Life Stem Genetics Inc (OTCBB:LIFS) Gets the Axe!

Our previous article on Life Stem Genetics Inc (OTCBB:LIFS) came out about an hour before the start of Friday’s trading session. We covered the fall that LIFS had experienced during the previous day and we tried to warn our readers that the slide could be just the beginning of a much bigger, much more painful drop caused by the $1.8 million promotion. A few minutes after our coverage went online, a Seeking Alpha contributor who calls himself Penny Stock Realist published his own views on the company and urged investors to get out as quickly as possible.

Whether this had anything to do with the horrific session that followed or not is still unknown, but whatever the reasons, we can see that some massive selling ensued and just six and a half hours later, LIFS had annihilated more than 55% of its value.

Despite the devastating drop, the message boards remained relatively active over the weekend and while some of the investors were saying that LIFS is nothing more than just another penny stock scam, others were quoting recent press releases and were arguing that the ticker is poised for a bounce. So what will happen?

“Nothing” is the correct answer because the Securities and Exchange Commission decided to step in and put a rather abrupt end to the whole fiasco by issuing a temporary suspension order on LIFS. This means that the ticker won’t be traded until December 9 when it should reappear on the Grey Market, most likely sporting a Caveat Emptor badge and a price much lower than the values from last week.

The reason for the suspension, according to the order, is “questions regarding the accuracy of assertions by the company, and by others, including in press releases to investors concerning, among other things, the company’s operations“. As we mentioned in our previous articles, there were certainly some discrepancies to be found in the promotional materials.

Quite a lot of people got caught off-guard by SEC’s actions but is the interference really surprising?

Well, if you follow penny stocks closely, you’re probably not that shocked. In fact, we tried to warn our readers about a potential suspension last Tuesday when we mentioned that the Commission has been somewhat intolerant towards the bigger promotions from the last couple of months. Hopefully, most of the traders have managed to get out on time and take their profit since the ones who didn’t are about to lose quite a lot of money. How much exactly?

The charts on the right belong to Press Ventures Inc (OTCMKTS:PVEN), Pacific Clean Water Technologies, Inc. f/k/a Unseen Solar, Inc. (OTCMKTS:PCWT), and PacWest Equities Inc (OTCMKTS:PWEI) – three companies that went through a temporary SEC suspension. You can see that the first day after the expiration of the order is quite painful. After that, volumes drop and you are, more often than not, left with some shares in a company that is all but worthless.

Hopefully, people will remember what happened to LIFS, PVEN, PCWT, and PWEI and will be extremely careful when dealing with paid pumps in the future.