Ralph Norman is a bit off. Don’t take my word for it. Do as I did and interview some GOP staffers who work with the Republican congressman from South Carolina and they’re going to walk you thru a few of his best hits. Amongst them: He urged former Trump chief of staff Mark Meadows in a text to institute something often known as “Marshall Law,” so the previous president could stay in office after being defeated by Joe Biden in 2020. Spelling, amongst other things, isn’t Noman’s strong suit.
I can go on and on and on, but I’ll stop at the newest little bit of Crazy Town that Norman is embracing: Conspiracy theories involving a meme stock often known as MMTLP. It seems that with all of the things that basically impact his constituents in South Carolina (migrants, the economy, inflation, terrorism), the congressman thinks there’s something fishy happening between securities regulators and possibly some nefarious forces on Wall Street to tear off individuals who bought into this as the following get-rich-quick scheme in so-called meme investing.
He’s calling for an investigation and hearings from House Financial Services Committee Chair Patrick McHenry. Norman is cementing his rep as a wing nut who can be financially illiterate.
Most individuals never heard of MMTLP, and lots of who’ve wish they didn’t. It has a convoluted history, even when its trajectory followed the same pattern within the meme era: A get-rich-quick scheme that eventually turned to dust. Recall how the memes — retail investors who share trading recommendations on social media after which pile into stocks — piled into AMC Theatres and the now-defunct Bed Bath and Beyond. They got crushed when the irrational exuberance wore off and social-media pumping ceased to work.
That’s what happened to those poor souls who in late 2022 began snapping up MMTLP, a preferred stock issued after a public company often known as Torchlight Energy Sources did a reverse merger with something called Meta Materials. The shares were designed as a claim on some oil and natural gas that’s presupposed to exist in West Texas. Eventually MMTLP would evolve right into a non-tradable stock in a recent private company called Next Bridge Hydrocarbons.
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Welcome to Crazy Town
Yeah, I realize it feels like a multitude. Oil wells in West Texas; reverse mergers, a nascent private company, and a preferred stock that found its way onto the over-the-counter market, the so-called pink sheets, where lots of crazy stuff goes down.
And it gets messier. Toward the top of 2022, the meme crowd, which gets most of its research from social-media touts, got wind of MMTLP and saw it as the following great “short squeeze” — they’d make a killing by buying up the float, and hold it until the bitter end when the shorts capitulated.
Short sellers, in fact, make their vig by betting stocks will decline in value. They start by borrowing shares, selling them, and eventually replacing the borrow with lower-priced stock.
A squeeze turns the tables on the shorts — which is what the memes wanted. They began spreading tall tales on social media that they might crush short sellers by bidding up the value so high that the shorts would should cover their borrow at ever higher levels.
Let’s just say things didn’t work out as planned. First, the short sellers weren’t that excited by MMTLP, it seems. There was no squeeze just like the one which took place around shares of GameStop in early 2021 and put a brief hedge fund out of business.
Plus, the memes didn’t appear to read any company press releases or understand how stocks settle or some unique attributes of MMTLP. The meme crowd thought they might sell as much as Dec. 9 to get the largest bang for his or her buck. But MMTLP was set to dissolve into nontradable shares of Next Bridge on Dec. 12, 2022, which suggests, under settlement rules, you could have to sell by Dec. 8 otherwise you’ll get the nontradable Next Bridge stuff most holders didn’t want.
Those that tried to sell after Dec. 8 — they usually are legion, if the cries on social media are any indication — were, as they are saying, SOL (s–t out of luck); their MMTLP was nontradable shares of Next Bridge.
Norman has heard those cries and he appears to think there’s some grand scheme involved among the many Securities and Exchange Commission, its sister agency, the Financial Industry Regulatory Authority (FINRA) and perhaps some unscrupulous Wall Street types. Now he’s “demanding answers,” even after FINRA provided him with pages of detailed answers, which just like the memes he either didn’t read or doesn’t understand.
In accordance with FINRA, it halted trading in MMTLP on Dec. 9 to make certain people didn’t buy a security that didn’t exist. Sounds reasonable to me, though the agency must also have proposed mandatory investor education courses for anyone still complaining how they lost money on this boondoggle.
To do something substantive, Norman must get buy-in from McHenry, who like most Republicans isn’t a fan of the famously left-wing SEC chief Gary Gensler. That doesn’t mean McHenry is keen on following Norman down any of his rabbit holes, MMTLP included. As one GOP committee staffer told Fox Business’ Eleanor Terrett, the leadership consensus on MMTLP is that it’s “lots of smoke and no fire.”
Appears like McHenry also knows financial illiteracy goes beyond the meme crowd to incorporate a certain member of his team.
McHenry and Norman declined to comment.