Investors have been expecting news regarding the Meta Materials’ (MMTLP) intention to spin off Next Bridge Hydrocarbons, a subsidiary that it fully owns, for several weeks. It was a surprising development that occurred with the highly awaited Meta Materials spinoff. In order to do this, Meta intended to exchange its Meta Materials Preferred Shares of the future Next Bridge.
According to a statement issued yesterday, the Financial Industry Regulatory Authority (FINRA) was notified of the company’s corporate action regarding the share exchange. However, FINRA startled retail traders worldwide today by stopping the trading of MMTLP stock in advance of the spinoff.
On its over-the-counter-equities list, FINRA confirmed the trading stop this morning. The halt code for it is U3. This time, the event is the spinoff of Next Bridge Hydrocarbons, which will likely result in a significant increase in trading volume. Even if MMAT is down today, the spinoff will probably help it rise when the stock of the Next Bridge Hydrocarbons formally replaces that of MMTLP.
A thorough investigation should be done by MMTLP shareholders as the preferred shares will no longer be traded on the over-the-counter (OTC) market after the spinoff.
The newly acquired Next Bridge shares will also not be marketable or capable of being transferred electronically via clearing corporations. The distribution date is set for December 14, with December 12 being the date of record.
However, retail investors have expressed their rage since FINRA ordered the trading halt. While some praised the amount of short interest, some have accused the company of manipulating the market.
Numerous traders have urged legal action against FINRA and have taken to defame market figures like Elon Musk and the CEO of AMC Entertainment, Adam Aron. but so far, everything appears to be legal and above board, with no illicit acts.
The actions of FINRA are nothing new. According to the Corporate Finance Institute, it is normal practice to impose a trading halt prior to a significant market event. To safeguard the interests of present investors, FINRA clearly thinks that trading must be suspended. Retail traders may not be pleased with the outcome, but it appears that FINRA was within its rights to halt trading before a significant market event.
Traders were undoubtedly paying attention to the stocks of MMAT and MMTLP prior to the event. That is especially true in light of the current halt.
MMTLP company shares have recently been doing poorly. The stock experienced a 58% fall on Thursday, its final trading day, and a 64% decline for the whole week. This comes after a week-ago decline of more than 17%.
In total, shares have decreased by more than 75% from their high on November 22. The stock of MMTLP has seen fluctuation before, though. Between October 5 and the highs in November, share prices exploded by more than 700%.
To safeguard present shareholders, FINRA has stopped trading. Despite the drama, FINRA appears to have every authority to halt trading in MMTLP stock, and doing so is one of the most frequent reasons for equities to be halted- to try to safeguard shareholders.
Additionally, as mentioned, Next Bridge will become an independent public company following the spinoff. It won’t, however, be a publicly traded firm. Instead, the sarees of the next Bridge Common Stock will be dispersed on December 14, 2022, after the closing of the Trading Markets.
It is currently hard to say whether or when trading will resume. What is certain is that Meta Materials’spinoff plans shouldn’t be affected by the trading halt. The trading symbol for the MMTLP stop will be removed on December 13, one day before the distribution date, according to a statement issued by FINRA earlier today.