What's Next For 'Old GM' Shares (GMGMQ)?
We continue to follow the developments related to the shares of the 'Old GM' (OTC: GMGMQ), now known as Motor Liquidation Company, which were halted Friday by FINRA due to confusion in the market after the "New GM" emerged from bankruptcy. The news created a nearly 40% boon in the shares of GMGMQ.
Even though GM management warned investors that the common shares of the 'old GM' would be worthless, investors and speculators were buying the stock, mostly foolishly, but also as a way to make a quick day-trading profit on the market confusion.
Because of the media frenzy on GM's emergence from bankruptcy, regulators should have had the foresight to never allow trading of GMGMQ on Friday. Well they didn't. Shares opened and skyrocketed higher, as investors were hoping to get their piece of the new, streamlined, government-backed GM. Because there is no publicly traded securities for the new GM, GMGMQ was the only trade and investors flocked into it. In addition, traders that know the game accumulated shares figuring they could sell it to the "greater fool" later, for a profit. It wasn't until 2:09PM Friday, after prodding from StreetInsider.com and others, that FINRA wisely halted the stock, as not to further the scam.
So what now? The halt was handed down by FINRA, not the SEC, so trading would have to resume in 10 days or the market must be given an update from the company or FINRA. That means on or before July 24th we will find out the fate of GMGMQ.
There are many different scenarios that could play out at this point. Here are three:
Even though GM management warned investors that the common shares of the 'old GM' would be worthless, investors and speculators were buying the stock, mostly foolishly, but also as a way to make a quick day-trading profit on the market confusion.
Because of the media frenzy on GM's emergence from bankruptcy, regulators should have had the foresight to never allow trading of GMGMQ on Friday. Well they didn't. Shares opened and skyrocketed higher, as investors were hoping to get their piece of the new, streamlined, government-backed GM. Because there is no publicly traded securities for the new GM, GMGMQ was the only trade and investors flocked into it. In addition, traders that know the game accumulated shares figuring they could sell it to the "greater fool" later, for a profit. It wasn't until 2:09PM Friday, after prodding from StreetInsider.com and others, that FINRA wisely halted the stock, as not to further the scam.
So what now? The halt was handed down by FINRA, not the SEC, so trading would have to resume in 10 days or the market must be given an update from the company or FINRA. That means on or before July 24th we will find out the fate of GMGMQ.
There are many different scenarios that could play out at this point. Here are three:
- FINRA could lift the halt and trading could resume in Motor Liquidation Company under a new stock symbol. If this is the case, market makers would have to fill out form 211 on the new ticker or trading could continue on the grey market.
- The company could cancel and de-list the shares
- SEC could revoke the security
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