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Law360 (April 6, 2020, 9:06 PM EDT ) The U.S. Securities and Exchange Commission suspended trading Monday morning for shares of two penny stock companies over concerns about claims that the companies were working to fight the COVID-19 pandemic.
The regulator filed two orders on Friday temporarily halting trading for dental supply company No Borders Inc. and apparel company Sandy Steele Unlimited Inc. until April 21.
No Borders, based in Arizona, purports to own a string of brands in the health and wellness, tech tool and CBD industries, and, perhaps most notably, provides "equipment and supplies to medical and dental professionals" through its U.S. company MediDent Supplies, according to the company's website.
The SEC said in its suspension order that since March 11, No Borders has made statements about its products and business activities as they related to the coronavirus pandemic that the regulator now questions, specifically regarding a claim that the company had an agreement to bring its "COVID-19 specimen collection kits" to the U.S.
No Borders did not immediately respond to a request for comment. On March 16, the company said in an announcement that it had launched its "'MediDent Supplies Covid-19 Home Specimen Collection Kit' to support the #StayHomeSaveLives efforts across the country." Its share price jumped from 1 cent to 6 cents that same day, according to available trading data.
The company followed up with an announcement on March 20 that it had started expediting shipments of medical equipment and supplies to its main operations center in an effort to meet surging national demand. Five days later, No Borders said it would be reducing its available-for-purchase shares from 300 million to 100 million in order to stave off possible dilution given an "increased demand for both its MediDent Supplies products and its securities."
The SEC said it had "questions and concerns regarding the adequacy and accuracy" of the company's representations.
The agency said the same in its order against the Minnesota-based Sandy Steele, which claims on its website to make battery heated apparel. According to the SEC, unknown sources have been claiming in email stock promotions to investors that Sandy Steele is an operational garment manufacturer that has the ability to produce protective masks "that are in high demand due to the COVID-19 crisis."
Sandy Steele's publicly reported financial statements however show that the company has limited operations, sales and inventory, the SEC said, noting too that there has been a substantial concentration of selling the company's stock by offshore accounts.
"The commission is of the opinion that the public interest and the protection of investors require a suspension of trading in the securities of the company," the SEC said.
Sandy Steele did not respond to a request for comment Monday evening. Its stock has not risen above 2 cents-per-share in months, according to available trading data.
The SEC, which has pumped up relief efforts for public companies affected by the COVID-19 crisis, suspended trading in March for a health care company that claimed it'd made a large quantity of medical protective masks, as well as Zoom Technologies Inc. over fears it was being confused for a booming video communication services provider with a similar name.
--Editing by Jay Jackson Jr.
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