As also happened with recent natural disasters such as Hurricane Katrina and Hurricane Sandy, the Ebola outbreak that has captured the attention of the American public has become a possible tool of scam artists. The SEC suspended trading in four companies today -- Bravo Enterprises Ltd., Immunotech Laboratories Inc., Myriad Interactive Media Inc., and Wholehealth Products Inc. -- that claim to be developing products or services in response to the Ebola outbreak.
The SEC stated that it halted trading in the four companies due to a "lack of publicly available information about the companies’ operations." The SEC said it moves quickly when it identifies "thinly-traded stocks being promoted with questionable information that make them ripe for pump-and-dump schemes.”
The agency also issued an investor alert warning investors about the potential for fraud in microcap companies purportedly involved in Ebola prevention, testing, or treatment. It reminded investors that fraudsters often attempt to use news events as a hook for investment schemes, and cited recent frauds related to oil and gas, virtual currency, and marijuana.
Citing today's trading halt of the four microcap companies, the SEC stated that
Although any company may make false statements relating to Ebola to lure investors, microcap stocks (low-priced stocks issued by the smallest of companies) such as penny stocks (the very lowest priced stocks) may be particularly vulnerable to fraudulent investment schemes, including Ebola-related investment scams.
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