Tuesday, August 19, 2014

Avoiding Marijuana Stock Scams

It seems that whenever something new comes along, there are investors willing to jump on a perceived opportunity to profit from the next new thing. It seems that medical marijuana is that next new thing.

Medical marijuana Acapulco goldWe wrote about marijuana stock scams last year, and just last week the SEC filed charges against promoters who the Staff believes were "pumping and dumping" stocks of companies in the medical marijuana business. The SEC charged four promoters with manipulating marijuana-related stocks and the stocks of other tiny companies through a scheme the SEC described as "a carefully planned operation."

According to the SEC, prices of a number of penny stocks were manipulated using illegal trading methods combined with aggressive promotional campaigns designed to pump up the price of the stocks. When the stock prices rose, the promoters "dumped" their shares, leaving investors with shares of virtually worthless stock.

FINRA has now released an article designed to help investors and advisers from becoming a victim of such schemes. For the details, see FINRA's Ways to Spot Potential Marijuana Stock Scams.

The attorneys at Sallah Astarita & Cox, LLC include former SEC Enforcement attorneys and prosecutors and decades of experience representing all participants in the securities markets. To see if we can help you with your securities issue, call 212-509-6544.
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