Marijuana Stock Fraud Just Keeps Going And Going

For once, the Federal Government is taking the right stance on marijuana businesses by suspending and heavily scrutinizing marijuana penny stock scammers and their trading. The Securities and Exchange Commission (SEC) told Reuters it has suspended trading in five different cannabis micro-cap companies in the past few months. The latest crackdown Friday was against Fusion Pharm Inc., a Denver-based company purportedly selling cultivation systems for marijuana. Of the five companies whose trading was recently suspended by the SEC, the agency said several were targeted for concerns about the accuracy of how they described their operations, and two of them were suspected of illegal activity, including market manipulation and unlawful sales.

Whenever there is a change in laws like what we have seen in Washington and Colorado, the vultures begin to circle and the stock market is no exception. What are the Feds looking for when it comes to popping marijuana stock scams? Typically, incomplete or misleading disclosures from “publicly traded” marijuana companies. Back in August 2013, the Financial Industry Regulatory Authority began noting marijuana penny stock pump and dump schemes and “instances of firms being run by people with criminal records.” Class action lawsuits have been filed against CANNAVest and GrowLife, Inc., and the SEC has suspended trading in GrowLife.

In Publicly Traded Pot Stocks. Watch Out, we noted our own concerns about publicly traded marijuana companies:

We have no opinion about ACS, but we do have an opinion regarding publicly traded pot stocks generally: BE CAREFUL. We are aware of many publicly traded pot companies that are trading at frothy levels that are not well-positioned to compete in the marijuana marketplace. In fact, it would be no exaggeration to state that for every one publicly traded marijuana stocks, there are ten privately held companies that are far more advanced in the market than the publicly traded company.

We noted similar issues earlier in the year in our post, Publicly Traded Cannabis Stocks. Be Careful Out There.

Scammers are bad for our industry and so long as they exist, we intend to call them out.