Government investigations always have an adverse effect on a penny stock.

Even if the company being investigated is subsequently cleared. By the time this happens the company’s name has been tarnished. Any investors who become aware of the investigation will assume the worst and react accordingly.

We would not invest in a company that is subject to a government investigation as it is likely there was some reason the company was being investigated in the first place. Even if the investigation turns up nothing untoward, they will have had to spend a lot of time and effort cooperating with the investigation, time not spent on urgent company matters.

It is likely the share price would take months if not years to recover.

Dave J.

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