NEW YORK (TheStreet) -- The Securities Exchange Commission issued an investor alert because of the increasing number of complaints about marijuana stocks. Since the beginning of March, the SEC temporarily suspended trading of five different companies for a variety of reasons related to the veracity of their claims to be involved in a marijuana businesses. Suspicions abound that some companies were simply an attempt to capitalize on the "green rush."

The five companies included FusionPharm (FSPM), Cannabusiness Group (CBGI), GrowLife (PHOT), Advanced Cannabis Solutions (CANN) and Petrotech Oil & Gas (PTOG). The SEC said two of the suspensions involved potentially illegal activity including unlawful sales of securities and market manipulation.

The SEC warned investors to look for the following:

  • SEC trading suspensions
  • E-mail and fax spam recommending a stock
  • Insiders owning large amounts of the stock
  • False or exaggerated press releases

The SEC also noted that most of these companies were microcaps that were traded on the OTC Bulletin board and don't have to meet any minimum financial standards. The SEC wrote, "Information about microcap companies can be extremely difficult to find, making it less likely that quoted prices in the market reflect full and complete information about the company."

FusionPharm is a Denver-based company that claims to make cultivation systems for cannabis growers. The SEC has suspended trading from May 16 to May 30 "due to a lack of current and accurate information about the company because of questions that have been raised about the accuracy and adequacy of publicly disseminated information concerning, among other things: (1) the company's assets; (2) the company's revenues; (3) the company's financial statements; (4) the company's business transactions; and (5) the company's current financial condition."

Cannabusiness Group is suspended from May 7 to May 20. The SEC wrote it was "temporarily suspended trading in the securities of CBGI because of questions that have been raised about the accuracy and adequacy of publicly disseminated information concerning, among other things, the company's operations." Cannabusiness said "we are in the process of researching this issue and will answer all questions to the best of our ability that the SEC has. Also, during the suspension we will continue to operate our company along with our subsidiaries as usual." They also apologized to shareholders for the phones being busy. "We know that shareholders would like to have their questions answered and our phones have been busy all day, however we have no other information than this right now and will update the public as we can." Cannabusiness brought some of this trouble onto themselves when they copied statements from other company's announcements.

GrowLife's suspension from April 10 to April 24 was a little more serious because questions had been raised about the accuracy and adequacy of information in the marketplace and potentially manipulative transactions in GrowLife's common stock. Trading returned for GrowLife, but the stock hasn't really recovered, dropping from roughly $0.60 prior to the halt to currently ten cents a share.

>>Read More: GrowLife Bounces Back After SEC Pot Halt

Advanced Cannabis Solutions saw its stock get halted March 27 to April 9 for questions regarding unlawful public distribution of securities. The stock had hit 52-week highs of $64.64, but is now trading at roughly $15. Petrotech Oil & Gas was suspended from March 14 to March 27 because of questions about the company's operations. The stock is now trading at one cent a share.

Marijuana investors that have lost money as a result of the trading halts blame the SEC for unfairly picking on marijuana stocks. Message boards for the stocks question the SEC's timing of the halts and suggest ulterior motives.

>> Read More: Marijuana Stocks Need To Grow Their Balance Sheets  

"We know from experience that fraudsters follow the headlines," said Lori J. Schock, director of the SEC's Office of Investor Education and Advocacy, which prepared the investor alert. "Given the attention that marijuana-related companies have attracted recently, we urge investors to exercise caution when looking at investments in this space. Always thoroughly research the company -- and the person selling the investment -- before making a decision."

>>Read More: Shareholder Alert Levi Korinsky LLP Reminds Investors of Class Action Against GrowLife

-- Written by Debra Borchardt in New York.

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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