You may be familiar with the GameStop and AMC debacle that occurred in 2021, when the stock trading app Robinhood prevented investors from buying or selling stocks when their stock prices rose significantly. This was a clear and criminal way for Robinhood to protect its Wall Street hedge fund friends and bully its investors. Investors began to ask themselves, “If brokers and regulatory agencies are allowing this to happen, can they do anything?”
That question was answered with a resounding yes a year and a half later when the Financial Industry Regulatory Authority (FINRA) suspended the purchase and sale of the Series A preferred dividend of Meta Materials Inc. ($MMTLP). We’ll get to what happened shortly, but it’s important to understand who FINRA is and how they have a direct role in what happened to $MMTLP and its investors.
FINRA’s Mission
FINRA’s mission is “to protect investors and ensure market integrity.” “We work every day to ensure that everyone can participate in the market with confidence.” As we dive into what happened to Meta Materials Inc. and $MMTLP this year, the key word to remember is “everything.”
Series of Events
It started with Torchlight Energy Resources Inc., a small company listed on the NASDAQ. They own 97,500 acres of land in the Orogrande Basin in Texas. The land has been touted as one of the largest oil and gas discoveries on American soil since the 1970s. It has about 3.2 billion barrels of recoverable oil and excess natural gas.
Despite all the positive news for Torchlight, their share price has seen unusual trading patterns due to strong shorting. This caused their stock price to drop to $0.20 per share. They then sought to raise the necessary capital to continue drilling wells and meet drilling quotas.
Due to a major short circuit, Torchlight CEO John Brda had to do something important to save his company and ultimately their oil and gas deposits. They decided to merge with Meta Materials Inc., a Canadian developer of advanced materials and nanocomposite products.
Torchlight shareholders received a special non-convertible dividend as a result of the merger, which will be converted into cash upon the sale of Torchlight’s oil and gas assets,A total of 165472,241.
One special dividend was distributed. This is an important number to remember. Because the stock was heavily shorted, the short positions that took Torchlight stock to $0.20 didn’t close when they should have. An estimated 30 million short shares were outstanding. Illegal, naked fishing only got worse from there.
Under the SEC-approved legal structure of the merger, Torchlight shareholders began seeing a temporary, non-exchangeable dividend proxy ($MMTLP) in their brokerage accounts.
FINRA’s approval of illegal Trading
Much to Brda’s surprise, a non-traded dividend placeholder is traded on the over-the-counter (OTC) market without company approval. One or two market makers traded this token illegally (using outdated company information), even though the merger documents stated that this dividend placeholder was not tradable, so they were able to close their illegal empty short positions.
Later in October 2021, FINRA and the OTC markets approved the registration of $MMTLP to start trading, despite the fact that it is illegally traded without the consent of the company.
Meta Materials has announced that the Torchlight assets will be spun off into a private company called Next Bridge Hydrocarbons. This is important because a private company can have zero shares shorted, effectively closing out any short positions. The only way to get rid of their short shares is through a share buyback, which will lead to a significant increase in the price of MMTLP.
After several changes to the documents required to make this type of move, the SEC and FINRA approved all the dates and went private. While GameStop and AMC’s short presses share many similarities, one thing they never had was an expiration date. This has earned it the nickname “MOASS,” or the mother of all short presses. The last day the MMTLP could buy shares (and receive the dividend) in December, 12.08.2022. The last trading day was December 12, 2022. Next Bridge Hydrocarbon’s private share transfer was December 14, 2022.
After the collapse of GameStop and AMC, retail investors became an educated and powerful group of people fed up with synthetic stocks and skinny pants. They realized how valuable $MMTLP was due to the excessive number of short positions and the fact that the typewriter had an expiration date. What the skinny pants didn’t expect were retail investors who held onto their positions until the end of those dates.
On December 8, bare shorts dropped MMTLP from $12.90 to $2.90 with only two days left to close out its estimated short position of over 300 million. It told retail investors there were more than 300 million shares to buy, when legally there were only 165 million. It was a “name your price” situation with only two days of trading left.
On December 9, FINRA suspended sales of $MMTLP due to “unusual events.” Yes, the same crooked organization that confirmed those dates stopped selling those shares after two trading days. This illegally forced every retail investor who had $MMTLP to go private while they waited another two days to decide whether they wanted to sell their shares or transfer them to Next Bridge Hydrocarbons. FINRA stole this option from 65,000 honest investors. They stole life-changing money from teachers, single mothers, police officers, nurses, and everyday people who relied on that money to bail out some of the richest people in the world.
Remember FINRA’s mission? “To protect investors and ensure the integrity of the market, “We work every day to ensure that everyone can participate in the market with confidence.”
Enough. We demand a free and fair market.
All US stock market investors and non-investors should be fed up. We are in a system that does not let you win. The rich protect the rich. Organizations that are supposed to protect their investors and ensure fair markets make backroom deals with hedge funds and do whatever they want, even if it means bullying others.
FINRA’s board includes hedge fund managers, the same organization that is supposed to exist to ensure market integrity. The same organization allows obvious shortcuts that, without consequence, have destroyed thousands of promising companies, including promising pharmaceutical, technology, and healthcare companies—companies that could save millions of lives and change the world. That is enough. Now is our time to stand up and fight for free and fair markets.
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