Trading of shares of GrowLife, which trade under the symbol PHOT on the over-the-counter bulletin board, was temporarily halted on Thursday by the SEC because of questions that have been raised about the accuracy and adequacy of information in the marketplace and potentially manipulative transactions in PHOTs common stock.
The temporary suspension lasts until April 25, but it’s not a given that trading will resume until broker-dealers have sufficient information about the company to make a market in its shares.
The SEC declined to comment and GrowLife did not quickly respond to requests for comment. Its shares had changed hands for as much as $201 not so long ago and one of men who helped launch the company, a Florida physiotherapist named Stuart Titus, pocketed $7 million in recent stock sales, SEC filings show.
With Colorado and Washington now permitting the sale of marijuana for recreational use, and 20 states allowing it medically, some 60 publicly traded penny stock outfits have emerged through reverse mergers claiming to be in the medical marijuana or hemp business. The vast majority of these stocks are thinly traded on the over-the-counter bulletin board, or Pink Sheets, where promoters have helped push their stock prices high.
The idea is to attract retail investors looking for a way to cash in on the legalization of marijuana, but financial markets regulators have expressed concerns about scams in the sector
Like many of these companies, GrowLife doesn’t actually touch marijuana, but claims to be involved in the business of providing infrastructure and services to marijuana and hemp businesses. Also like many other pot stocks, GrowLife has been involved in several offerings of notes that can convert into lots of stock at prices that are severely discounted to the price the shares have been trading for in the public markets.