Cynk Tech has no assets, no revenue, and $4.5B value. Wait, what?
Friday, The US Securities and Exchange Commission suspended trading for shares of Cynk Tech (CYNK), a聽company with no revenue, no assets, and only one employee is currently valued at $4.5 billion dollars. Don鈥檛 worry. You read that right.
Cynk Technology Corp., which is the operator of the social network site , was trading at $.06 on May 15, and by July 10, the stock was trading at $13.90. That 24,000 percent gain in less than two months caught the attention of a lot of people, including regulators.
鈥淭he Commission temporarily suspended trading in the securities of CYNK because of concerns regarding the accuracy and adequacy of information in the marketplace and potentially manipulative transactions in CYNK鈥檚 common stock,鈥� the SEC stated on its .
IntroBiz.com has no users, no revenue, and no assets, according to . Cynk鈥檚 last quarterly earnings report showed a loss of $1.5 million.
Cynk was a penny stock, a stock 聽that trades for under five dollars a share. These stocks trade on over-the-counter-bulletin boards or pink sheets, and they're volatile because little tends to be known about the company 鈥� shares have a lack of trade history, and they have little liquidity.
鈥淭he issue of stock manipulation, or perceived stock manipulation, particularly in the penny market, is extremely common, and it鈥檚 a challenge to the regulators,鈥澛燡acob Frenkel, a former SEC enforcement official who鈥檚 now a securities attorney at Shulman Rogers Gandal Pordy & Ecker PA, told . 鈥淩eal companies get hurt when the entire space gets tagged as bad because of really bad incidents such as this.鈥�
Cynk's headquarters are supposedly in Belize City, Belize, and Marlon Sanchez, the company鈥檚 only employee, signed SEC filings from April. The company created IntroBiz.com in June 2009. tried to contact Mr. Sanchez and the company, but could only contact a young boy.
鈥淭hru our marketplace you may both buy and sell the ability to socially connect to individuals such as celebrities, business owners, and talented IT professionals,鈥� according to the website. But besides a few stock photos of Johnny Depp and Angelina Jolie, the site is empty. 聽
Paulo Santos wrote in that he believed there was a group of insiders raising the price of the stock and then shutting off the supply of shares available for short-sellers to acquire. Short-sellers borrow shares in the hopes that they can buy back the stock at a lower price. Since they controlled the ability to stocks that can be sold short, they control the stock鈥檚 prices, Mr. Santos wrote.
The company鈥檚 earnings report filed last November characterized Cynk as being in the developmental state. "Cynk Technology Corp. plans to introduce a new model for social networks that we believe will require some acceptance," the company stated in the filing. "Selling a stranger your record collection via online auction was a stretch for some people to adopt, and Cynk Technology Corp. is likely to face similar challenges from late adopters. Cynk Technology Corp. believes its planned social network may disrupt an inefficient model of meeting people that is currently based on vague notions of social capital by making it clear `I want to meet this person, and I will make it worth your while.'"
The SEC鈥檚 suspension of the stock is in effect until July 24. After that date, brokers and deals can only enter a quotation if they have complied with rule provisions.
