Scam of the day – November 25, 2014 – SEC halts trading of Ebola-related companies

On November 20th, the Securities and Exchange Commission (SEC) suspended the trading of four companies that claim to be developing products or services related to the Ebola virus.  The SEC has the authority to suspend trading for ten days and prohibit the soliciting of investors when it believes that information about a company is either inaccurate or unreliable.  The four companies whose stock trading was suspended are Bravo Enterprises, Ltd., Immunotech Laboratories, Inc., Myriad Interactive Media, Inc. and Wholehealth Products Inc.  Scammers often exploit public interest in events that are particularly newsworthy to tout low-priced stocks, often called penny stocks whose price can be manipulated by scammers through a technique called pump and dump by which the scammers artificially pump up the value of the stock through rumors, emails, texts, faxes and social media and then sell the stock when the price has been artificially inflated, leaving other investors with large losses when the stock reverts to its more accurate price as the truth becomes known.

TIPS

Never invest in anything or any company that you do not truly understand.  Don’t fall prey to touting of stocks through social media or other communications that are difficult to verify.  Be wary of investments promised to provide a huge profit in little time with no risk.  Never buy stocks based on what is represented to you as “inside information.”  Not only is insider trading illegal, the promise of it is also a common lure by scammers to induce people into buying a stock without properly researching it.  Also, never buy a stock through unlicensed or unregistered brokers.