The situation with MMTLP was unique. It was a stock that was being exchanged into a non-tradeable private security. The last day that it would be eligible by the holder of record for that exchange was Dec 8. However, the actual exchange could not happen until Dec 12. So any stock purchased in the market after Dec 8 would not get the NB stock.
So this wasn’t a subjective determination that it was worthless after Dec 8. It was completely objective. And that is what made it a rare situation. In other OTC cases you are referring to, it is still subjective for the most part (even though most know it is worthless) but the stock has no pending cancellation date.
The only other situation that has some similarity is when the SEC revokes the registration of a stock. While there is a longer process involved, when the administrative proceedings are occurring it should be obvious to anyone the stock is going to disappear at some point. However it is not ever announced like the situation here when everyone should know the stock was not eligible for the exchange after Dec 8. In the case of the revocation, it just happens one day. The music stops and if you are left holding the bag…you played roulette and lost.
So in a lot of ways it was the same here. It came without warning…and that is how suspensions and halts are suppose to work.
And nobody can deny what was happening. This naked short narrative was being used to pump the stock at the exact moment it would disappear. Why?
That’s easy.
Anyone who was able to sell their stock after Dec 8 was going to both pocket that money AND get the NB stock.
FINRA simply prevented that from happening.
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