The U.S. Securities and Exchange Commission (SEC) announced suspension last week of trading in four companies, two in California, which make Ebola-related products while releasing an investor alert warning about financial scams that delicately dodges a direct link between them.

The SEC warned of “the potential for fraud in microcap companies purportedly involved in Ebola prevention, testing, or treatment, noting that scam artists often exploit the latest crisis in the news cycle to lure investors into supposedly promising investment opportunities.”

And with that in mind, the SEC will scrutinize Monrovia-based Immunotech Laboratories Inc. and Anaheim-based Wholehealth Products Inc., because in each case, “Questions have arisen concerning the accuracy and adequacy of publicly disseminated information, including information about the relationship between the company’s business prospects and the current Ebola crisis.”  

The companies all have over-the-counter penny stocks that are used for the kind of pump-and-dump schemes showcased in “The Wolf of Wall Street” last year. The out-of-state companies under investigation are New York-based Bravo Enterprises Ltd and Canada-based Myriad Interactive Media Inc. The SEC said all four companies lacked public information on their operations and had experienced unusually high trading levels.

After Immunotech announced it was working on an Ebola drug in an October 21 newsletter, its daily average of 223,000 traded shares jumped to 28 million, according to the Wall Street Journal.

The SEC can suspend trading of a stock for up to 10 days

There are a broad range of Ebola scams that mirror the tried-and-true scams from previous health crises. They include: e-mails purporting to have the latest Ebola news but just download malware to your computer; pitches for fake charities; sales of protection or natural cure kits; and, of course, false or misleading financial come-ons.    

The U.S. Food and Drug Administration (FDA) began warning companies months ago about treatments they were peddling as Ebola drugs and vaccines. There are no FDA-approved products for treating or preventing the virus. The Better Business Bureau and the AARP Fraud Watch Network sent out fraud alerts, too.

Some Libertarians and Republicans expressed a fear that the government was preventing the free market and new crowd-sourcing techniques from taking on the virus, but even they might have a problem with an Ebola home remedy Science-Based Medicine found being peddled briefly at Natural News before taken offline.

It mostly involves having an Ebola-infected person spit in a bottle, add some water and whisky (or brandy or rum, depending on your taste), bang it against a hard surface (like a book) 40 times and store the contents away from electrical devices and sunlight. The infected bottle can be reused to make up to 30 batches for prevention or remedy.

The worst Ebola outbreak on record has killed more than 5,400 people mostly in Sierra Leone, Guinea and Liberia.

–Ken Broder

To Learn More:

Ebola Becomes Latest Stock Scam, SEC Says (by Sarah N. Lynch and Ransdell Pierson, Reuters)

SEC Suspends Trading in Four Penny Stocks on Ebola Claims (by Erik Holm, Wall Street Journal)

SEC Suspends Trade in 4 Ebola-Related Companies (by Karma Allen, CNBC)

SEC Halts Trading in Ebola-Related Companies, Two in Southern California (by Dean Starkman, Los Angeles Times)

Agency Issues Investor Alert Warning of Fraud Risks (U.S. Securities and Exchange Commission)

Ebola SCAMs (by Mark Crislip, Science-Based Medicine)