SEC acts against companies exploiting prevention, treatment of Ebola
The US Securities and Exchange Commission (SEC) today suspended trading in four companies that claim to be developing products or services in response to the Ebola outbreak, citing a lack of publicly available information about the companies’ operations.
The SEC simultaneously issued an investor alert warning about the potential for fraud in microcap companies purportedly involved in Ebola prevention, testing or treatment, noting that scam artists often exploit the latest crisis in the news cycle to lure investors into supposedly promising investment opportunities.
In a release out of Washington, D.C., the SEC enforcement division and its microcap fraud task force work to proactively identify microcap companies that are publicly disseminating information that appears inadequate or potentially inaccurate.
The companies whose trading was suspended today are Patchogue, N.Y.-based Bravo Enterprises Ltd., Monrovia, Calif.-based Immunotech Laboratories Inc., Toronto-based Myriad Interactive Media Inc., and Anaheim, Calif.-based Wholehealth Products Inc.
“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 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,” the SEC said.
According to the SEC’s investor alert, similar to how natural disasters such as Hurricane Katrina and Hurricane Sandy have given rise to investment schemes for companies purportedly involved in cleanup efforts, con artists may perpetrate investment scams related to Ebola prevention or treatment efforts.
The alert suggests that investors be wary about promises or guarantees of high investment returns with little or no risk, avoid solicitations with pressure to “buy RIGHT NOW,” and beware of unsolicited investment offers through social media, the SEC said.