FP says SEC's Cynk halt came too late for short seller
2014-07-16 09:38 ET - In the News
The Financial Post reports in its Wednesday edition a Wall Street trader said Cynk Technology's 36,000-per-cent stock surge cost him his job. A Bloomberg dispatch to the Post quotes Tom Laresca, a market-maker at New Jersey broker Buckman Buckman & Reid, as saying he was among traders who thought they spotted a scam as the shares jumped to $2.25 (U.S.) last month from pennies. He sold it short last week around $6 (U.S.). Mr. Laresca figured the Securities and Exchange Commission would suspend trading, sending the price toward zero. Cynk describes itself as a social-network service. It has no revenue and one employee. "The stock looked worthless," Mr. Laresca said. Instead of falling, however, the price more than doubled the next day, July 9, starting the squeeze. Market-makers who had sold the shares short got nervous and scrambled to buy them to close their positions, driving the price even higher. The SEC stopped trading two days later, citing concerns about the accuracy of information in the marketplace and "potentially manipulative transactions." That was too late, Mr. Laresca said, adding he resigned Tuesday after his firm cut his ability to hold positions. He declined to say what the trades cost.