Sigma Labs
Kurta Law is investigating broker recommendations of Sigma Labs (NASDAQ: SGLB). These were high-risk investments, making them unsuitable for many investors. The Financial Industry Regulatory Authority (FINRA), the regulator for the securities industry, requires that investors recommend exclusively suitable investments. Suitable investments fit an investor’s risk tolerance, as well as their age, financial goals, tax status, overall investment strategy, and other key investor characteristics. Unsuitable investment recommendations are a type of broker misconduct. Broker misconduct is grounds for FINRA arbitration, which is the process brokerage firms typically require investors to use instead of suing in civil court.
If you believe you suffered losses as a result of broker misconduct, contact a securities lawyer today. Call (877) 600-0098 or email info@kurtalawfirm.com.
About Sigma Labs
According to the prospectus, Sigma Labs is a software company that developed an In-Process-Quality Assurance (IPQA) software known as PrintRite3D, which Sigma Labs proposed for use with 3D printing.
The Offering
The prospectus dated July 31, 2019, announced Sigma Labs was offering 2,875,000 shares of common stock for $0.80 per share. Penny stocks that trade for less than $1.00 are always high risk.
Risks Associated with Sigma Labs Investments
The following risks were clearly disclosed in the prospectus. Brokers either knew or should have known about the following risks.
Potential Stock Market Volatility
The prospectus states that Sigma Labs’ stock prices may be subject to volatility. This could be caused by a variety of factors, including any major changes to management or announcements by competitors of new products and services. A drop in share prices could result in stockholder legal action.
Limited Operating History
Sigma Labs reported that it had incurred losses in every reporting period since the company started in 2010. According to the prospectus, “is no assurance that any revenues we generate will be sufficient for us to become There profitable or to maintain profitability.” Furthermore, a limited operating history makes it more difficult for investors to evaluate the business.
Additional Financing
Sigma Labs Investments revealed that it would require additional financing. There was no guarantee that it would be able to secure financing on acceptable terms.
Global Economic Downturn
Any economic downturn that would cause a drop in government spending would adversely affect business. Unpredictable global economic events could also cause disruptions to and delays by third-party contractors and suppliers.
Managing Growth
As a new business, the prospectus indicates there were uncertainties around how the business would handle any growth.
Insurance Requirements
Certain customers required Sigma Labs to maintain insurance. Sigma Labs was uncertain as to whether it would be able to obtain or maintain adequate liability insurance on acceptable terms, if at all.
Intellectual Property Rights
The business’s success depended on its ability to protect its intellectual property rights and proprietary technology. It may not be able to protect its intellectual property and Sigma Labs could be sued by third parties who claim they infringed on their intellectual property rights.
Aegis Capital Corp. Underwriting
Investors should know that Aegis Capital Corp. served as the underwriter for this offering. Underwriters take on risk in exchange for a fee, which could motivate certain investment banks to underwrite investments that pose too much risk for the average retail investor. Additionally, brokers may have conflicts of interest when they recommend shares that are underwritten by an affiliate of their brokerage firm.
Kurta Law Can Help
Contact Kurta Law today for a free case evaluation – keep in mind that you have a limited time to file a claim. Our attorneys do not collect a fee unless we win your case. If you have any questions, call (877) 600-0098 or email info@kurtalawfirm.com.