Fraudulent stocks refer to shares of companies that are involved in deceptive practices to mislead investors. These companies often provide false information about their financial health, growth potential, or business operations to inflate their stock prices. This can lead to significant financial losses for unsuspecting investors when the truth is revealed. Common tactics used in fraudulent stock schemes include pump and dump schemes, where the stock price is artificially inflated before insiders sell their shares at a profit. Regulatory bodies like the Securities and Exchange Commission (SEC) work to identify and prosecute such fraudulent activities to protect investors and maintain market integrity.