Ebola becomes latest stock scam, SEC says
Nov 21, 2014 12:10 AM EST
Nov 21, 2014 12:10 AM EST
U.S. regulators warned investors of stock scams tied to West Africa's Ebola outbreak and suspended trading in four small companies that they said have made unverifiable claims about products to prevent or treat the deadly virus.
The Securities and Exchange Commission said on Thursday it had suspended trading in over-the-counter stocks of New York-based Bravo Enterprises Ltd, California-based Immunotech Laboratories Inc and Wholehealth Products Inc, as well as Canada-based Myriad Interactive Media Inc.
The SEC cited a lack of publicly available information about their operations and separately warned that "con artists" may be soliciting investors and claiming to be developing Ebola treatments.
More than 5,400 people have died, most of them in Sierra Leone, Guinea and Liberia, in the worst Ebola outbreak on record.
Immunotech said in an Oct. 21 news release that it hoped to sell an experimental Ebola treatment in Africa. Immunotech trading volume jumped to more than 28 million shares that day, compared with a daily average of just above 223,000 in the previous 50 days. Company officials could not be reached for comment on Thursday.
Myriad Interactive, a website development company, said in an Oct. 15 news release it was designing an "Ebola tracking system" to notify citizens in Western countries about the expanding outbreak.
That day, over 16 million Myriad Interactive shares changed hands, compared with a daily average near 180,000 in the previous 50 days. The company did not return a Reuters call on Thursday.
Unusually high trading volumes have also been seen with Bravo Enterprises and Wholehealth.
Bravo makes dehumidifiers that take moisture from the air and turn it into purified drinking water. An Aug. 27 news release said the equipment can provide "a temporary and permanent alternative water supply for Liberia and countries like it."
May Joan Liu, a manager for Bravo, on Thursday defended the language of the release. "We pointed out that water was a top priority in the Ebola outbreak," she said.
A woman who answered the phone at Wholehealth Products hung up after saying the company, which sells "natural health products," was private.
In 2013, the SEC stepped up its enforcement in microcap fraud, creating a new task force. The agency has periodically issued investor alerts, especially when fraudsters play off of topics featured prominently in the news, such as earthquakes or hurricanes, to pump up thinly traded stocks.
Investor interest in companies that can play a role in curbing the Ebola outbreak has soared in recent months, raising valuations of drugmakers developing vaccines and manufacturers of protective gear.
They include Canadian drugmaker Tekmira Pharmaceuticals Corp, which is working on an experimental treatment under a contract with the U.S. Department of Defense and Ebola vaccine developer NewLink Genetics Corp. Face mask maker Alpha Pro Tech Ltd and protective suit maker Lakeland Industries Inc have also attracted investor interest.
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