The suspicious trading of MDGC stock that resulted in a caveat emptor (skull and crossbones) warning from OTC Markets appears to have been illegal market manipulation. Even transactions that are intended to maintain an artificial price are illegal.
Section 9(a)(2) of the Securities Exchange Act of 1934 defines market manipulation as transactions which create an artificial price or maintain an artificial price for a tradeable security.
a.Transactions relating to purchase or sale of security
It shall be unlawful for any person, directly or indirectly, by the use of the mails or any means or instrumentality of interstate commerce, or of any facility of any national securities exchange, or for any member of a national securities exchange--
1.For the purpose of creating a false or misleading appearance of active trading in any security registered on a national securities exchange, or a false or misleading appearance with respect to the market for any such security, (A) to effect any transaction in such security which involves no change in the beneficial ownership thereof, or (B) to enter an order or orders for the purchase of such security with the knowledge that an order or orders of substantially the same size, at substantially the same time, and at substantially the same price, for the sale of any such security, has been or will be entered by or for the same or different parties, or (C) to enter any order or orders for the sale of any such security with the knowledge that an order or orders of substantially the same size, at substantially the same time, and at substantially the same price, for the purchase of such security, has been or will be entered by or for the same or different parties.
2.To effect, alone or with one or more other persons, a series of transactions in any security registered on a national securities exchange or in connection with any security-based swap agreement (as defined in section 206B of the Gramm-Leach-Bliley Act) with respect to such security creating actual or apparent active trading in such security, or raising or depressing the price of such security, for the purpose of inducing the purchase or sale of such security by others.
3.If a dealer or broker, or other person selling or offering for sale or purchasing or offering to purchase the security or a security-based swap agreement (as defined in section 206B of the Gramm-Leach-Bliley Act) with respect to such security, to induce the purchase or sale of any security registered on a national securities exchange or any security based swap agreement (as defined in section 206B of the Gramm-Leach Bliley Act) with respect to such security by the circulation or dissemination in the ordinary course of business of information to the effect that the price of any such security will or is likely to rise or fall because of market operations of any one or more persons conducted for the purpose of raising or depressing the price of such security.
4.If a dealer or broker, or the person selling or offering for sale or purchasing or offering to purchase the security or a security-based swap agreement (as defined in section 206B of the Gramm-Leach-Bliley Act) with respect to such security, to make, regarding any security registered on a national securities exchange or any security-based swap agreement (as defined in section 206B of the Gramm-Leach-Bliley Act) with respect to such security, for the purpose of inducing the purchase or sale of such security or such security-based swap agreement, any statement which was at the time and in the light of the circumstances under which it was made, false or misleading with respect to any material fact, and which he knew or had reasonable ground to believe was so false or misleading.
5.For a consideration, received directly or indirectly from a dealer or broker, or other person selling or offering for sale or purchasing or offering to purchase the security or a security-based swap agreement (as defined in section 206B of the Gramm-Leach-Bliley Act) with respect to such security, to induce the purchase of any security registered on a national securities exchange or any security-based swap agreement (as defined in section 206B of the Gramm-Leach-Bliley Act) with respect to such security by the circulation or dissemination of information to the effect that the price of any such security will or is likely to rise or fall because of the market operations of any one or more persons conducted for the purpose of raising or depressing the price of such security.
6.To effect either alone or with one or more other persons any series of transactions for the purchase and/or sale of any security registered on a national securities exchange for the purpose of pegging, fixing, or stabilizing the price of such security in contravention of such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors.
wow, all this "hoop-lah" because of the skull & cross bones? What's with this "oh a suspension is coming?" Now microcaps get suspension warnings with skull & crossbones? lol. Silly, they do not.
The stock traded up fast, too fast & too high. This raised a flag with otc. Otc clearly states: "Generally, OTC Markets will remove the Caveat Emptor designation once the security meets the qualifications for Current Information and we are satisfied that there is no longer a public interest concern, typically no sooner than 30 days"
So if management files the annual report with an attorney opinion letter, next week, then mdgc may wait a month or maybe 5 weeks before otc removes the skull & crossbones? Ok. So if management does this, wont today's .002 be tomorrow's .005+ again? lol. Awful lot of "sky is falling" and panic sell off for a situation easily rectified. I'd worry more if the annual report and attorney opinion letter don't get filed. Let it trade down out of fear. I'm not a shareholder here, but I certainly wouldn't be so bold as to advise people to sell and get out. Not enough facts for anyone to support that proposed, unnecessary and unjust destruction theory of mdgc.
I called up the OTC and spoke directly with the person responsible for the CE on MDGC, the reason for the CE was because MDGC was late on its financials, as soon as they are received and verified the CE will be removed.