If
you’re paying any attention to emerging markets, it goes without saying that
the legalization of marijuana for medical and recreational use has triggered a
stampede of medical marijuana-related stocks. And along with it, fraud in the
microcap space. The U.S. Securities and Exchange Commission (SEC) recently
issued a warning to investors about possible scams involving marijuana-related
investments after a handful of companies came into question.
In
the past two months alone, the agency says it has suspended trading on five
cannabis industry microcaps flagged for potential fraud.
“For
marijuana-related companies that are not required to report with the SEC,
investors may have limited information about the company’s management,
products, services, and finances,” the SEC’s alert says. “When publicly
available information is scarce, fraudsters can more easily spread false
information about a company, making profits for themselves while creating
losses for unsuspecting investors.”
The
SEC’s Microcap Fraud Task Force is responsible for sharking the microcap market
to identify inadequate or potentially misleading/inaccurate news disseminated
by public companies. The SEC is authorized to suspend trading on questionable
companies for up to 10 days while the alleged activity is further investigated.
“Recent
changes in state laws concerning medical and recreational marijuana have
created new opportunities for penny stock fraud,” Elisha Frank, co-chair of the
SEC Enforcement Division’s Microcap Fraud Task Force, stated in the SEC’s news
release. “Wherever we see incomplete or misleading disclosures, we act quickly
to protect investors.”
The
SEC recently suspended trading on FusionPharm, Inc.; Cannabusiness Group, Inc.;
GrowLife, Inc.; Advanced Cannabis Solutions, Inc.; and Petrotech Oil and Gas,
Inc.
“We
know from experience that fraudsters follow the headlines,” said Lori J.
Schock, director of the SEC’s Office of Investor Education and Advocacy, which
prepared the investor alert. “Given the attention that marijuana-related
companies have attracted recently, we urge investors to exercise caution when
looking at investments in this space. Always thoroughly research the company –
and the person selling the investment – before making a decision.”
For
more information visit www.sec.gov
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MissionIR is committed to connecting the investment community with companies that have great potential and a strong dedication to building shareholder value. We know our reputation is based on the integrity of our clients and go to great lengths to ensure the companies represented adhere to sound business practices.
Sign up for “The Mission Report” at www.MissionIR.com
