Growlife, Inc. (OTCBB:PHOT) Slammed Into Suspension by the SEC
It’s been a good long run for Growlife, Inc. (OTCBB:PHOT) but it has now come to a very abrupt end. Yesterday morning the Securities and Exchange Commission (SEC) issued a trade suspension order for PHOT, halting the stock from trading for 10 market days. The event left many investors dumbfounded and sent rumbles through the entire pot sector.
The suspension order for PHOT was published shortly before the opening bell yesterday and left many hopeful investors staring at their screens, gaping in disbelief. The reasons outlined by the SEC include ‘concerns regarding the accuracy and adequacy of information’ as well as ‘potentially manipulative transactions in Growlife’s common stock’.
The suspension comes in the immediate wake of thirty consecutive Form 4-s made public over the last two days, containing information about insider selling by one and the same PHOT officer and director. Obviously, at least someone managed to partially cash out before the suspension and the demotion to the Grey Market sector of the OTC that comes with post-suspension trading. Many novice investors will of course wonder what happens with the company and their stock once the halt ends. As history and practice have shown – nothing good.
When the suspension period ends, the company resumes trading on the grey market tier of the OTC, still stamped with the ‘Buyer beware’ skull and crossbones. There is usually a drastic drop in trade volumes due to market makers not publishing quotations for grey market tickers. A new price level that is anywhere up to 90% below pre-suspension values is usually reached immediately and the stock simply simmers down there.
Two visual examples in the form of post-suspension charts are provided in this article as a source of reference. One is PacWest Equities, Inc. (OTCMKTS:PWEI), a pump job that went sour and got suspended. The other is Petrotech Oil & Gas, Inc. (OTCMKTS:PTOG), who thought there was more space left on the 2014 pot gravy train but eventually got suspended by the SEC. The charts should speak volumes on their own.
The blow dealt to PHOT echoed across the entire pot sector. Even though we have published multiple articles in the past, highlighting the potential red flags surrounding the company, many traders seemed to think that PHOT was as close to a real-deal pot company as things could get. PHOT was even part of a video piece on marijuana stocks published recently, in which a penny stock expert, while not praising the company directly, singled them out as a ‘legitimate company’ less than 24 hours prior to the SEC suspension. If this goes to show anything, it’s that the entire pot stock sector is still one big hazy bog that can give way at any time, with little warning signs.
Among the other marijuana stocks that slipped in double digits as a wave of panic swept the OTC following PHOT‘s suspension are Terra Tech Corp. (OTCMKTS:TRTC) who closed 16% down and Medical Marijuana, Inc. (OTCMKTS:MJNA) who dropped in double digits for the first time in nearly two months.
