March, when the stock closed at two-hundredths of a penny.

With prices so low, it’s easy for shares to soar or plunge in value by huge percentages. And with such anemic demand for the shares, investors who buy can’t be assured they will be able to sell their holdings.

Those circumstances can leave investors especially vulnerable to ma­nipu­la­tion, according to the SEC. In the absence of solid information about companies, unscrupulous traders can fill the vacuum with hype and misinformation, enticing investors to buy at inflated prices.

It’s a classic scam known as the “pump and dump.”

“The problem is when someone sends out an e-mail that says, ‘Hey, this company has invented the Internet, or the next Internet,’ ” and there is no authoritative information out there to provide a reality check, said R. Cromwell Coulson, president of OTC Markets Group.

OTC Markets runs an online marketplace for stocks that do not trade on major exchanges.

When OTC Markets hears that someone is hyping a stock, it displays a skull and crossbones beside it — to warn investors that “there may be pirates around,” Coulson said.

Neither Fantom Technologies, which made vacuum cleaners, nor several other delinquent filers about which The Washington Post inquired for this story received the skull-and-crossbones warning, but they were marked with stop signs advising investors to consider the lack of financial disclosures, Coulson said.

The SEC’s campaign to stop trading in delinquent filers is “a very aggressive program that protects investors — and in many cases, which is the holy grail of enforcement, before investors have been defrauded,” Nester said.

The SEC recently called attention to the risks of penny or “microcap” stocks, announcing suspensions involving 17 companies, some of which had stopped filing required financial reports.

But in some cases the SEC’s efforts may have come too late for investors.

The SEC suspended trading in a company called Calypso Wireless on June 7 after noting that its share price had more than quadrupled to 17 cents in September, when a stock-promoting Web site encouraged investors to buy the stock. Calypso had not filed periodic reports since February 2008, the SEC said.

A Calypso representative did not respond to e-mails.

Through Tuesday, the SEC had suspended trading in 163 delinquent filers and permanently revoked the registrations of 409; to some extent, the two statistics overlap. Both put the agency far ahead of last year’s pace.

Apparel America

On June 13, the SEC began the process of revoking the registration of Apparel America, which made swimwear. Apparel America had not filed a quarterly report with the agency since 1998. The company’s stock was canceled under a 1999 bankruptcy plan, said Marilyn Simon, a lawyer who represented the company.

That means anyone buying or selling that stock was trading in worthless shares, Simon said.

When a company plans to stop filing financial reports with the SEC — for example because it is dissolving, or because it no longer wants to go to the trouble and expense of being listed on a stock market — it is supposed to file a form notifying the agency, but the paperwork is sometimes neglected.

Zombie stocks can also benefit from the “piggyback exception.” Brokerage firms that support trading in a company’s shares are supposed to vet the company but can rely, or piggyback, on the fact that another brokerage firm has already researched it. That other brokerage may rely on vetting it performed before the company stopped filing SEC disclosures.

For some sophisticated investors, buying shares in a company that has gone out of business may be part of a deliberate strategy.

“Every once in a while, one of them may come back to life,” Coulson said.

Dormant corporate shells can be taken over by businesses looking for a back-door entrance to the stock market. Through “reverse mergers,” companies can avoid the regulatory hurdles associated with an initial public offering of stock.

The SEC recently issued a warning about reverse-merger stocks, saying that they have been involved in fraud and other abuses. In more than a dozen recent cases, citing a lack of current information about the companies, the SEC suspended them from trading.