The U.S. Securities and Exchange Commission (SEC) has suspended trading in four firms that it says claim to be developing products or services in response to the Ebola outbreak. The regulator says that the companies in question have not provided adequate information to the market.
One of the suspended firms is a Toronto-based company that trades on the over-the-counter (OTC) bulletin board in the U.S., Myriad Interactive Media Inc.
In its order suspending the firm, the SEC says, “Questions have arisen concerning the accuracy and adequacy of publicly disseminated information, including information about the relationship between the company’s business prospects and the current Ebola crisis.”
In its latest filing with the SEC, Myriad indicates that it is in the early stages of developing “a state of the art ebola tracking app. The app will provide alerts to its users that shows proximity threats to their location based of the mobile devices’ GPS.”
No allegations of specific securities law violations have been made against the firms now under suspension. Under U.S. federal securities laws, the SEC can suspend trading in a stock for 10 days and generally prohibit broker-dealers from soliciting investors to buy or sell the stock again until certain reporting requirements are met.
Along with the suspensions, the SEC also issued an investor alert warning about the potential for fraud in microcap companies purportedly involved in Ebola prevention, testing, or treatment. It notes that “scam artists often exploit the latest crisis in the news cycle to lure investors into supposedly promising investment opportunities.”
“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. “Fraudsters are constantly exploiting issues of public concern to tout a penny stock company supposedly in the business of addressing the latest crisis.”