SEC sues Chicago residents for fraud

The U.S. Securities and Exchange Commission said it halted a so-called boiler room that raised at least $44 million since 2007 while selling penny stocks to European investors without disclosing "exorbitant" commissions.

Four Chicago residents and four businesses were sued by the SEC over their alleged involvement in the scheme, the agency said today in a statement. Buyers in the U.K., Germany and other European countries paid fees exceeding 60 percent of their investments, it said. A federal judge in Illinois issued an order freezing assets.

"Those who attempt to use international borders to thwart the efforts of the SEC will be disappointed," said Merri Jo Gillette, director of the agency's Chicago office, in the statement.

Boiler rooms typically mount aggressive sales campaigns by cold-calling or e-mailing prospective investors, often touting worthless stocks by suggesting they may recover their value, according to the SEC's Web site.