Jeffrey Starr of Charles Schwab wrote a good comment letter to the SEC which you should read in its entirety. I’ve excerpted some key parts below:

“Large reverse splits tend to be clear indicators of potential fraud, yet Nasdaq has not been vigilant in policing this type of behavior … Many of these microcap securities are nexuses for major fraud – pump and dump schemes often orchestrated by company insiders. Many of the microcap securities in question are for shell companies from the Cayman Islands and British Virgin Islands orchestrated by fraudsters often, but not always, located in China.”

“Exchanges such as Nasdaq are not properly policing existing listing standards and have overly lenient rules that allow fraudulent firms to stay listed for much too long, allowing the fraud to snowball.”

I’ve been saying this for years, but I guess I should have contacted the SEC directly instead of tweeting into the void.