Cynk shares rise 23,000 percent, SEC suspends trading
After Cynk shares rise 23,000% in just one month, the US Securities and Exchanges Commission (SEC) suspended trading until July 24. According to the company’s documents, it is registered in Nevada, has an office in Belize City, one employee and no revenue.
Cynk shares were being traded in an “over-the-counter” exchange which is not subject to close supervision. Its common stock is quoted on the OTC Link (“Pink Sheets”) operated by OTC Markets Group Inc.
The SEC wrote that it is in the public interest and the protection of investors to suspend trading in the securities of Cynk Technology Corp “because of concerns regarding the accuracy and adequacy of information in the marketplace and potentially manipulative transactions in Cynk’s common stock.”
The Financial Industry Regulation Authority (FINRA), another regulator, had suspended trading in Cynk under its “extraordinary event halt” code.
Cynk valued at $4 billion?
In early June, Cynk shares were trading at six cents, by last Thursday they had rocketed to $13.90 after weeks of no trading activity, which values the company at about $4 billion.
Cynk’s main website – INTROBIZ The Social Marketplace – is a marketplace where people can both purchase and sell the ability to socially connect people such as talented IT professionals, business owners, and celebrities, according to its homepage.
One employee, no revenue, valued at billions of dollars, according to current share price.
Stamping out “pump & dump” schemes
The SEC’s suspension of Cynk share trading comes as regulators and prosecutors increase efforts to stamp out the possibility of fraud in penny-stock markets, where scores of tiny companies trade with virtually no proper scrutiny of their financial status.
Over the last two years, the SEC has suspended trading in over 1,300 businesses. The US government is increasing the number of sting operations in order to catch people allegedly committing crimes.
Penny stocks (UK: penny shares) can become the target of manipulators and stock promoters who initially buy large quantity of shares, then artificially inflate their price by releasing false and misleading positive statements through newsletter websites, chat rooms, fake press releases, stock message boards or e-mail blasts.
The perpetrator will typically claim to have inside knowledge of impending events in order to persuade gullible investors to “hurry up and buy now.” When the share price starts to rise there is a snowball effect with more people believing the hype and buying stocks.
“Pump & Dump” – when the “pumping” is over, the manipulators “dump” (sell their shares), making a large profit. Unfortunately, dumping sends the share price crashing and the innocent investors lose their money.