Superconductor Technologies

Kurta Law is investigating broker recommendations of Superconductor Technologies (NASDAQ: SCON). These investments were high-risk and may have been unsuitable for many investors. Unsuitable investments violate FINRA Rule 2111, which requires brokers to consider their investor’s risk tolerance. Regulation Best Interest also requires brokers to exercise reasonable care and skill when they make recommendations.  

If a broker recommended unsuitable investments to you, you may have a case for a securities lawyer. Call (877) 600-0098 or email info@kurtalawfirm.com for a free case evaluation.  

The Offering  

The prospectus dated November 20, 2012, announced that Superconduct Technologies was offering 3,333,334 shares of common stock for $0.30 per share. It was delisted from the stock exchange in 2020.  

Penny stocks that trade for less than $1.00 are always high risk. 

About Superconductor Technologies  

According to the prospectus, Superconductor Technologies produces high-temperature superconductor materials and related technologies.  

Risks Associated with Superconductor Technologies Investments  

The following risks were identified in the prospectus. These are risks that brokers should have known about when they recommended Superconductor Technologies to their clients.  

De-Listing from NASDAQ  

At the time of the offering, Superconductor Technologies had already received notice from NASDAQ that its share price had fallen below $1.00 for 30 consecutive business days and therefore did not meet the minimum bid price requirements. When a stock is de-listed from the stock exchange, investors are left with worthless stocks.  

History of Losses 

The prospectus states, “We have a history of losses and have never been profitable. In each of our last five years, we have experienced net losses and negative cash flows from operations.”  

Need for Additional Capital  

Superconductor Technologies disclosed that it would most likely need to raise additional capital. The prospectus states, “If we cannot raise any needed funds we might be forced to make further substantial reductions in our operating expenses, which could adversely affect our ability to implement our current business plan.”  

New Wire Platform May Not Be Successful 

At the time of the offering, Superconductor Technologies was working on a new wire platform for power applications. It had put considerable resources toward the project, but substantial technical and business challenges remained before it could commercialize its product.  

Commercial Market Uncertainties 

Commercial uses for superconducting wire are limited, and a broad commercial market might not develop.  

Limited Experience 

Superconductor Technologies had limited experience marketing and selling superconducting wire. The company knew it might not be successful in its efforts to market this new technology.  

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.