The SEC has suspended the trading of a few microcap companies touting unverified Ebola treatments and tests, warning investors of penny stock peddlers looking to cash in on the West African outbreak that has killed thousands.
The agency's Microcap Fraud Task Force has suspended the OTC listings of four companies, including California's Immunotech Laboratories, which announced last month that it had signed a deal with a Zimbabwean company to "pursue the development of market opportunities related to the deadly Ebola virus." Under the agreement, Immunotech said it expected to start selling ITV-1, which the biotech is developing for hepatitis C, in Africa as a solution to Ebola, a claim the SEC said "appears inadequate or potentially inaccurate."
Now Immunotech's shares, which peaked at around 25 cents a pop this year, are on hold for at least 10 days, joining dehumidifier maker Bravo Enterprises, web development outfit Myriad Interactive and supplement marketer Wholehealth Products.
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| SEC's Elisha Frank |
"We move quickly to protect investors when we see thinly traded stocks being promoted with questionable information that make them ripe for pump-and-dump schemes," the SEC's Elisha Frank said in a statement. "Fraudsters are constantly exploiting issues of public concern to tout a penny stock company supposedly in the business of addressing the latest crisis."
Meanwhile, high above penny-stock territory, investors and analysts are trying to parse the veracity of Ebola projects from larger-cap firms, as well. The shares of Tekmira Pharmaceuticals ($TKMR), Chimerix ($CMRX) and NewLink Genetics ($NLNK)--makers of actual clinically relevant Ebola treatments--have tanked and soared along with staccato stabs of news about how each investigational therapy or vaccine is performing.
Global researchers are rushing to study whether any of the in-development products can help stem the virus' spread, fast-tracking treatments from Fujifilm and Mapp Biopharmaceutical and vaccines from GlaxoSmithKline ($GSK) and Johnson & Johnson ($JNJ), among others.
- read the statement