Penny Stocks Is The Dark Side Of The Reefer Boom

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Worse, OTC Market’s banned the company’s legal counsel, Guy-Jean Pierre,in 2010, and the SEC later charged him with issuing fraudulent attorney opinion letters that resulted in more than 70 million shares of microcap stock becoming available for unrestricted trading.

On June 2, a few days after FusionPharm’s trading reinstatement, the company released a document explaining the origins of the SEC’s investigation: failure to disclose the company’s relationship with Williams Sears, Dittman’s brother-in-law. Sears is an officer at two companies, Vertifresh and Meadpoint Ventures, with which FusionPharm has done considerable business.

In 2007, Sears pleaded guilty to federal charges involving securities fraud and bribery. He and his wife encouraged their clients, many of whom were retired, to invest substantial amounts of their savings in high-risk securities while failing to disclose that obvious risk, according to the SEC’s complaint . If you’re a small company, and the people involved have a history of stock scamming, David says, I don’t think they have the best interests of their investors in mind.

The company’s press release also mentions that as part of the investigation for potential securities law violations, the federal authorities raided FusionPharm on March 16, seizing records, computers, and about $200,000 in funds from the company’s bank accounts. It’s not a good company, David adds. Dittman declined to comment.

The Trouble With Penny Stocks

Many of the other marijuana microcap stocks have similar characteristics to FusionPharm. If you look at some of these companies, it’s ridiculous, Hamilton says.

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