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When the Financial Industry Regulatory Authority (FINRA) halted trading of MMTLP in December 2022, it led to a massive outcry.
In their final trading days, the preferred shares of Meta Materials (NASDAQ:MMAT) surged. Then, FINRA halted trading on Dec. 9 ahead of their spinoff and delisting. For months, retail investors have sounded the alarm on social media. This week, in response, the Congressional Research Service published a report on MMTLP stock and the drama surrounding it.
Titled “Meme Stock MMTLP and FINRA Trading Halt,” the report takes a close look at MMTLP and everything that has transpired since the FINRA trading halt.
A New Report on MMTLP Stock
How many letters has the MMTLP community sent to Congress? According to a post from financial blogger Frank Nez that the report cites, more than 40,000, although some were auto-generated. Acknowledging the attention that Meta Materials and MMTLP have received, the report takes readers through the stock history and provides recommendations for policymakers.
As the report’s writer Eva Su notes, MMTLP stock was the result of a 2021 merger between Meta Materials and Torchlight Energy Resources. Since the trading halt, former Torchlight CEO John Brda has claimed that “MMTLP was never designed to trade.” But as a Forbes article cited by the report also notes, Brda’s own actions have aroused suspicions that he may have been involved in a pump-and-dump scheme. Su uses the allegations against Brda to illustrate the need for regulators to consider “signs of insider trading and pump and dump” schemes with meme stocks.
Su also discusses the speculation that MMTLP stock would experience a short squeeze prior to its delisting. She notes that retail investors likely hoped to score last-minute profits before the preferred shares spinoff. In her words:
“However, an MMTLP short squeeze did not happen. Some observers attribute this to the unexpected timing of the FINRA trading halt affecting the possibility of a last-minute gain for MMTLP investors. Others see the potential of illegal naked shorts, which would not involve corresponding borrowed shares. FINRA states that broker-dealers have adjusted their operational conversions to accept Next Bridge shares to close out the MMTLP short positions. As such, the MMTLP trading halt and deletion may not have affected short sellers’ capabilities to close their MMTLP positions so long as they had access to Next Bridge shares.”
The Bottom Line
Ultimately, Su acknowledges that many investors have suffered financial losses following the MMTLP trading halt. She recommends that policymakers examine “retail investors’ access to these high-risk investment opportunities and [investigate] potential illegal, fraudulent, and manipulative activities.”
On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.