Ebola becomes latest stock scam, U.S. SEC says (updated)
20/11/2014 21:53
(Adds background on companies, SEC strategy, Bravo comment)
By Sarah N. Lynch and Ransdell Pierson
WASHINGTON/NEW YORK, Nov 20 (Reuters) - 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 OGNG.PK , California-based
Immunotech Laboratories Inc IMMB.PK and Wholehealth Products
Inc GWPC.PK , as well as Canada-based Myriad Interactive Media
Inc MYRYE.OB .
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
TKM.TO , which is working on an experimental treatment under a
contract with the U.S. Department of Defense and Ebola vaccine
developer NewLink Genetics Corp NLNK.O . Face mask maker Alpha
Pro Tech Ltd APT.A and protective suit maker Lakeland
Industries Inc LBAI.O have also attracted investor interest.
(Additional reporting by Chuck Mikolajczak and Rodrigo Campos;
Editing by Michele Gershberg and Jonathan Oatis)
((sarah.n.lynch@thomsonreuters.com; 202-354-5831;))
Keywords: SEC EBOLA/SCAMS