Cynk Fiasco Cost Me My Job: Wall Street Trader

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July 15 (Bloomberg) -- A Wall Street trader said Cynk’s 36,000 percent stock surge cost him his job, and he blames a short squeeze and regulators who didn’t halt the shares before the company’s value shot past $6 billion. Former Buckman Buckman and Reid Trader Tom Laresca and Bloomberg’s Zeke Faux discuss on “Taking Stock.” (Source: Bloomberg)

Zeke faux who has been covering the story.

What is think and what happened?

It's one of many dormant companies sitting on the market.

It barely traded, and when it did, it traded for a nickel or six cents.

Suddenly last month, it jumped up to two dollars and people started talking about it.

At that point, it got the attention of professional traders, two.

Tom, when did you spot it and how did you know it was not the next facebook?

A friend of mine saw the stock go from six cents to two dollars.

Anytime you see a stock jump like that, you take a look at it.

Something is going on.

You see it has one employee, $39, and you wonder how they are allowing this in 2014. did you contact regulators?

I saw that it was a complete scam, a complete joke.

I sent to the sec a fax that said this has to be the biggest scam i've ever seen.

Please take a look at this.

I didn't get a response, so i went to cnbc.

They went on tv and alerted the public to stay away from this until we could find out about it.

But you didn't stay away from the stock.

What did you do?

As a market maker, you're in there to make markets.

You're there to provide liquidity.

That's our job.

If the stock went to $100, the public would have done buying it at $100. we are there to maintain an orderly market.

This was not a fair game.

Was there a demand from your customer base?

There was demand, whether they were reading it on blogs or on charts.

They don't even know what the company does.

Did they come to you to buy the stocks quest mark -- by the stocks?

Somebody than some sold it also.

Did you end up becoming a customer?

If you go from six cents to $20 and you are a market maker, you are either buying that stock or selling that stock.

As the stock goes higher, you are selling to people who are buying it.

You have no choice.

You have to make the market.

You have to be in that stock.

How much did this cost you?

I really don't want to say.

It was not a tremendous amount.

My company did a great job of cutting it.

It's a great firm with great people.

It's unfortunate it happened to them.

But i am here so that it doesn't happen again.

If you see a stock going from six cents to $20, and they say they have $39 in the bank and they have one employee, that's either a hell of an employee or something is going wrong.

Zeke, what has been the response of regulators?

The sec does what it normally does in the situation.

They suspend trading in the stock saying that there is not enough information out there.

They didn't say, necessarily, anything bad was going on, but presumably they are investigating now and they are going to look at who was trading the stock and whether people were trading it with their friends to create the appearance of a rising market which can be a part of penny stock manipulation.

What about having an obligation to make a market in the stock?

As a market maker, i mean tom, you can say more.

Were you under your obligation to make a market?

I could've dropped out.

Everybody could have dropped out.

We stayed in and made a market so that there was a safeguard.

We did our job.

If we don't make markets.

If all the other guys palau, the stock is $100. -- other guys pull out, the stock is $100. when that thing opens up, you will be lucky if it is a dollar.

We were doing our jobs by maintaining a fair market, but it wasn't a fair game.

If what is he describes is true and you had people buying and selling the stock amongst themselves in order to drive up the price, would that be something you have not seen before?

I worked on the floor of the new york stock exchange for five years and i was a sales trader.

I have been trading foreign stocks.

I have not traded one of these stocks in 15 years.

But it does not take much to figure out it was a scam.

What about stocks that trade by appointment only?

I don't trade those, but you can look at the companies and see that they have more than $39 and the bank.

Unless the company came up with a cure for cancer, have you seen a stock go from six cents to $20? what about making sure if you trade these things that they are real companies.

These traded over-the-counter.

Their policy is buyer beware.

They marked stocks and say this stock does not have enough information available, but they will not stop trading for that reason.

That means there are quite a few stocks that trade over-the-counter where eventually it is found that the

This text has been automatically generated. It may not be 100% accurate.

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