Two days ago the SEC suspended trading in Aventura Equities, Inc (AVNE). AVNE is one of a large number of penny stocks that have recently issued press releases stating that they are getting into the marijuana business. While there are a few real marijuana-related penny stock companies (all of which are horrible companies and have overvalued stocks), most of the companies recently issuing press releases are little more than shells.
SEC suspension release (pdf) SEC suspension order (pdf)
The reasoning given for the trading suspension should strike fear in everyone trading these ‘wannabe’ marijuana stocks:
The Commission temporarily suspended trading in the securities of Aventura because of questions concerning the adequacy and accuracy of publicly available information about Aventura, including, among other things, its financial condition, the control of the company, its business operations, and trading in its securities.
The press release that the company issued to announce that it was entering the marijuana business was issued on February 26, 2014. The stock more than doubled and traded a decent number of shares in the weeks following that press release. Also of note is that AVNE is linked to the Jan / Hipple company iEquity, which is also linked to SKTO and AEGY (which have both entered the marijuana business recently as well). I would not be surprised to see those stocks get suspended soon. I previously wrote about why I thought SKTO was at risk of an SEC trading suspension, almost a year ago.
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