The SEC issued a strongly worded investor alert in mid May warning investors about the potential for fraud committed by publicly traded companies in the cannabis sector.
The move comes on the heels of the suspension of two more companies for the year, making seven total publicly traded stocks in the vertical the SEC has suspended from trading so far this year. Those companies are Aventura Equities (AVNE), Citadel EFT (CDFT), FusionPharm (FSPM:US), Cannabusiness Group Inc (CGBI), GrowLife (PHOT), Advanced Cannabis Solutions (CANN) and Petrotech Oil and Gas Inc (PTOG).
The SEC claims that its new warning comes on the heels of increased investor complaints regarding investments in the space. Per the SEC warning, “Fraudsters often exploit the latest innovation, technology, product, or growth industry – in this case, marijuana – to lure investors with the promise of high returns….When publicly-available information is scarce, fraudsters can more easily spread false information about a company, making profits for themselves while creating losses for unsuspecting investors.”
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