A Colorado businessman has been fined $4.1 million by the Securities and Exchange Commission for allegations that he misled investors about Israeli cannabis company OWC Pharmaceutical Research, according to a MarketWatch report.
Jeffrey Friedland, who authored “Marijuana: The World’s Most Understood Plant,” is accused of taking kickbacks from OWC in exchange for promoting the stock during conference appearances and in online videos from 2016 to 2017 – during which the price of the stock jumped from one cent to as high as $2.20 a share and gave OWC a $300 million market value. Today, the stock has collapsed 99 percent and is back down to a penny.
The SEC says Friedland, as Global Corporate Strategies LLC, received 5.1 million shares of the company – about 6.3 percent of the stock – in exchange for promoting it.
Melissa Hodgman, associate director of the SEC’s enforcement division, said that securities laws require retail investors to list all “the facts about promoters’ relationships with the companies they tout.”
In all, Friedland made about $6.5 million from the scheme and, while he has admitted to no crimes, the U.S. District Court of Colorado has barred him from participating in any penny stock offering for a decade. He is also accused of using disbarred attorneys to mislead intermediaries while selling the stock.
OWC’s most recent SEC filings show net losses of $287,000 during last quarter but the company is proposing a reverse stock split, which would merge as many as 700 old shares into one new one to make each share more valuable.
Get daily news insights in your inbox. Subscribe