The Securities and Exchange Commission warned investors to be “especially careful” about investing in reverse merger companies. These are private foreign firms that gain access to U.S. markets by joining with “public shell” companies, which have either no or only nominal operations and assets.
The Commission and the exchanges recently suspended trading in a more than a dozen reverse merger companies because of “a lack of current, accurate information about these firms and their finances,” according to a June 9 Investor Bulletin. “Investors should thoroughly research the company— including ensuring there is accurate and up-to-date information—before making a decision to invest,” said the SEC’s Director of the Office of Investor Education and Advocacy Lori Schock in the document.
