The SEC Halts Trading Of More Than 20 Stocks Due To COVID-19 Claims

As a result of the influx of fraudulent activity stemming from the COVID-19 pandemic, in April the Enforcement Division of the United States Securities and Exchange Commission (“SEC”) suspended trading for more than 20 publicly-traded companies, including 16 penny stocks on the OTC market.  The SEC explained that it has concerns that these companies have made suspect or questionable claims regarding, inter alia, vaccines, protective devices, testing, mitigation, and technology to treat the virus.  In one such order, the SEC explained that “the public interest and the protection of investors” warranted suspension because the commission has “concerns about the adequacy and accuracy of publicly available information” about the company.

SEC Chairman Jay Clayton and Division of Corporate Finance Director William Hinman also issued a joint statement earlier this month advising companies that, in light of the significant economic impacts of COVID-19, companies’ upcoming earnings releases should “provide as much information as is practicable regarding their current financial and operating status, as well as their future operational and financial planning[.]”  The statement contained an admonition against any potentially fraudulent activity, warning that Commission remains “laser-focused on identifying bad actors who would seek to use the current uncertainty to prey on our investors.”