SMTP Inc.

Kurta Law is investigating broker recommendations of SMTP, Inc (NASDAQ: SMTP). The prospectus, the registration document that companies file with the Securities and Exchange Commission, clearly states that investing in this stock involves a high degree of risk. Brokers should have known about this risk and steered clear of recommending this stock to investors with moderate to conservative risk tolerance. Unsuitable investments violate FINRA Rule 2111, which requires brokers to consider their investor’s risk tolerance before making an investment recommendation.  

If you believe you suffered investment losses due to broker fraud or misconduct, contact Kurta Law for a free case evaluation. Call (877) 600-00098 or email info@kurtalawfirm.com.  

About SMTP  

According to the prospectus, SMTP Inc. is an email service provider for companies that send large volumes of emails that are attempting to get around spam filters.  

The Offering  

The prospectus dated January 30, 2014, announced that SMTP was offering 1,600,000 shares of common stock for $6.25 per share. As of April 16, 2024, SMTP is not listed on the public stock exchange.  

Risks Related to This Offering  

Kurta Law wants investors to know about the following risks that were clearly disclosed in the prospectus. These are only some of the risks that SMTP listed in the “Risk Factors” section.  

Thinly Traded Stock  

Before this offering, shares of SMTP traded over the counter – the trading platform available to securities that do not meet the requirements for listing on a public exchange. As the prospectus states, “The number of persons interested in purchasing our common stock at or near bid prices at any given time may be small or non-existent.”  

Short-Term Subscription Agreements  

The majority of SMTP email services are sold pursuant to short-term subscription agreements, which are generally one month to one year in length. If customers choose not to renew, its revenue could decrease.  

Potential Failure to Develop New Services  

To stay competitive, SMTP would have to enhance existing services or develop new services. If the company is unable to keep pace with customer needs, the business would be harmed.  

Reliance on Relationships with Channel Partners  

SMTP relies on a network of active channel providers, web developers, and marketing agencies to refer customers to its services. If SMTP cannot maintain its relationships, it will cause the business to experience delays and increased costs in adding customers.  

International Operations  

SMTP’s international operations come with a unique set of risks. Complex foreign and U.S. regulations apply to its international operations, which increase the cost of doing business. It could interfere with SMTP’s ability to offer products and services.  

Spam Blacklists  

SMTP depends on email to market to customers. If SMTP continues to be blacklisted by  certain companies, it could interfere with its ability to market its services.  

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.