MedMen Enterprises (CSE:MMEN) recently got in trouble with government regulators concerning a particularly over promising stock promotion. Over-the-counter markets ended up investigating the specific advertisement relating to MedMen’s shares, promising that investors could see extreme gains from purchasing the company’s stock. This comes at a bad time for the company, which is already dealing with allegations of securities violations and financial fraud from it’s ex-CFO.
In a promotion now removed from the internet called “The single best way to play a market soaring to 80 billion per year retail,” it appears that MedMen hired Winning Media back in January to help improve their image through online ads.
While it’s common for many publicly trading companies to enlist the aid of agencies, hoping them imagine and subsequent stock prices will increase in doing so, they have to ensure they don’t go overboard in their promotions. It appears that this indeed happened, Winning Media published an article on marijuanastox.com, in which OTC Market Groups contacted both companies regarding the promotion.
“After due inquiry, the Company identified the promotional materials as an article featuring the Company that was posted on February 25, 2019 on the website marijuanastox.com by Wining Media LLC (“WM”). WM is an independent third-party investor relations and consulting firm. The Company engaged WM orally in January 2019 to provide public relations and communication services for the Company,” read a press release from MedMen. “Upon reviewing the content of the promotional materials, the Company confirms that the statements and claims made were taken from the Company’s public financial statements, historical press releases, the investor relations presentation and other public documents which are factual and non-misleading. However, there are statements made which encourage investors to purchase the stock of the Company. The Company has concluded, upon investigation, that, in this instance the article was not approved according to the Company’s internal procedures. The Company disclaims any potentially exaggerated or misleading statements contained in the materials.”
Additionally, MedMen went on to state that it wasn’t able to figure out if the promotion resulted in any serious “increased trading activity of the company’s stock.” In the days after the article was published, however, MedMen stock prices did increase before taking a drastic dive once OTC regulators got involved.
The OTC inquiry comes at a time when MedMen’s former CFO James Parkers filed a lawsuit against the company in which he alleged MedMen participated in securities violations. The executive left only a year after the company went public, a rare thing for a CFO to leave a recently made public company so quickly. Allegations include that the company made the executive waste shareholder money on frivolous expenses and compelling him to “wire hundreds of thousands of public dollars to a ‘consultant’ in Canada to ‘buy up our stock when it is under attack.’”
Over the past week, MedMen’s stock stumbled around 10 percent, with today’s trading session seeing share prices decline an extra three percent. For many analysts, MedMen has been a particular disappointing stock, with these recent announcements only adding to their letdown.
MedMen Company Profile
MedMen Enterprises is a leading cannabis company in the U.S. with assets and operations across the country. Based in Los Angeles, MedMen brings expertise and capital to the cannabis industry and is one of the nation’s largest financial supporters of progressive marijuana laws. – MedMen