A new correspondence between Next Bridge Hydrocarbons (NBH) and FINRA has now emerged in response to the MMTLP scandal that occurred in mid-December of 2022.
Investors who held shares of MMTLP stock on the record date of December 12 would receive a preferred dividend of Next Bridge Hydrocarbon on Wednesday, December the 14th.
However, MMTLP stock stopped trading on Thursday, December 8 after FINRA delisted the security without notice or warning.
Since the events, investors have requested blue sheets and their two trading days back, with many simply wanting regulators to settle uncovered short positions.
Unfortunately, the self-regulatory body claimed immunity against any form of litigation requesting for blue sheets and the motion was dismissed mid-June.
This month, congressman Eli Crane, 2nd District of Arizona, submitted a letter to both SEC Chairman Gary Gensler and the House Financial Services Committee Chairman Patrick McHenry requesting for answers related to the MMTLP fraud allegations.
“I write regarding an issue brought to my attention by my constituents regarding a corporate action and trading halt in the Series A Preferred Shares of Meta Materials, Inc. (Meta Materials) that traded under the symbol MMTLP.
My constituents believe that shares were sold illegally, leading to losses in their retirement savings.
In response to these allegations, I am requesting from your offices a briefing regarding this matter, as well as what your offices are doing to prevent securities fraud at the U.S. Securities and Exchange Commission.
My constituents are deeply distressed about this matter and have suffered greatly as a result of this trading halt.
I implore your prompt response and look forward to working with you on this pressing issue,” the letter said.
On Thursday, FINRA released three correspondence letters sent to Next Bridge’s CEO Clifton DuBose; here are two of the biggest key points.
FINRA Correspondence with Next Bridge Hydrocarbons
Two of the biggest shareholder concerns were touched on in the letters sent to NBH CEO DuBose.
- The probability of finite trading that shareholders have been requesting
- And the closing of short positions floating around in purgatory
In short, FINRA states that in order for stock to trade, it must have an assigned CUSIP which NBH does not have.
“If NBH obtains a CUSIP for its common stock and a member obtains a symbol for those shares, that symbol would continue to be available for ongoing quoting and trade reporting purposes unless conditions were to significantly change,” the letter said.
Furthermore, an issuer’s desire to limit trading in its stock “for a very short, finite period of time” does not justify the initiation of a trading halt under FINRA rules.
The regulator says that it has authority to initiate a trading halt whenever deemed necessary.
This correspondence letter was issued on May 19th and released for the public on July 27.
On Wednesday, Next Bridge announced that it will provide investors with a new future stock under ‘NEWCO’ according to its Form S-1.
The distribution by Next Bridge will be a non-transferable subscription right to receive at no cost shares of common stock of a new subsidiary of NBH to be formed in the future, the filing said.
Additionally, the subscription rights are only being distributed to eligible stockholders of Next Bridge.
In order to be an eligible stockholder to receive the subscription rights, holders must register their Next Bridge common stock directly with the Company’s transfer agent, American Stock Transfer & Trust Company, LLC (“AST”) at or prior to the close of business on the 60th day after the Form S-1 filed with the SEC becomes effective and maintain such registration with the transfer agent for 180 days thereafter.
Looking at the statements from FINRA, it becomes clearer as to why NBH would offer a new ticker symbol to shareholders in the future.
The Closing of Short Positions
NBH also requested that FINRA, during a limited trading period, “cause FINRA member firms to close out and settle any remaining uncovered short positions originating in MMTLP Stock that are now in the NBH Common Stock.”
However, FINRA states that short interest reports on NBH common
stock is not available on FINRA’s website because firms report short interest by security symbol and NBH common stock does not have a symbol.
“If NBH were to obtain a CUSIP for its common stock, a FINRA member would then be able to request that FINRA assign a symbol in connection with quoting or trading activity, consistent with FINRA rules and procedures.
In turn, FINRA members would be able to report short interest in NBH common stock to FINRA and FINRA would make this information available on its public website.
The scenario that you describe in your letter—whereby steps would be taken by FINRA and other third parties to facilitate your desire to end any trading market that may develop in NBH common stock after a relatively short, predetermined time—does not comport with FINRA’s understanding of its authority and applicable regulations, processes, or market practice.
FINRA cannot and will not take actions that are inconsistent with its authority or that do not enhance investor protection and market integrity,” the letter stated.
In other words, it seems FINRA is not willing to take extraordinary measures for an extraordinary event.
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