Who’s The Financier Behind A Hot Pot Stock?

This store in Santa Rosa, California is one of seven GrowLife outlets.   Photograph: Jeff Singer/Bloomberg Markets

Volume topped 1 million shares a day on May 31, 2012, and the price averaged 5.5 cents a share that month. Had the original Phototron investors sold then, they would have almost tripled their money. Press Releases Both price and volume spiked in November 2012 after voters in Colorado and Washington approved legal recreational sales of marijuana.

GrowLife issued a series of press releases, including one on Nov. 13 in which it announced that its greenhouses now shipped with LED lights that improved crop yields, part of the company’s focus on selling the picks and shovels of the growing green rush.

GrowLife touted the stock itself, not just the business, in June 2013, when it put out a press release saying that Grass Roots Research & Distribution Inc., led by a former Bear Stearns Cos. stock analyst named D. Paul Cohen, had written a 55-page report calling GrowLife’s business model brilliant and assigning it a price target of 22 cents a share, up from the 4.5 cents the stock fetched at the time.

In fine print on page 50, Cohen warns, Do not base any investment decision or rely on information in this commercial advertisement. Cohen says GrowLife paid him to write the report. He also says he owns GrowLife shares.

To read more, visit http://www.bloomberg.com/news/2014-06-18/legal-pot-sets-off-penny-stock-frenzy.html

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