Markets have long been touted as amoral entities, but sometimes law and morality intersect in the most obvious manner. SEC decided to prevent four penny stock companies from selling shares because of their claims of working on Ebola cures. The reason – they did not provide adequate information to back their claim.
The current Ebola outbreak produced around 5,000 deaths, making it the largest ever recorded in history. Many social, natural and medical disasters have their winners and losers. However, taking risks when investing in stock market related to such events should be a pursuit preceded by thorough investigation.
“We move quickly to protect investors when we see thinly-traded stocks being promoted with questionable information that make them ripe for pump-and-dump schemes,” said Elisha Frank, Co-Chair of the SEC Enforcement Division’s Microcap Fraud Task Force. “Fraudsters are constantly exploiting issues of public concern to tout a penny stock company supposedly in the business of addressing the latest crisis,” she added in the written statement.
SEC decided to stop the transactions for up to 10 days, asking the four companies to provide adequate information on how the funds will be used. At the moment, SEC says that none of the four companies has come up with “publicly available information.”
Bravo Enterprises Ltd., a New-York-based company formerly known as Organa Gardens, claimed to develop air-to-air harvesters, USA Today notes. California-based Immunotech Laboratories Inc. allegedly works on “protein-based therapeutic and diagnostics products with applications in HIV/AIDS.” Canada-based Myriad Interactive Media Inc develops activities in e-commerce. Another California-based company, Wholehealth Products Inc, is formerly known as Gulf Western Petroleum. Now it claimed to produce and distribute vitro diagnostic tests.
Stock market investment has always been a risky process. But investors have to double check if publicly traded companies provide any hard evidence to back their claims.
