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As The SEC Finally Gets Involved In CYNK, One Short Has A Big Problem
It took the SEC only a week (after we first reported on it) to get involved with a company that does not exist, and whose stock rose nearly 30,000% in a few days, on a few thousand shares traded, hitting a nearly $6 billion market cap before it was finally halted for trading as we reported earlier. From the SEC:
However, even in its halt, CYNK ("don't be cynkal, be hopeful" perhaps Obama would say) continues to provide entertainment.
Case in point, this sad individual who on that bulletin board of epic retail investor comedy, Yahoo Finance, has explained their problem: it appears some brokers actually did allow shorting of CYNK, at a cost. A rather high and recurring cost it would appear.
Oops.
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yeah, he sold the stock, the money is in his account.
:)
This is how everything ends in the new normal.
Not with a bang or a whimper.
Not with winners and loses.
It ends in a micro second, with nothing emanating from the void but Tweets of hapless fools.
Sucks to be you, dude!
Crzyhum - yes. the last thing you wanted this morning was to be long 5K shares of this pig at $12 and learn that it was halted. This will re-open at .75 or lower is my guess. Shorts are going to be just fine....
too funny. at least least the SEC did something with at least a modicum of concern for overall market integrity. i have no sympathy for the nincompoops who lost their money though. serves them right. and if i were to make the same mistake, i would have no one to blame but myself either.
That is the real newsworthy event here: The SEC did something.
Must be a new summer intern.
SEC Supervisor: "Richard, can I see you in my office?"
Intern: " Did I do something wrong?"
Oh Belize, its pretty there!
The muppet site has a surprisingly accurate take on this scam -- http://seekingalpha.com/article/2309115-cynk-technology-is-the-new-schem...
Thanks. A good expanation. The good thing about this the furor may force regulators to look more into naked shorts, of which there's many.
I just wonder if something like this can be used as a step in a big money laundering scheme.
Look, here's how it works:
Retail Short in OTC Land:
1. Call, get locate and agree to the VIG. You are GOOD TO GO. No fuss, no muss. Just pay the man. IF you got the locate, it's because the BD presumably has the stock IN INVENTORY or has reason to believe he can locate the stock (usually from scamturd trader friend of a friend who knows the promoters sitting atop hundreds of millions of 1 to 75 split stock). They will be attempting to unload at some point. That these guys couldn't sell means they COULD NOT clear the stock ANYWHERE. NO compliance/legal would sign off on it and allow someone to deposit 200MM shares of an obvious turd.
2. What most of you don't realize is that MOST Market Making BDs (not all follow this rule as they should because they have been exempted owing to their "special relationships") MUST buy in after being short 5 days or be in violation of Reg SHO. That is to say, they (MMs) can get short if they have reason to believe they can buy the stock back or get a locate but they MUST BE FLAT on the morning of DAY 6. The big debate in OTC land right now is how MMs fit into this picture. Used to be that MMs could get naked short to "add liquidity", and as such, were given an exemption from having to locate or borrow. This was/is known as the MM exception for BONA FIDE market makers. The big debate is what constitutes a BONA FIDE market maker? Reg SHO is complicating this greatly. The duality of Reg SHO allows some of the big boys like NITE to do as they please while punishing smaller firms.
Someone who has been in (making) the issue since the beginning after filing 15c2-11 would most likely be the closest to fitting that definition. The market maker that picked up the stock on heavy volume two days ago after seeing the 200% price increase is likely getting in solely to NAKED SHORT the deal knowing it will implode at some point. These are the nail biter guys who are going "oh shit, oh shit" please stop going up. They are also the ones who drove this thing to $20 as they slowly tapped out and bought in. The ones that had the cushion and stuck it out will do well. Question is, how many smaller MM firms have the cushion to watch one of their traders get $10MM in the hole before pulling the plug. Then the chase higher begins as the MM starts taking ANYONE and EVERYONE, bidding them for 100K shares at a clip. The seller sees this and moves up his offer knowing a full blown short squeeze is underway. Vicioius cycle and not for the faint of heart.
Anyway, long story short, you can get a forced buy in notice but that doesn't actually happen that often as MOST guys who are lending it at 12% genuinely have locates. How they "rehypothecate" those shares is another issue entirely. A few retail clowns had their local bucket shop get naked short some, too but those are few and far between. Not many MMs willing to put their dick in the chopper for a friend who wants to short a runaway train.
Thanks for the education - good explanation. So, some folks on the wrong end of these trades possibly lost over $4 billion?
Thnx for the detailed explanation.
BOHICA Motherfucker.
Financial regulators on Friday suspended trading in Cynk, the social networking company with no assets, no revenues and one employee, whose value on the stock market had mysteriously soared to $6bn in a matter of weeks.
Fuelling talk of another dotcom bubble, shares in the until now unknown Belize-based tech firm soared as much as 25,000% between the middle of June before being suspended Friday morning, before trading began. The Financial Industry Regulatory Authority halted trading in the company, citing an "extraordinary event.”
In a statement, the Securities and Exchange Commission (SEC) statement said the suspension had been made “because of concerns regarding the accuracy and adequacy of information in the marketplace, and potentially manipulative transactions in Cynk's common stock."
The stock’s runaway rise had made the profitless company more valuable than Domino’s Pizza, JetBlue or Spotify – even as a chorus of critics cited mounting evidence that there was little substance behind Cynk. Valued at 6¢ a share back in June, Cynk finished trading on Thursday valued at $14 and had reached as high as $21.
The rise has made a paper billionaire of Marlon Luis Sanchez, the chief financial officer, chief accounting officer, secretary, treasurer and director. Sanchez, a partner in Sanchez Medical Services, a company that “provides comprehensive medical services to the southern California market”, is also the primary spokesperson for the Medical Tourism Industry counsel in Tijuana, Mexico. Calls to the office of Sanchez Medical Services went unanswered.
Cynk’s main business is a website called introbiz.com, which markets itself as somewhere to “buy and sell the ability to socially connect to individuals such as celebrities, business owners, and talented IT professionals”.
The front page features a host of stars, including Angelina Jolie, Channing Tatum, Johnny Depp, Benedict Cumberbatch and Peter Dinklage, although there is no evidence the stars have any ties to the business. There seems to be very little activity on the site.
According to a regulatory filing made last November, Cynk has yet to officially launch, and plans to introduce a new model for social networks "that we believe will require some acceptance". The plan seems to involve being paid for making meetings happen.
“Cynk Technology Corp believes its planned social network may disrupt an inefficient model of meeting people that is currently based on vague notions of social capital by making it clear ‘I want to meet this person, and I will make it worth your while’,” the company said in its filing with the SEC.
“We believe that people will pay for introductions that are meaningful, since it can save or create significant value to someone's life such as to find the right executive, nanny, software developer – or even the right squash player. Instead of paying for a lunch that neither party wants to eat, parties can get down to business knowing that their time has been valued,” the company said.
Some companies, Cynk concedes, may be unhappy with their employees taking money for paid introductions. In those cases, money could be given to a charity. Cynk is also likely to “fly under the radar” for some time, according to the filing. Cynk concedes that there are plenty of other social networks out there, not least LinkedIn which has emerged as the major business-focussed social network.
“However, Cynk Technology Corp believes a social network that generates revenue is a compelling reason to get people to join,” the company said.
So far Cynk and its one employee have not made any money, at least not from their primary business. Sanchez was awarded 210m shares “for acceptance of position and responsibilities” on 17 April 2013. The shares were valued at $.0068 each, or $1,428,000 (£834,000) at the time. Assuming he still holds those shares, and that he would have been allowed to sell them and able to find a buyer, on Thursday they were worth an astounding $2.9bn (£1.69bn).
Cynk’s extraordinary rise started about three weeks ago with a barrage of Twitter accounts tweeting about a massive surge in the stock’s price. The volatile penny-stock market is notorious for sudden share price rises and falls that leave the owners who bought in high holding the bag and facing large losses.
Nicholas Colas, chief market strategist at ConvergEx Group, a global brokerage company based in New York, said: “After the 1990s tech bubble, the 2000s housing bubble, and the financial crisis, you’d think that investors would be keenly aware of excessive risk taking. Turns out you’d be wrong, at least in several areas.”
http://www.theguardian.com/business/2014/jul/11/down-the-cynk-hole-what-...
You really didn't need to post the entire article, an excerpt and link would have done it.
http://mlblogsvineline.files.wordpress.com/2013/02/harry-caray-glasses.jpg
I often troll around Yahoo Finance (AKA CNBC/Bloomberg shill corporation) just for a little fun.
Try mentioning anything truly relevant to reality there, they don't like it much....thick cunts.
And fuck the asshole who was short with those rates. Again, thick cunt.
Another sucker suckered into a sucker bet by shorting a can't-lose sucker stock.
Obvious except to the oblivious.
hold it. if they basically shut it down, that means $0 stock price, right?
so maybe he pays interest until then, but for a 100% profit. what problem?
He can't buy back the stock to give back - assuming he full-on borrowed them
Yeah, you're right, he'll probably make money on this one and convince himself that he's a trading genius. Then again, maybe he is. But "obvious" trades usually don't work (usually by the time you realize it's obvious, it's too late).
Doggone it, why didn't I short this dog?!?
His good fortune was due to the shutdown. Could it have hit $25 today without the shutdown? It was no secret to anyone that there was no there there with CYNK. Insanity took it up to where it was.
Wot's a SEC?
They play football down south, right?
What are they doing with this company?
I actually give the guy props.
He saw an opportunity and had the balls to do something about it. (That is if it's true)
Fundametally it was a good trade. It is the regulators/brokers etc. who let this circus start and continue.
I think the buyers are the real idiots. Not the guy shorting.
Time for another Etrade baby commercial... this time he bites into his rattle
Maybe the Legion of Creepy Faggots, also known as Facecrook, will step up to the plate and buy CYNK before it resumes its ascent towards $10 and then $20 billion.
here's what u do. I should charge for this. you call the tranfer agent and offer to pay a premium for stock and deliver it to shit trade. you put an ad in the wsj and offer $$ for stock. there is always a whore out there willing to sell and transfer. ill send you my bill. i live to kill stocks. the next dow crash is near, followed by a sp crash. I hear ken griffin has a security detail at his house. how afraid are they?
There is no problem....the short seller now has a large credit in his margin account.....the difference between where he shorted it and 0.
t should be a force majeur which cancels the short contract, in a fair world. What did Scotttrade do to earn this trader's recurring money?
CYNKo'd
Call their only employee and ask him what to do.
call the 1800 number for the boiler room "investors" relationship
Congrats.
You have a high quality problem. Eventually either the symbol will re-open somewhere and you can cover or it will go BK in which case your broker will eventually mark down the value of the stock to 0. If that occurs then you pay 12% p.a. waiting for a hell of a trade to sort itself out in your favor. Unless you shorted the stock at some ridiculously low price, you are going to make money on the trade. Congratulations, go buy yourself a beer and smile.
Cheers.
"It is morally wrong to allow a sucker to keep his money." -W.C. Fields
CYNK ... pronounced as 'sink' ...
... dumb shit is now having a sinking feeling ...
Skulls and crossbones should be across the entire exchange and all equities.
Trade, buy, hold, sell this paper shit at your own peril. It's a free market alright. You're free to loose your money, guaranteed 100% all the time. What a privilege!
Go see your coin and bullion dealer today. It's a good day to convert fiat. Clock is ticking. IMF says they sure "hope" to be part of it. Whatever "it" is that is happening in this "magic" year 2014 where they mention G7 in January when it was still a G8.
Pay attention. Something big is brewing. Germany exposed min. 2 US spies and has yet to hear any response from the US government. Why is there no response for over a week now? Because the spy issue won't matter in a few more days as something much bigger will have control of the headlines and gives the US control over the narrative across the globe.
IMF sure "hopes" to be part of this when it happens. Buckle up and enjoy the ride into the global currency abyss! All our loans will soon be "guaranteed" only by the IMF and all our revenues will cover interest to satisfy the IMF. They want to be part of it. When everyone else is broke, who does the world turn to for emergency funding and loans? Think!
Austria Alpe Hypo Real Deutsche Banco Espirito Santi Banco Santander Vatican Banca...
All broke. Collateral is hard to come by. No yields. Game over for this round of fiat pillage.
This is the moneymaker of the century Just hang on- it will reopen at 1c.
End up being the best trade of the best trade of the guys career...
only if they reopen and only if he gets enough sellers wanting to part with their shares
shorts on penny stocks are brutal
Corzined! Only this time with paper cover...
catching mice in the pigpen.
Makes me laugh out loud, when the SEC writes "... public interest and protection of investors require..." Hahhhaaaaa!!!
Well, there are some CYNK insiders that have LOTS of shares that they would probably be happy to sell in a private transaction. He might try contacting one of them to buy enough shares to close out the short (if he can catch them while they are still in the country). Then deliver the physical stock certificates to the broker to close out the position.
Buy! Buy! Buy!......Bye! Bye! Bye!...
Finally the SEC found it out after the "digital dickweed" bloggers have been reporting it for days. There is hope for this country!
One perspective: http://seekingalpha.com/article/2309115-cynk-technology-is-the-new-schem...
Some people are brain dead but still walk.
Poor Sanchez, from one of the 400 richest men in America to needing an EBT card in less than 24 hours.
The name is Sanchez not Corzine. He's fair game for the SEC. Bang Bang!!
Double down.
Double down.
Martingale all the way, Scottsdale.
Blue horse shoe loves CYNK Tech. So does Stockwatch. lol
BTFD
Looks like CYNK is no longer a good investment. For those who are now looking for the next great investment, check out my new company, DYNK (to be followed by FYNK and GYNK).
CYNK was not borrowable, so you could not go short-this is a fake story.
If it is deemed a fraud, isn't the trade canceled as there hasn't been much time passed?