Meta Materials (NASDAQ:MMAT) stock is in the green today after the company announced that it had retained law firm Christian Smith & Jewell, LLP to assist with investigating allegations of naked short selling within MMAT stock. The functional materials company had previously tapped into ShareIntel Shareholder Services, who completed an initial trading analysis.
That analysis “seemingly identified trade imbalances” that could affect Meta’s public float and average trading volume.
“We have reviewed the preliminary report from ShareIntel, and as a result we have engaged the services of Christian Smith & Jewell,” said Chairman Jack Harding. “In the best interest of our shareholders, we believe Wes Christian and his team will offer us the most effective solution in addressing potential instances of illegal trading, particularly by naked short sellers, either in our shares or those falsely represented as ours.”
MMAT Stock: Naked Short Selling Investigation Moves Forward
Meta points out that Christian Smith has a prominent track record of successfully representing companies facing market manipulation. In the past, the law firm has represented publicly traded companies like Overstock (NASDAQ:OSTK) and Taser International, which trades as Axon Enterprise (NASDAQ:AXON).
Based on data from Fintel, Meta’s number of failure-to-deliver (FTD) shares is currently close to a yearly low. FTD spiked to a yearly high in March, with some days registering over 8 million FTD shares, such as March 21 and March 22. March’s high FTD figure seems to correlate with a corresponding drop in MMAT stock over the following month. However, correlation does not necessarily equate to causation.
FTD occurs when one party in a contract fails to deliver on their obligation to the other party. In terms of short selling, this can occur when the short seller does not own all or any of the shares at the time of settlement, which results in a default. This could also result in the creation of fake or phantom shares, which can lower a stock’s price due to its dilutive nature. Based on the latest data, there were 7.65 million shares of MMAT sold short as of June 15. That’s equivalent to a short interest as a percentage of float of about 2%.
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On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
