{"id":42175,"date":"2014-05-19T06:27:32","date_gmt":"2014-05-19T10:27:32","guid":{"rendered":"http:\/\/www.hedgeco.net\/news\/?p=42175"},"modified":"2014-05-19T09:08:17","modified_gmt":"2014-05-19T13:08:17","slug":"sec-warns-investors-about-marijuana-related-investments-amid-recent-trading-suspensions","status":"publish","type":"post","link":"https:\/\/hedgeco.net\/news\/05\/2014\/sec-warns-investors-about-marijuana-related-investments-amid-recent-trading-suspensions.html","title":{"rendered":"SEC Warns Investors About Marijuana-Related Investments"},"content":{"rendered":"

\"marijuana-leaf.tif\"<\/a>The SEC cautioned investors about the potential for fraud in microcap companies that claim their operations relate to the marijuana industry after the agency suspended trading in the fifth such company within the past two months.<\/p>\n

The SEC issued an investor alert warning about possible scams involving marijuana-related investments, noting that fraudsters often exploit the latest growth industry to lure investors with the promise of high returns. \u201cFor marijuana-related companies that are not required to report with the SEC, investors may have limited information about the company\u2019s management, products, services, and finances,\u201d the SEC\u2019s alert says. \u201cWhen 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.\u201d<\/p>\n

Spearheaded by its Microcap Fraud Task Force, the SEC Enforcement Division scours the microcap market and proactively identifies companies with publicly disseminated information that appears inadequate or potentially inaccurate. The SEC has the authority to issue trading suspensions against such companies while the questionable activity is further investigated.<\/p>\n

As the markets opened today, the SEC suspended trading in Denver-based FusionPharm Inc., which claims to make a professional cultivation system for use by cannabis cultivators among others. According to the SEC\u2019s order, the trading suspension was issued \u201cbecause of questions that have been raised about the accuracy of assertions by FusionPharm\u201d concerning the company\u2019s assets, revenues, financial statements, business transactions, and financial condition.<\/p>\n

\u201cRecent changes in state laws concerning medical and recreational marijuana have created new opportunities for penny stock fraud,\u201d said Elisha Frank, co-chair of the SEC Enforcement Division\u2019s Microcap Fraud Task Force. \u201cWherever we see incomplete or misleading disclosures, we act quickly to protect investors.\u201d<\/p>\n

Other marijuana-related companies in which the SEC recently suspended trading are Irvine, Calif.-based Cannabusiness Group Inc., Woodland Hills, Calif.-based GrowLife Inc., Colorado Springs-based Advanced Cannabis Solutions Inc., and Bedford, Texas-based Petrotech Oil and Gas Inc.<\/p>\n

Under the federal securities laws, the SEC can suspend trading in a stock for 10 days and generally prohibit a broker-dealer from soliciting investors to buy or sell the stock again until certain reporting requirements are met. More information about the trading suspension process is available in an SEC investor bulletin on the topic.<\/p>\n

\u201cWe know from experience that fraudsters follow the headlines,\u201d said Lori J. Schock, director of the SEC\u2019s Office of Investor Education and Advocacy, which prepared the investor alert. \u201cGiven 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 \u2013 and the person selling the investment \u2013 before making a decision.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

The SEC cautioned investors about the potential for fraud in microcap companies that claim their operations relate to the marijuana industry after the agency suspended trading in the fifth such company within the past two months. The SEC issued an […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-42175","post","type-post","status-publish","format-standard","hentry","category-hedgeco-news"],"_links":{"self":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts\/42175","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/comments?post=42175"}],"version-history":[{"count":5,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts\/42175\/revisions"}],"predecessor-version":[{"id":42182,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts\/42175\/revisions\/42182"}],"wp:attachment":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/media?parent=42175"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/categories?post=42175"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/tags?post=42175"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}