Micro-cap stock fraud has always been perilous for investors, and it looks like it’s actually getting worse—and that our regulators, despite a concerted game of whack-a-mole, seem unable to get a handle on the problem.

Some recent regulatory cases show that while the attention of the nation is focused elsewhere—on the depredations of big banks like Goldman Sachs—old-fashioned stock swindling is going strong and is harder than ever for investors to detect.

The traditional method of pushing worthless stocks on the public was simple. All stock swindlers had to do was hire a bunch of college-age kids, place them in a room with phones, and voila—a “boiler room.” It was as if they were following a script—which, very often, they were. These were not registered brokers, for the most part, just kids from working-class backgrounds who could just as easily be peddling vinyl siding. Like all cold-callers, they required financial inducements to function efficiently, usually a few bucks per share over and above any commissions. These were known in the business as “chops,” hence the term “chop shops” to refer to these brokerages.

Thus there was a simple way to avoid being taken: Never buy stocks over the phone, no matter what. Sure, legit brokers employed cold-callers (and still do), but the chances of being snared by a thief were just too serious.

The boiler rooms are still out there, but recent regulatory cases indicate that they’ve been largely replaced by a different species of threat—penny-stock promoters disguising as “investment newsletters.” Now investors find themselves drawn to such wealth-depletion mechanisms not by the phone, but by stock hustlers exploiting social-networking sites—and, above all, by the investors’ own greed and their hunt for “undervalued stocks.” If there’s a better reason to give up stock-picking altogether and place one’s money with a mutual fund—preferably one paralleling stock indexes—I can’t think of any.

A good example can be found in the recent SEC enforcement action against a Canadian couple who pushed penny stocks not through the traditional boiler-room route, but the modern way—through a website, PennyStockChaser.com, Facebook, and Twitter. The SEC’s litigation announcement can be found here.