Hot trends are known to attract crooks looking for new ways to fleece the public. Marijuana legalization appears to be no exception.
The Securities and Exchange Commission issued an alert today cautioning investors against placing their money with promoters promising unrealistically high returns in pot start-ups.
“We know from experience that fraudsters follow the headlines,” the SEC said. “Recent changes in state laws (in Colorado and elsewhere) concerning medical and recreational marijuana have created new opportunities for penny stock fraud.”
The warning came after the SEC halted trading in Colorado-based cannabis cultivation system maker FusionPharm Inc., the fifth suspension for a marijuana-related microcap stock in the past two months.
The action came after the SEC questioned the accuracy of FusionPharm’s assets, revenues, financial statements, business transactions and financial condition disclosures.