The recent movie “The Wolf of Wall Street” chronicles the rapid rise and fall of Stratton Oakmont, a brokerage firm that sold worthless, low price “penny stock” to unsuspecting investors and then manipulated those stock prices. While the scope and audacity of Stratton Oakmont make it unique, plenty of suspect practices have continued since the firm was shut down in 1996.

An early scene with Matthew McConaughey nicely simplifies the goal of the game, which is the same as the fundamental principle of casinos: keep the players at the table and the house will ultimately win. The longer the players stay in the game, the bigger the win for the house.

Here are just a few of the more entertaining and bewildering examples of stock fraud.

• Congressional testimony by the SEC in 2000 outlined over 25 years of stock manipulation schemes that were directly linked to organized crime. Along with plenty of routine fraud, over 50 stockbrokers working at firms with alleged ties to organized crimes were charged in 1997 with paying two impostors to take their licensing tests and two stock promoters were shot to death execution-style in 1999. The New York Times reported that the Mafia saw the securities markets as a replacement for the loss of $500 million a year from the dissolution of its garbage-hauling cartels.
• In 2010, a Phoenix securities attorney was sentenced to 33 months in prison for defrauding investors through stock manipulation of 19 publicly traded companies and was ordered to pay over $6 million in restitution. He “pumped” the price of the stocks through millions of emails, false statements and coordinated trades and then sold shares for large profits.
• In a scene eerily similar to the movie, a husband and wife team convicted in 2013 of stock manipulation were also convicted of carrying over $2 million in cashier’s checks from the proceeds of their fraud to a Panamanian bank account.
• Bloomberg recently reported that there are currently at least 15 small high-pressure brokerage firms selling speculative securities located within a few blocks of the New York Stock Exchange as large banks have moved to other parts of Manhattan.

Unfortunately, unscrupulous brokers are not necessarily drummed out of the business. In a practice known as “cockroaching”, brokers with multiple violations and investor complaints simply move to other firms that also have serious compliance problems. A Wall Street Journal analysis concluded that between 2005 and 2012, 5,000 brokers had worked at firms that had been expelled from the securities business by regulators. In fairness, some of those brokers innocently found themselves in a bad environment. Still, the Financial Industry Regulatory Authority (FINRA) is creating a new system to track brokers who move from expelled firms to other firms and has already barred 22 brokers it has identified as high-risk.

These stock scams often follow a predictable pattern. A company will go public and issue low-priced shares with little if any revenue (or even easier, a company will merge with a “shell” company that has no operations whatsoever but has already gone through the stock issuance process). Insiders and related parties will hold most of the shares. The issuance of shares is combined with a change in control of the company, and there is often a change in company name and stock symbol to something catchy. Most important, the company creates a compelling story that is related to current events or public interests (for example, a cancer treatment, new energy generation or conservation, or an agreement or partnership in an emerging market).

The internet and spam emails have made the pitch even easier, and the ease of sharing information between unsuspecting investors actually lends more legitimacy to the story. Bogus companies and unscrupulous brokers often hire promotional companies to publish ads that look very much like serious research reports. The typical required disclaimer from an actual promotion in fall 2013 (which is how the promoters stay within the letter of the law) makes the purpose clear: “DO NOT BASE ANY INVESTMENT DECISION UPON ANY MATERIALS FOND IN THIS REPORT. This publication is distributed free of charge and does not provide an analysis of a company’s financial position.”

Recent regulations may actually make these situations more common. The Jumpstart Our Business Startups Act – the JOBS Act of 2012 – relaxed a number of securities rules with the goal of making the securities markets more accessible to small businesses. The JOBS Act raises from 500 to 2,000 the number of shareholders a company can have before it’s required to register its stock with the SEC. It makes securities that were previously available only to “accredited investors” (those who earn more than $200,000 a year or have over $1 million in assets) open to those with more modest means, although limited to a percentage of the investor’s income or assets. And for companies with less than $1 billion of revenues, it eliminates some of the disclosure and financial-reporting requirements of the 2002 Sarbanes-Oxley law. While the JOBS Act will likely meet its objective of expanding financing options for small businesses, and hopefully creating new jobs, even legitimate and well-intentioned small businesses usually fail. Less scrupulous ventures will undoubtedly take advantage of the opportunity to legally reach more unsuspecting small investors.

Of course, the scam artists have a very willing audience. The belief that there is quick money to be made persists despite so many well-publicized episodes. Consider that Twitter issued its first stock to the public in November, 2013 with the symbol TWTR. A bankrupt company called Tweeter Entertainment was already using the symbol TWTRQ (the Q indicating bankruptcy) and when Twitter announced their trading symbol shares of Tweeter shot up 700% before Tweeter changed its symbol. Yes, investors thought they had magically found a way to buy shares of Twitter for a few cents. And it happened again in January, when Google announced it was acquiring Nest Labs (which did not have stock owned by the public). Nestor, another bankrupt company which uses the trading symbol NEST, saw its shares shoot up 1,900% before the confusion was cleared up.

Fear and greed are always the biggest obstacles in investing. Fear makes us cautious and anxious; greed seems to make us really stupid.