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Marijuana Stocks Buckle for Second Day After 'Surprise' Trading Suspension of Growlife (PHOT)

April 11, 2014 2:21 PM EDT

Marijuana stocks that trade over-the-counter are weaker for the second straight session as the ripple effects from Thursday's trading suspension of Growlife Inc. (OTC: PHOT) continue to be felt.

The SEC, with the assistance of FINRA, halted trading in Growlife until at least April 24, 2014 due to questions that have been raised about the accuracy and adequacy of information in the marketplace and potentially manipulative transactions in PHOT's common stock.

Growlife commented on the halt Thursday afternoon, saying, "We were not notified in advance, but have contacted the SEC to better understand the basis of the complaint. We will fully comply with the SEC's requests for information, and continue business as normal during this temporary suspension."

While Growlife indicated there were surprised by the halt, industry watchers note that FINRA issued a warning about 'Marijuana Stock Scams' back on August 20, 2013. At that time FINRA warned:

Medical marijuana is legal in almost 20 states, and recreational use of the drug was recently legalized in two states. As a result, the cannabis business has been getting a lot of attention – including the attention of scammers. Like many investment scams, pitches for marijuana stocks may arrive in a variety of ways – from faxes to email or text message invitations, to webinars, infomercials, tweets or blog posts.

In addition to the latest trading suspension of Growlife, the SEC temporarily suspended trading in the securities of Advanced Cannabis Solutions (OTC: CANN) on March 27, 2014 for similar issues. When shares resumed trading on April 10, 2014 they collapsed by 77% upon opening before recovering slightly. Shares of Advanced Cannabis Solutions remain 57% below pre-halt levels.

While the SEC is the main enforcer on marijuana stocks, FINRA is separately watching and recommending stocks for the SEC to look at - as was the case with Growlife.

While FINRA and SEC aren't saying if any additional action in the industry if forthcoming, it is clear that the watchdogs are out in force. Investors and traders in the sector aren't taking any chances and have been cutting risk the past two sessions. Companies that are not in compliance need to clean their act up before it is too late.

Below is a list of marijuana-related stocks:

Anything Tech Media (EXMT), CannaVEST Corp. (OTC: CANV), Cannabis Science, Inc. (OTC: CBIS), ENDEXX Corp. (OTC: EDXC), Endocan Corporation (OTC: ENDO), Tranzbyte Corporation (OTC: ERBB), Fusion Pharm, Inc. (OTC: FSPM), GW Pharmaceuticals plc (OTCBB: GWPH), Hemp, Inc. (OTC: HEMP), Homeland Security Corporation (OTC: HSCC), Medbox, Inc. (OTC: MDBX), Medical Marijuana, Inc. (OTC: MJNA), MediSwipe (OTC: MWIP), Nuvilex, Inc. (OTC: NVLX), Rapid Fire Marketing, Inc. (OTC: RFMK), Terra Tech Corp. (OTC: TRTC).



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