The SEC issued an investor alert warning potential investors of possible scams pertaining to marijuana-related investments, pointing out that fraudsters will often use the latest growth industries to entice potential investors with promises of high returns. The SEC noted that “[f]or 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.” Furthermore, when such information is not readily available, fraudsters are able to spread false information more easily.
Additionally, the agency suspended trading in a fifth microcap company, who claimed their operations related to the marijuana industry. FusionPharm Inc., a Denver-based company claiming to make a professional cultivation system for use by cannabis cultivators, was suspended as the markets opened yesterday. FusionPharm’s assertions regarding company assets, revenues, financial statements, business transactions, and financial conditions were called into question by the SEC.
The SEC has also suspended trading in Cannabusiness Group Inc. out of Irvine, CA, GrowLife Inc. out of Woodland Hills, CA, Advanced Cannabis Solutions Inc. out of Colorado Springs, CO, and Petrotech Oil and Gas Inc. out of Bedford, TX.
The SEC can suspend trading in a stock for ten day and prohibit a broker-dealer from soliciting investors to buy or sell the stock again until certain reporting requirements are met. Lori J. Schock, director of the SEC’s Office of Investor Education and Advocacy, has urged investors to use extreme caution when looking at these kinds of investments and to research the company before deciding to invest.
If you or someone you know has lost money as a result of an investment, please contact Richard Frankowski at 888-741-7503 to discuss your potential legal remedies.