A small, Toronto-based company is warning investors to keep their eyes peeled for a “speculative” promotional email that they say is a scam.
The Canadian cannabis cultivator, Two Hands Corp., currently trades on over-the-counter stock markets as TWOH. Two Hands says it was unaware of the campaign promoting its company until it was alerted to the issue by OTC Markets. They said the email was sent from an “unreliable source” and that they did not have editorial control over it.
Shady promotional activities have been an ongoing problem in Canada’s turbulent cannabis stock market. Back in December, the Canadian Securities Administrators (a group of stock market regulators) warned publicly traded companies in newer industries, cannabis included, that there was a risk of “problematic promotional activities” that could artificially increase share prices and put investors at risk.
“We do see a higher incidence of problematic practices among venture issuers, and particularly among issuers involved in emerging industries like cannabis, fintech and battery metals,” commented the Canadian Securities Administration.
- For reference, here are some examples of misleading promotional activities:
- Circulation of marketing materials, presentations, social media posts, or other documents that exaggerates the potential of early stage business plans.
- Sending out numerous press releases that don’t divulge any new information.
- Paying for third party advertisers who use social media and general investing blogs but refuse to disclose their agency or financial interest.
- Announcing changes to the name or business without offering a supporting business plan or comprehensive risk disclosure.
- Suggesting that an entity property holds strong potential for development with providing feasible evidence.
- Relying on projected peak profits instead of long-term commodity prices.
- Suggesting that a property has a specific fair-market value without offering a supporting report for proof.
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