SEC Suspends Trading of GrowLife Inc.

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SEC Suspends Trading of GrowLife Inc.

The Security and Exchange Commission (SEC) suspended all trading of GrowLife Inc.'s (OTCBB: PHOT) shares from Apr. 10 through Apr. 24 because of its "concerns regarding the accuracy and adequacy of information in the marketplace and potentially manipulative transactions in Growlife's common stock".

The Woodland Hills, Calif. holding company that supplies equipment for legal marijuana growers said in a press release commenting on the suspension that the company had been not notified in advance of the suspension, but that it has 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," the company stated.

Even so, industry experts say it's not guaranteed that trading will resume after the suspension period until broker-dealers have enough information about the company to make a market in its shares.

Law Firm Also Investigating GrowLife

Meanwhile, The Rosen Law Firm also announced Apr. 10 that it is investigating potential securities fraud claims against GrowLife resulting from allegations that the company may have issued materially misleading business information to the investing public and manipulated trading in its common stock. It is publicly asking GrowLife shareholders to contact the firm, if they have any such complaints.

So far, GrowLife has not responded to the law firm's claims.

Other Suspended Marijuana-Related Stocks

However, Growlife is not the only marijuana-related stock the SEC has suspended trading on recently.

On Mar. 27, it suspended trading on Advanced Cannabis Solutions' (OTCQB: CANN) shares. The SEC said at the time that it did so because there were questions regarding whether certain undisclosed affiliates and shareholders of Advanced Cannabis common stock engaged in an unlawful distribution of securities through the OTC BB and OTC Link.

"The Commission is of the opinion that the public interest and the protection of investors require a suspension of trading in the securities of the above-listed company," the SEC said, in a written statement.  The suspension ended 11:59 p.m. Apr. 9, and shares of CANN began trading again Apr. 10.

On Mar. 14, the SEC also suspended trading of PetroTech Oil and Gas, Inc. (OTC Pink: PTOG) shares because of questions that had been raised about the accuracy and adequacy of publicly disseminated information concerning, among other things, the company's operations. The temporary suspension ended Mar. 27, 2014 at 11:59 p.m.

Such suspensions can have a negative effect on the credibility of not only the companies involved but also on an entire sector. In a rush to stake their claims in the marijuana gold rush, it appears some companies and investors could be taking shortcuts. Only time will tell.

On Apr. 9, PHOT shares closed at 50 cents down 3 cents from its closing price of 53 cents the previous day, on volume of 28.4-million shares.

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