Filed under: Alternative Investment, Investment Fraud, Stocks, Investing
By Everett Rosenfeld
CYNK Technology (CYNK), the mysterious over-the-counter stock that at one point broke a $6 billion market cap, dropped roughly 80 percent in its first trades after a Securities and Exchange Commission halt.
The SEC halted CYNK for two weeks following a massive rise in the stock's value -- it had been worth only a few cents per share in June, but it jumped above $21 on July 10. The Belize-based CYNK Technology supposedly operates a social networking site, but filings indicate it only has one employee and virtually no assets.
Experts told CNBC the week of the SEC halt that they expected CYNK to fall precipitously after reopening, and its first day of trading is proving those predictions correct. When it was halted, the stock was worth just less than $14 per share, and is now below $3 a share after briefly hovering around $5 earlier Friday morning.
An OTC Markets spokeswoman told Reuters that CYNK's shares were not trading on its platform, but were occurring over the phone.
Earlier this week Reuters reported that OTC's CEO did not expect CYNK to trade on its platform at all after reopening, as no brokerages would file the required paperwork for the stock to trade on their exchanges.
An SEC spokesman said that the organization cannot comment on the status of a company after a suspension period ends, citing an online explanation of the process. That document notes that broker-dealers may not solicit investors to trade the previously suspended OTC stock until they satisfy several regulatory requirements.
The SEC warned, however, that "unsolicited" trading may occur after a reopening -- as CYNK is now seeing -- but "even though such trading is allowed, it can be very risky for investors without current and reliable information about the company."