Risk & Compliance

Ebola Microcaps Suspended From Trading

The SEC halted trading in the shares of four thinly traded companies that are "purportedly involved in Ebola prevention, testing or treatment."
Vincent RyanNovember 20, 2014
Ebola Microcaps Suspended From Trading

Some analysts have touted stocks of businesses that have some connection to preventing or curing the deadly Ebola virus, but when the company is thinly traded and has disclosed very little about its operations, it’s a red flag.

So much so that on Thursday morning the Securities and Exchange Commission suspended trading in the shares of 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,” says an SEC press release.

Simultaneously, the SEC issued an investor alert about the potential “for fraud in microcap companies purportedly involved in Ebola prevention, testing or treatment.” The alert noted that “scam artists often exploit the latest crisis in the news cycle to lure investors into supposedly promising investment opportunities.”

A Better Way to Do Ecommerce

A Better Way to Do Ecommerce

Learn how Precision Medical leveraged OneWorld to cut the cost of billing in half and added $2.5M in annual revenue.

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. All of them are penny stocks that trade on over-the-counter markets.

“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, in a press release.  “Fraudsters are constantly exploiting issues of public concern to tout a penny stock company supposedly in the business of addressing the latest crisis.”

The federal securities laws allow the SEC to suspend trading in a stock for 10 days. It can also “generally prohibit a broker-dealer from soliciting investors to buy or sell the stock again until certain reporting requirements are met.”

The investor alert advises to “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.”