CYNK - Cynk Technology stock suspension lifted
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Posted On: 07/26/2014 8:51:18 AM
CYNK - Cynk Technology stock suspension lifted
By Richard Morgan
July 24, 2014 | 4:50am
Modal Trigger
Penny-stock traders are hoping for clarification Friday as they await the Securities and Exchange Commission’s next directive in the curious case of Cynk Technology.
The SEC suspended trading in Cynk two weeks ago at $13.90 a share — citing “potentially manipulative transactions” — after its shares soared 36,500 percent in less than a month.
The suspension, which expires a minute before midnight Friday, froze trading in a company with no revenue, a laughable business plan and a single Belize-based employee.
The market’s frenzied buying temporarily gave Cynk a market cap of $6.4 billion and set off speculation of a well-orchestrated pump-and-dump scheme.
Those burned most, however, likely brought on their woes themselves.
“They thought they were smarter than the penny-stock investors buying up shares in Cynk’s fast-rising stock,” said Linda Riefberg, an attorney who counsels individuals accused of securities law violations. “And so they sold the stock short.”
Short sellers sell a stock they don’t own, hoping to buy it back later at a lower price. They then pocket the difference.
And though they’re legally required to “borrow” a stock before shorting it, some go “naked” and don’t worry about covering their short until the settlement date — typically three days later.
In Cynk’s case, though, the short sellers appear to have been squeezed.
The thinking is that, when they tried to cover, they couldn’t pry Cynk shares loose from a group that not only owned most of the stock but also refused to put it on the open market.
Faced with settlement dates — not to mention SEC violations for being exposed as “naked” — these short sellers soon became panic buyers that sent the stock’s price up ever higher.
Saddest of all is the lack of recourse for these short sellers even if the SEC uncovers fraudulent practices.
“They can’t blame their fate on stock promoters who said, ‘Buy this stock — it’s going way up,’ ” said Riefberg, who previously served market-regulator Finra as a chief counsel of its enforcement department.
“Because they didn’t act on that advice but, when you think about it, did just the opposite.”
http://nypost.com/2014/07/24/cynk-technology-...on-lifted/
By Richard Morgan
July 24, 2014 | 4:50am
Modal Trigger
Penny-stock traders are hoping for clarification Friday as they await the Securities and Exchange Commission’s next directive in the curious case of Cynk Technology.
The SEC suspended trading in Cynk two weeks ago at $13.90 a share — citing “potentially manipulative transactions” — after its shares soared 36,500 percent in less than a month.
The suspension, which expires a minute before midnight Friday, froze trading in a company with no revenue, a laughable business plan and a single Belize-based employee.
The market’s frenzied buying temporarily gave Cynk a market cap of $6.4 billion and set off speculation of a well-orchestrated pump-and-dump scheme.
Those burned most, however, likely brought on their woes themselves.
“They thought they were smarter than the penny-stock investors buying up shares in Cynk’s fast-rising stock,” said Linda Riefberg, an attorney who counsels individuals accused of securities law violations. “And so they sold the stock short.”
Short sellers sell a stock they don’t own, hoping to buy it back later at a lower price. They then pocket the difference.
And though they’re legally required to “borrow” a stock before shorting it, some go “naked” and don’t worry about covering their short until the settlement date — typically three days later.
In Cynk’s case, though, the short sellers appear to have been squeezed.
The thinking is that, when they tried to cover, they couldn’t pry Cynk shares loose from a group that not only owned most of the stock but also refused to put it on the open market.
Faced with settlement dates — not to mention SEC violations for being exposed as “naked” — these short sellers soon became panic buyers that sent the stock’s price up ever higher.
Saddest of all is the lack of recourse for these short sellers even if the SEC uncovers fraudulent practices.
“They can’t blame their fate on stock promoters who said, ‘Buy this stock — it’s going way up,’ ” said Riefberg, who previously served market-regulator Finra as a chief counsel of its enforcement department.
“Because they didn’t act on that advice but, when you think about it, did just the opposite.”
http://nypost.com/2014/07/24/cynk-technology-...on-lifted/
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