Monday, July 13, 2009

GMGMQ Halted, Finally

I very rarely blog about one particular stock, however with this instance I am making an exception. Earlier today the the self regulatory body of the brokerage industry, FINRA stepped in and halted trading on the Bankrupt General Motors company, now known as "Motors Liquidators," with ticker symbol GMGMQ.

Why did it Take so Long to Halt GMGMQ?
This is a question many people are asking. Why didn't this stock get halted weeks ago? General motors stated repeatedly that the shares of GMGMQ would be worthless once the US government, the United Auto Workers, and the company’s bondholders take their pieces of the restructured company. By allowing it to continue to trade it allowed for manipulation to occur, and traders to make quick money off of the uninformed.

What Sparked the Halt?
Earlier today the stock surged, up 38% for really no other reason then stock newsletters pumping it up. The initial jump in price caught the attention of investors who thought that maybe the GMGMQ symbol represented the new General Motors which emerged from bankruptcy just last Friday. This was not the case, thus the halt to stop the confusion.

It's pretty crazy when a company that claims their stock is worthless trades at a market cap of over $600 million, like it was at at the time of the halt earlier today. I just wonder how many investors lost big money thinking they were buying into the new General motors that is now no longer bankrupt.

9 comments:

Marcelo said...

I don`t understand why GM or FINRA don`t stop the trading before the announcement. A lot of people put a lot o f money. We need make samething about this.
thanks

philhege said...

Caveat emptor. That about sums it up.

Trademaster J said...

Actually, a lot of investors are opposed to this halt. A symbol and listing name change would have been all that was necessary. This is a free market and Motors Liquidation Company is a publicly traded entity; this temporary halt has left this stock illiquid for two long. Many investors, both individuals and institutions have derivatives positions scheduled for settlement this Friday; the halt lasting this long is irresponsible and reflects poorly on FINRA's ability to mitigate extraordinary OTC events. A U3 halt is not an viable alternative to a proper deactivation.

L said...

I agree with Trademaster.

I'm short JULY CALLs and now I have no market in which to manage my risk in this position.

A halt is a only good thing if done properly ... a stock should be halted immediately before a signficant news release, and only for long enough for the news to disseminate. Halts should be avoided by making all news releases after hours when controllable.

Trademaster J said...

Good news, FINRA is finally releasing the halt. To help avoid the confusion, they are issuing a rename of the symbol to MTLQQ. This is what they should have done in the first place; not a 3-day halt. Trading is likely to resume tomorrow.

L said...

Reference, please, Trademaster?

GIDEON said...

I DONT OWN ANY OF THIS BUT A FRIEND OF MINE DO I WONDER WHY THE MEDIA DID NOT JUMP ON THIS STORY A LOT OF PEOPLE LOST A LOT OF MONEY IT LOOKS LIKE A CLASSIC CLASS ACTION

L said...

The media doesn't give a hoot about retail investors, and neither does the SEC.

Retail investors exist for one reason and one reason only ... to provide a fund pool for the wall street scam artists (not only the Madoff's but the "legal" elite brokers, fund managers, market makers, and all their cronies).

The elite investors were profiting via the manipulation of old GM's stock price and FINRA waited as long as possible to step in for the sake of appearances. June PUTs sold mostly by elites (how many retail investors do you know that write PUTs?) were made to expire worthless, and the same attempt was being made for July $1 PUTS.

And it's not Friday yet!

moefuzz said...

This guy has obviously had enough:

Disgruntled guy burns his GM shares, swears never again to buy anything GM. video

http://www.youtube.com/watch?v=iY84WB5c9Q8

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