Months after the Financial Industry Regulatory Authority (FINRA) halted trading of MMTLP stock, the former preferred shares of Meta Materials (NASDAQ:MMAT), Gary Gensler has finally addressed the matter.
Yesterday, the Chairman of the U.S. Securities and Exchange Commission (SEC) appeared in a U.S. Senate hearing and fielded questions on many topics, including artificial intelligence ( ) and cryptocurrency. Senator Mike Crapo (R-ID) focused on a different subject, though. He grilled Gensler on MMTLP stock — specifically on how the SEC plans on responding to the allegations made by investors and whether any action has been taken.
Crapo began by noting Gensler’s description of himself as the “cop on the beat” regarding Wall Street. He then claimed that many people from his state have been impacted by what he described as the “troubling trading halt” of MMTLP. Crapo added that people across the country have shared these concerns and also have many questions.
Gensler on the MMTLP Stock Trading Halt
Answering Crapo’s questions calmly, Gensler made a few things clear. For one, the SEC cannot discuss an ongoing investigation. Additionally, it only provides information on a probe if someone is charged or if the matter is settled. Gensler also highlighted that FINRA imposed the trading halt under its own rules without seeking the SEC’s permission or advice.
Crapo made multiple attempts to learn whether the SEC is conducting any sort of investigation into the allegations of fraud and manipulation made by MMTLP stock investors. However, Gensler remained firm in his stance that he could not provide any specific information at this time:
“We seek to analyze fraud [or] wrongdoing wherever it might be in our capital markets. And certainly we are well aware of these matters but I can’t speak about specific possible investigations or even confirm or deny whether we have them because it protects the markets […] We sometimes close an investigation and we don’t find something.”
As Crapo emphasized, investors are seeking the “aggregated, audited share count” for MMTLP as well as blue sheet data. They believe that this information will confirm their theory that MMTLP stock was subject to naked short selling. The community has even hired a law firm to look into their claims. However, an investigation from Forbes dismissed this school of thought as a baseless conspiracy theory. Another detailed analysis of the situation argues that these naked short selling allegations are due to “misinterpretation of the data, and the very real fact that the vast majority of reported ‘daily volume’ has nothing to do with actual short selling by short sellers.”
No New Information
When asked if the findings of a potential investigation would be made publicly available, Gensler noted that the SEC could only do so if it resulted in either settling or bringing charges. “That really helps protect the public and protects individuals when we don’t bring charges,” he added. After further prodding on a potential MMTLP investigation, Gensler noted that the “registrants [and] market participants” involved in a case have the right to determine whether an investigation has been closed.
Crapo concluded his questioning by saying he would be following up with Gensler with more inquiries. Gensler responded that he looked forward to this. However, as it stands, no new information has been provided regarding the MMTLP stock allegations.
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On the date of publication, Samuel O’Brient 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.