“FINRA whistles the play dead”, The MMTLP Winners and Losers

Crank up your HBOMax app, or borrow a friends account and watch “Gaming Wall St“, if you need background on the reddit by the name of wallstreetbets that has gone viral among common folks who dabble in stock investments. Whether you agree or disagree with the concept of people banding together to share trade information and investing as a group, or not, its happening all over the world. For example, for people interested in trading in FOREX markets, there are paid subscriptions where people join conference lines and invest in calls or puts against currency pairs, real time, based on an expert’s educated guess shared on the conference line. Its foundational that when you plan to invest in anything, you want to be able to weigh the risks and potential gains. In a society of impatience, people are willing to lean on the expertise and research of trusted sources, even if those sources are sources by association. Kindergarten games teach us, the further away from a personal connection to the true source, the less likely your information is credible, yet the daring members of wallstreetbets stay the course and sometimes risk it all on opportunities to win big. The publicly traded security Meta Materials Preferred Shares (MMTLP) had a unique and tremendous upside, because the company submitted documentation, signaling they were going PRIVATE and giving trade of the security a hard stop date of 12/12/2022. This setup the uncommon environment for an inevitable short squeeze. However, to the surprise of many investors, MMTLP wasn’t available for trade at all in the pivotal last days of trade. I guess I have to give you a little back story on MMTLP before I get into winners and losers.

Torch Light (NASDAQ:TRCH) was a stock that some in the wallstreetbets group speculated would grow massively last year. The company was acquired by Metamaterial Inc, and the symbol was converted to MMAT and a number of MMTLP preferred shares were awarded to any current shareholders of TRCH in the process. Anyone still holding these shares or still paying attention learned that, this year, the company filed documents with the proper trade authorities, committing to going PRIVATE. When a publicly traded company decides to spinoff and go private, all investors must close positions before the deadline given, or the respective brokerages will have to forcefully close the positions themselves to balance their books. This isn’t unusual, MMTLP is not the first company to spinoff, and they won’t be the last.

What I found to be blog worthy about this particular situation is the unequal treatment of individual investors in comparison to hedge funds. After word was given that MMTLP would be going private, hedge funds were given continued authorization to short sell this security. When you short a stock, you are basically loaned someone else’s shares to sell immediately receiving the cash, with hopes and expectation that the price of the stock will fall. Then you can buy back the loaned amount of shares and keep the difference. How hedge funds were allowed to do this, while at the same time, some brokerages weren’t allowing MMTLP to be purchased at all by the public is perplexing. According to some in the wallstreetbets group who claim to have credible sources, the security was shorted well beyond the amount of shares that exist. When a company is heavily shorted, there is a simulation of low investor confidence. The price of the stock dips because so many shares are being sold in a short amount of time. Ask yourself why would a hedge fund be allowed to do such a complex transaction, if the average Joe couldn’t even do simple transactions like buying on the same symbol?

With the hard deadline for the MMTLP spinoff approaching, countless shares of the security would need to be bought back by the hedge funds to close their short positions, which was set to send the price of the security soaring, or as wallstreetbets members say, “to the moon”. FINRA, “the powers that be”, decided to do what some unpopular referees do in American football. In the NFL, if a player fumbles and the opposing team picks up the ball, and runs in for a touchdown, the play can be reviewed, and depending on the video review, the defensive team can be credited for 6 points, or the ball can be placed back at the yard-line of the fumble if the offensive player was found to be “down by contact” post-review. In hindsight, they can get the RIGHT call and proper outcome with the help of review. However, if the referee whistles the play dead, the defensive team never has a chance to run the ball in for the touchdown, and the best possible outcome for the defensive team is never realized. Even if the defensive team’s coach challenges the call and it turns out that the offensive player really fumbled the ball, the defensive team never gets that moment of open play to score again. In a situation where there was a clear path to the end-zone, defensive teams often feel like losers, even if they are awarded possession, because of the opportunity to score they were robbed of.

FINRA whistled the play dead. Instead of allowing the living breathing markets to balance themselves, and the chips to fall where they may, the markets were trifled with by FINRA, and MMTLP was administratively and prematurely taken off the market on 12/09, days before the deadline. Investors never got to see just how many shares hedge funds needed to buy to close their short positions, and never got to see what that demand would have done to the price of MMTLP. The settlement of the shorts was handled under the table and off the books, mafia style. A hedge fund would have had to close its short positions and depending on how reckless the hedge fund had gotten with MMTLP shorts, the event may have wiped them out completely, causing any other stocks to dip, if in the proverbial blast radius that is said hedge fund’s portfolio. As the price of MMTLP went up, investors would have had the opportunity to sell their shares and reap the benefits of stock purchases at prices that some had waited over a year to see. Reports of suicide attempts and devastation for the people who were deemed less important than hedge funds by FINRA have rang out all over twitter and reddit. Are some hedge funds “too big to fail”? If so, shouldn’t the risks they’re allowed to take be regulated?

In this NFL analogy, FINRA is the referee, hedge funds are the offensive team, the winners, who fumbled the ball, and everyday investors, like the people in the wallstreetbets community, are the defensive team, the losers, who recovered the ball and looked to score before the play was blown dead. The unknown actor is the defensive team’s coach. Who challenges the ruling on the field? The damages are unknown since trade was stopped, but it is no question the ball was in the hands of the real shareholders of MMTLP, and they deserve more than Next Bridge Hydrocarbons‘ private stock. I hope to God this situation results in real change, new regulations on hedge funds and FINRA, and less market manipulation in the future. It stinks of corruption, and gives me little faith in the concept of the market being free flowing and administered ethically. At time of posting, this was the most recent update I received regarding the matter, and it leaves a sliver of hope for MMTLP shareholders. I hope things work out in their favor.

Equal Pay for All

Violations of the law of anti-hypocrisy must stop wherever it may rear its head. Whether you learned it as “love thy neighbor as thy self” or “Would you like that if your sister did that to you?” almost everyone has been taught the concept of anti-hypocrisy by a person that loved them at an early age. It is something that is assumed we all know, and it should be obvious we do not all live by it. This principle shapes our laws of ethical business practices, criminal law, and is the spirit of fairness. It is the spirit of sportsmanship, and the spirit of many sacred things that we as humans hold dear like the price for food and commodities. You want a “fair price” don’t you? You want the umpire to call a “fair game” and you want “fair pay” for the work you do…Oops…Maybe I shouldn’t go there. Since there are still companies that pay women less money when they do the same work as men. Just as well, employers are still paying black people less than white people for the same job…but wait…Where does that leave black women?

If John negotiates a great salary for his project management position, it should be considered unethical to pay anyone less, with similar experience, at the same office, for the same position, if hired after John. John set the bar, and everyone else benefits from the bar he set. Is this not fair? Is this not what equal pay for equal work is all about? Sometimes there is no way to know what John negotiated, unless you ask him. But should you have to ask? The company knows, and they should acknowledge what the position is worth to them and should pay all future employees that amount. On the back end, when reviews are given, any person excelling at John’s position should be given a raise to get them somewhere within range of the new standard pay for the position.

Violation of the law of anti-hypocrisy has to end. Let’s start paying people fairly. If anyone, white man, black man, red man, method man, or orange man perform the same job, for the same organization, with similar or offsetting credentials (education, experience, certification, etc.), lets pay them the same. Let us govern our pay scale as they do in the NBA, NFL, FIFA Soccer Leagues, etc. If a starting quarterback at the top of his game negotiates a record contract from his team, it helps all the rest of the starting quarterbacks at the top of their game in the NFL. The same goes for NBA players and soccer players. Why should it be any different for INSERT OCCUPATION HERE?

Essential Value

Essential Value

As the number of unemployed continues to rise in America, it is painfully clear that, in addition to health, the financial worlds of many have been shaken by this COVID-19 pandemic. Those of us fortunate enough to still have our jobs, are doing what we must to keep them. Empathize with me, the stress of the Essential worker who has to continue to get up in the morning and commute to their jobsite, as if none of this is going on. It’s hardly “business as usual”. Imagine the fear of being infected by a co-worker and bringing that infection home to the ones you love. Imagine witnessing coworkers quit or elect to stay home without pay in order to prevent exposure, and wondering if you’re doing the right thing by continuing to work to provide for yourself and your family. Imagine how hard it might be to go to work, when you actually know someone, personally, who has been very sick or, worse, has perished from this deadly virus. You’re receiving the same paycheck but at a greater risk than ever before. If at no other time in your life, you may do some cost to benefit analysis of taking advantage of the government assistance that is available versus continuing to leave your home. If at no other time in your life, you may consider many new avenues to get what you consider “essential”.

Now then, imagine you’re a warehouse worker for Amazon, Target, Walmart, or a similar company. How could your employer make you feel like you’re essential to them? What if your employer provided an exclusive shopping experience for you, their essential worker? Would that make you feel important? If it were me, I’d say, “It’s a good start”. As an essential worker, why should you have to go without the essential goods that have all but disappeared from the markets? If you’re picking, packing, and shipping the very toilet paper, hand soaps, bottled waters, and other items you find impossible to secure when you get off from work and head to the super market, wouldn’t it be awesome to have some exclusive access to buy those items directly from your employer? I asked someone, who works for Amazon, how they would like to have an “employees only” store, and they’re response to me was insightful. “We have to look at the stuff all day anyways”, they said. They compared working at the fulfillment center to window shopping. I figure it’s a lot like working at the mall. You’re seeing all kinds of things you want to try out, along with items you feel like you need. As you’re working, you’re subconsciously creating this shopping list based on the items you’re seeing throughout the workday, like ads you see as you scroll through your social media feed. As if these essential workers didn’t have to deal with enough, they’re being teased all day at work, sometimes coming in direct contact with items they’ve run out of at home.

Many are extending their gratitude to the essential worker, and while simply having a job is a clear and obvious blessing in this economic climate. This time has given us unique perspective on specific job functions within our society. The essential worker contributes to society in such a way that we cannot do without them. They’re part of an ecosystem that keeps our nation going and keeps us all alive. They shouldn’t have to go without the things they need for their families, and, if only during this time, they should be paid better wages for their health risk. Let’s give our essential workers hazard pay, and let them know we appreciate their sacrifice.

America’s Grand Re-Opening

The states of America are not so united on how to handle the economic pressures of the COVID-19 pandemic. As states like New York, continue to plan, and states like Georgia, seemingly, throw caution to the wind, our nation appears as divided on how to deal with the Wuhan coronavirus issue as any issue that happens to fall on the cracks of political party lines. While many shout to the heavens, “this is a health crisis, not a political one”, some factors of the issue strike political nerves at their very roots. Republicans believe in shrinking government involvement in private matters, in preservation of freedom. Democrats have a more “save the people from themselves” approach to governing, because they know that the people look to the government to make decisive actions, or at least set the standards, on many issues that affect the masses, like healthcare. When you consider those perspectives, it becomes a lot clearer to understand that the confusion surrounding this issue, like any other political drama, is the cause of unwillingness to compromise.

The more right of center your viewpoints are, the more likely you are to believe that the government should stay out of the way and let people do what they feel is best for themselves and their families. The truth of the matter is, the quintessential “American Way” of governing should not involve country-wide mandates, telling people how to do what is best for themselves and their businesses. Frankly, telling the masses to stay home and forcing businesses to close their doors is very similar to what Obama called “crippling sanctions”, only these sanctions aren’t to prevent nuclear weapons from being created abroad, they’re sanctions on American businesses. The American businessman and woman who, like the rapper Roddy Ricch says, “got it out the mud”. These business owners do not want to sit around and watch their hard work go up in smoke. As a business owner, I would want the opportunity to conduct my business in the safest way possible, in effort to save what I’ve worked so hard to build. Owners of businesses, small or large, have a responsibility not just to their own families, but to the families of their employees and the people who demand their goods and services. Shouldn’t it be a business owner’s right to conduct their business, if they believe they can tweak their business practices to the safety standards set in place?

The more left of center your viewpoints are, the more likely you will believe that the masses cannot be trusted to do the right thing when it comes to health issues, because the average person isn’t a health expert. Daily, on the news and on social media, you can see the confusion of the masses. The death tolls are rising, and the loss of life is a cost that cannot be repaid. The virus is still so new that even the experts are changing their story on how to combat it. You don’t have to be an expert to know the country isn’t ready to go back to how it was at the new year. Many feel this time is a break that the planet needs to heal as carbon emissions are at record lows, and many companies are already changing their business practices to allow people to work from home. This could, very well, be a re-tooling moment for the American workforce. The nation could benefit greatly if more people took advantage of education and training resources, becoming more tech-savvy and computer literate. App downloads are way up as more people step outside their comfort zones to find new comforts. Online Shopping and video conferencing are just a few ways people are continuing old habits, in new ways, and it’s about time. It’s about time more companies offered work from home positions, it’s about time more companies invested in their network infrastructure and data security, it’s about time more people invested in themselves and their own talents through entrepreneurship, it’s about time for many changes that have come with being placed outside of our comfort zones. We all want this to come to a safe, peaceful end, right?

In conclusion, whether your viewpoints are right or left, we all can be right on this issue if we meet in the middle. We must all demand for competent direction from our leaders. Both Democrat and Republican citizens have been told their jobs are not essential, but no one disputes that taking care of your family is essential. Business owners shouldn’t be forced to close by the government, especially when the government has no means to cover the losses. That would be disenfranchisement of the American business owner. However, business owners who don’t want to close their doors need detailed guidelines that spell out, plainly, the acceptable standards for conducting business safely in this pandemic environment. If a business cannot meet the standard set in place, they can, at least, focus on a new business or make the necessary adjustments to become compliant. Without enforceable standards, businesses are free to do “due diligence” measures which may not maximize safety by minimizing the spread of infection. Without clear standards, the consumer cannot make educated decisions on whether they want to patronize a business. Now more than ever, we need leadership at the highest positions in our nation to be on the top of their game. The futures of all our children depends on it.