Last week, FINRA halted trading in a stock just before a spin-off.
#FINRAfraud started trending and short sellers were saved from billions in losses.
Here’s what happened 🧵
#FINRAfraud started trending and short sellers were saved from billions in losses.
Here’s what happened 🧵
On Friday, FINRA halted trading in $MMTLP, which are the preferred shares of Meta Materials, $MMAT
Why did FINRA halt trading?
Here’s what their statement said:
Why did FINRA halt trading?
Here’s what their statement said:
“FINRA has determined that an extraordinary event has occurred or is ongoing that has caused or has the potential to cause significant uncertainty in the settlement and clearance process for shares in MMTLP”
This all started on November 23rd when the company announced it was spinning off a subsidiary, Next Bridge Hydrocarbons.
Holders of the preferred shares, $MMTLP, would receive common stock in the spin-off company.
Holders of the preferred shares, $MMTLP, would receive common stock in the spin-off company.
Then last week, FINRA announced that it would halt trading in the shares effective Friday.
Thursday, December 8th was the last trading day, and the day of record for the transaction.
Thursday, December 8th was the last trading day, and the day of record for the transaction.
The halt caused an uproar among MMTLP investors.
The share price fell 70% over the 3 days leading up to the halt.
The share price fell 70% over the 3 days leading up to the halt.
https://twitter.com/optimpm/status/1602047046726594560?s=20&t=uDC9upRkHxPqhUGtYg2K9Q
While it’s common for trading to be halted ahead of a transaction, it’s more common that the halt happens briefly around the announcement, with trading resuming after a short pause.
But MMTLP’s situation is a bit more unique.
But MMTLP’s situation is a bit more unique.
The MMTLP symbol will be deleted, which means it can no longer be traded or quoted.
Investors are alleging that this halt allows shorts off the hook.
Investors are alleging that this halt allows shorts off the hook.
Some have pointed out that Ari Rubenstein, the CEO of Global Trading System, is on the board of FINRA while his firm is a market maker for MMTLP trading.
https://twitter.com/AShortSqueeze/status/1601556984163356672?s=20&t=uDC9upRkHxPqhUGtYg2K9Q
Some are comparing it to GameStop and AMC trading from last year, when the “buy” button was turned off.
In other words, shorts were allowed to close out their positions, but because the “buy” button didn’t work, the price was only going down,
In other words, shorts were allowed to close out their positions, but because the “buy” button didn’t work, the price was only going down,
MMTLP was halted at $2.90, but many think that the new company would have a share value of $30.
It traded at $9.55 on the day of the deal announcement.
It traded at $9.55 on the day of the deal announcement.
$MMAT and $MMTLP are both heavily shorted.
Up to 10 million shares of MMAT and 6 million shares of MMTLP are short now, but that’s way lower than it was a few weeks ago.
Up to 10 million shares of MMAT and 6 million shares of MMTLP are short now, but that’s way lower than it was a few weeks ago.
As the price has collapsed over the last couple of weeks, the number of shares shorted has plummeted as short sellers have been closing out their trades at lower and lower prices.
Short sellers have saved billions in potential losses.
If MMTLP actually traded around $30, short sellers could have lost up to $200 million (and that’s not counting shorts who closed out already, or MMAT shorts).
Total losses for short sellers could have been in the billions.
If MMTLP actually traded around $30, short sellers could have lost up to $200 million (and that’s not counting shorts who closed out already, or MMAT shorts).
Total losses for short sellers could have been in the billions.
What happens next?
Holders of MMTLP will receive their new shares, and the MMTLP ticker will disappear forever.
And we’ll never know how MMTLP would have traded if the halt didn’t happen.
Holders of MMTLP will receive their new shares, and the MMTLP ticker will disappear forever.
And we’ll never know how MMTLP would have traded if the halt didn’t happen.
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