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NEW YORK (
The Deal) -- The
Securities and Exchange Commission said Tuesday, June 25, that it suspended trading of
Biozoom Inc., a German-based company that purports to be developing a hand-held "biofeedback" device, after the stock was recommended in advertisements that had been purchased in the Sunday
New York Times and on the Rush Limbaugh radio show.
The SEC said in its administrative order that it was taking action "due to a lack of current and accurate information concerning Biozoom" and because of concern that some Biozoom affiliates and shareholders may have "unjustifiably" relied upon Rule 144, the provision of the Securities Act that governs sales of restricted shares. Those shareholders, the company and others may be engaged in an unlawful distribution of shares through the OTC Markets QB platform, the SEC said.
OTC Markets is a market for stocks that aren't listed on the major U.S. exchanges. Its QB platform features shares of such companies that are current in their filings with the SEC.
Biozoom, which trades under the symbol BIZM, closed at $3.45 on June 24, implying a market capitalization of $206.1 million. The stock has almost tripled since May 22.
Biozoom went public in February, through a reverse merger with a registered shell company. At the time, it raised $1.15 million in a private placement of convertible preferred stock to an investor that the company did not identify.
Neither SEC officials nor representatives of Biozoom returned calls seeking comment.
An article recommending Biozoom shares took up most of the space in full-page ads that were published in the June 23 issue of the
New York Times and the June 21 issue of
USA Today. Both of the ads were packaged, not as promotions of the stock, but as advertisements for a magazine called
Global Financial Insight and included subscription information for the magazine.
In the advertisement on the nationally syndicated Rush Limbaugh Show, Biozoom shares were mentioned as one of the top stock picks of a newsletter called
Biozoom has also been featured in more common outlets for stock promotions, including e-mail newsletters and Web sites that recommend penny stocks. At least 13 e-mail newsletters have included recommendations for Biozoom, according to
Hotstocked.com, a Web site that tracks stock promotions.