Meta Materials Inc (MMATQ)

[trader59]

FINRA weighs in on the "get shorty" nonsense that was the foundation of the pump and dump run on this stock....

https://www.finra.org/investors/insights/supplemental-faq-mmtlp-corporate-action-and-trading-halt

Key Excerpts:

Based on FINRA’s subsequent regulatory efforts, FINRA estimates that there was an aggregate short interest position in MMTLP in accounts held at broker-dealers as of December 12 of approximately 2.65 million shares out of 165.47 million total shares outstanding, which is not a significant percentage—only 1.6%—of the total shares outstanding.13 The short interest position in MMTLP had therefore decreased substantially—by nearly 60%—between November 15 and December 12. Specifically, short interest in MMTLP as of November 15, 2022, (approximately 6.4 million shares) declined around 27% to approximately 4.7 million shares as of November 30, 2022, and declined about a further 32% to approximately 2.65 million shares as of December 12.

15. Was there excessive “naked” short selling resulting in “counterfeit shares” in MMTLP at the time of the corporate action?

While it is not clear what is meant by the term “counterfeit shares,” it has been used in social media when discussing “naked” short selling and FTDs in a security.15 A “naked” short sale is generally understood to mean a short sale where the seller does not borrow or arrange to borrow the securities in time to make delivery within the standard settlement period—resulting in a FTD16 when delivery is due.17While certain trades are required to be marked “short” pursuant to SEC Regulation SHO, “naked” short sales are not identified as such in the relevant short sale data.18 Nonetheless, where there is significant “naked” short selling in a security, we would expect to see indicators in the data—particularly, a high number of FTDs. The SEC publishes data obtained from the National Securities Clearing Corporation’s (NSCC) Continuous Net Settlement (CNS) system on the total quantity of FTDs per security as of each reporting settlement date.19

FINRA has found no evidence that there was significant naked short selling in MMTLP at the end of its trading, which appears to run counter to the social media claims regarding “counterfeit shares.” The SEC did not publish FTD data for MMTLP for December 12 because transactions in MMTLP executed on the last day of its trading—December 8—were not cleared through CNS. However, FTDs as of December 9 were very low—215,238 shares. In addition, while CNS FTD data is not available for transactions in MMTLP due to settle on December 12, FINRA estimates that a very small number (0.03% of MMTLP’s total shares outstanding) of the short positions in MMTLP as of December 12, 2022, would have potentially resulted in FTDs. Broker-dealers had stock borrows or margin securities available to cover almost 100% of the open short positions.

The limited number of FTDs through December 9 together with other factors—such as the availability of shares (stock borrows or margin securities) to cover almost 100% of the open short positions on December 12 (as discussed above), the successful distribution of Next Bridge shares (as discussed above in Question No. 12), and the low amount of short interest positions in MMTLP relative to total shares outstanding as of December 12 (as discussed above in Question No. 14)—run counter to claims that there was extensive “naked” short selling near the end of trading resulting in “counterfeit shares,” or that the distribution of Next Bridge common stock to many MMTLP shareholders was disrupted by such activity.