Meme Stock MMTLP and FINRA Trading Halt
link to page 2 
INSIGHTi
Meme Stock MMTLP and FINRA Trading
Halt
August 21, 2023
During the fourth quarter of 2022, abnormal trading in MMTLP attracted the attention of capital markets
observers and regulators. MMTLP was the over-the-counter (OTC) stock trading symbol for non-voting
series A preferred shares of Meta Materials (MMAT), a small nanotechnology and materials company.
Since MMTLP’s trading halt in December 2022, investors who suffered financial losses have sent more
than 40,000 letters (some generated through automatic letter wizards) to Congress to voice concerns. This
Insight explains MMTLP’s lifecycle and trading halt for policymakers.
Social Media and Meme Stock Trading
Meme stocks gain popularity through social media. Their share prices often decouple from their perceived
fundamental financial performance and income capabilities. The market volatility related to GameStop is
one example of meme stock trading that heightened policy debates. MMTLP’s trading prices rose rapidly
from less than $2 per share to around $12 per share from October to November 2022 (Figure 1). Like the
GameStop event, the price appreciation was fueled by social media valuation discussions despite some
research analysts’ belief that MMTLP shares were “worthless.”
Congressional Research Service
https://crsreports.congress.gov
IN12228
CRS INSIGHT
Prepared for Members and
Committees of Congress
link to page 3
Congressional Research Service
2
Figure 1. MMTLP Share Prices Leading up to the FINRA Trading Halt
Source: FactSet and Wall Street Journal.
FINRA’s Trading Halt
The Financial Industry Regulatory Authority (FINRA), a self-regulatory organization that oversees the
OTC markets, halted MMTLP trading on December 9, 2022. FINRA placed a trading halt on MMTLP
under Rule 6440(a)(3), an action taken during an “extraordinary event.” FINRA believes the trading halt
before the cancellation and new share distribution dates may have provided a more orderly transaction
settlement. However, the timing of FINRA’s trading halt, which happened a few days before the
scheduled cancellation and conversion of MMTLP shares (more details below), prevented some investors
from exiting their positions as planned.
MMTLP’s Creation, Listing, Deletion, and Conversion
MMTLP was created during a merger between MMAT and Torchlight Energy Resources (TRCH) to
provide preferred stock dividends to TRCH shareholders. “MMTLP was never designed to trade,” said
John Brda, former CEO of TRCH. FINRA issued the ticker symbol MMTLP for OTC trading in 2021
following a broker-dealer request. MMAT spun off a subsidiary called Next Bridge Hydrocarbons (Next
Bridge) in November 2022 and planned to convert MMTLP shares into Next Bridge shares at a one-to-
one ratio. MMTLP shareholders on record as of Monday, December 12, would have received the
distribution of Next Bridge shares on December 14, when MMAT canceled MMTLP. Because transaction
settlements normally take two business days, FINRA believes that December 8 was the last transaction
date for new MMTLP shareholders to settle in order to meet the December 12 record date for Next Bridge
share distribution. Any MMTLP shares settled after the record day would not receive Next Bridge shares
and thus would have zero value. FINRA halted MMTLP trading on Friday, December 9. Figure 2 details
this timeline. After the conversion, because Next Bridge’s registration statement became effective, FINRA
has expressed that Next Bridge shares (although unlisted) could become listed and tradable upon
receiving a new trading symbol.
Congressional Research Service
3
Figure 2. MMTLP Deletion and Conversion Key Dates
Source: CRS using information from FINRA and MMAT publications.
Short Selling and “Short Squeeze”
Short sellers are investors who profit when the price of a stock falls by borrowing the stock, selling it, and
then later buying it back at a lower price in order to return the stock to the lender. If the price rises
between the time it is borrowed and sold and the time it is bought back and returned, short sellers lose
money. A “short squeeze” happens when the shorted stock’s price goes up substantially, but short sellers
still need to purchase shares at a higher price to close their positions. These purchases put further upward
pressure on a stock’s price because of the increased demand, potentially further escalating losses for short
sellers and generating larger gains for the investors holding the now rapidly appreciating stock.
Many retail traders reportedly targeted MMTLP because it was perceived to be heavily shorted, and they
hoped to profit from a last-minute short squeeze, during which short sellers would have to purchase
MMTLP shares at a (potentially high) prevailing market price to settle their borrowed shares.
However, an MMTLP short squeeze did not happen. Some observers attribute this to the unexpected
timing of the FINRA trading halt affecting the possibility of a last-minute gain for MMTLP investors.
Others see the potential of illegal naked shorts, which would not involve corresponding borrowed shares.
FINRA states that broker-dealers have adjusted their operational conversions to accept Next Bridge shares
to close out the MMTLP short positions. As such, the MMTLP trading halt and deletion may not have
affected short sellers’ capabilities to close their MMTLP positions so long as they had access to Next
Bridge shares.
Policy Discussions
The MMTLP event illustrates the existence of significant investment risks during meme stock trading of
complex and speculative instruments. Many investors suffered financial losses. Policymakers’ initial
responses could include examining retail investors’ access to these high-risk investment opportunities and
investigating potential illegal, fraudulent, and manipulative activities. Some Members of Congress sent
letters to the primary capital markets regulator, the Securities and Exchange Commission (SEC), to voice
concerns about investor retirement savings losses. They also requested further investigations into the
MMTLP transactions to identify any regulatory or legislative gaps that could be addressed in order to
enhance investor protection and market integrity. Potential policy concerns include:
• Whether investors knowingly entered into risk-taking with a full understanding of material
information and without misleading guidance from social media or elsewhere. For example,
the SEC has charged social media influencers with manipulation schemes in the past.
• Whether there are better ways to provide transparency and clarity regarding risk disclosures
that could enhance market integrity and reduce market disruptions. For example, retail
investors and experts (e.g., OTC Markets Group’s vice president) were reportedly confused
about MMTLP’s final trading date. As such, investors may not have been able to optimize
their investment decisions.
• Whether there is the existence of fraud and manipulation, such as illegal forms of naked
shorts and counterfeit shares, that could distort markets.
Congressional Research Service
4
• Whether there are signs of insider trading and pump and dump. For example, Brda’s MMTLP
transactions have drawn related suspicions.
Author Information
Eva Su
Specialist in Financial Economics
Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff
to congressional committees and Members of Congress. It operates solely at the behest of and under the direction of
Congress. Information in a CRS Report should not be relied upon for purposes other than public understanding of
information that has been provided by CRS to Members of Congress in connection with CRS’s institutional role.
CRS Reports, as a work of the United States Government, are not subject to copyright protection in the United
States. Any CRS Report may be reproduced and distributed in its entirety without permission from CRS. However,
as a CRS Report may include copyrighted images or material from a third party, you may need to obtain the
permission of the copyright holder if you wish to copy or otherwise use copyrighted material.
IN12228 · VERSION 1 · NEW
INSIGHTi
Meme Stock MMTLP and FINRA Trading
Halt
August 21, 2023
During the fourth quarter of 2022, abnormal trading in MMTLP attracted the attention of capital markets
observers and regulators. MMTLP was the over-the-counter (OTC) stock trading symbol for non-voting
series A preferred shares of Meta Materials (MMAT), a small nanotechnology and materials company.
Since MMTLP’s trading halt in December 2022, investors who suffered financial losses have sent more
than 40,000 letters (some generated through automatic letter wizards) to Congress to voice concerns. This
Insight explains MMTLP’s lifecycle and trading halt for policymakers.
Social Media and Meme Stock Trading
Meme stocks gain popularity through social media. Their share prices often decouple from their perceived
fundamental financial performance and income capabilities. The market volatility related to GameStop is
one example of meme stock trading that heightened policy debates. MMTLP’s trading prices rose rapidly
from less than $2 per share to around $12 per share from October to November 2022 (Figure 1). Like the
GameStop event, the price appreciation was fueled by social media valuation discussions despite some
research analysts’ belief that MMTLP shares were “worthless.”
Congressional Research Service
https://crsreports.congress.gov
IN12228
CRS INSIGHT
Prepared for Members and
Committees of Congress
link to page 3
Congressional Research Service
2
Figure 1. MMTLP Share Prices Leading up to the FINRA Trading Halt
Source: FactSet and Wall Street Journal.
FINRA’s Trading Halt
The Financial Industry Regulatory Authority (FINRA), a self-regulatory organization that oversees the
OTC markets, halted MMTLP trading on December 9, 2022. FINRA placed a trading halt on MMTLP
under Rule 6440(a)(3), an action taken during an “extraordinary event.” FINRA believes the trading halt
before the cancellation and new share distribution dates may have provided a more orderly transaction
settlement. However, the timing of FINRA’s trading halt, which happened a few days before the
scheduled cancellation and conversion of MMTLP shares (more details below), prevented some investors
from exiting their positions as planned.
MMTLP’s Creation, Listing, Deletion, and Conversion
MMTLP was created during a merger between MMAT and Torchlight Energy Resources (TRCH) to
provide preferred stock dividends to TRCH shareholders. “MMTLP was never designed to trade,” said
John Brda, former CEO of TRCH. FINRA issued the ticker symbol MMTLP for OTC trading in 2021
following a broker-dealer request. MMAT spun off a subsidiary called Next Bridge Hydrocarbons (Next
Bridge) in November 2022 and planned to convert MMTLP shares into Next Bridge shares at a one-to-
one ratio. MMTLP shareholders on record as of Monday, December 12, would have received the
distribution of Next Bridge shares on December 14, when MMAT canceled MMTLP. Because transaction
settlements normally take two business days, FINRA believes that December 8 was the last transaction
date for new MMTLP shareholders to settle in order to meet the December 12 record date for Next Bridge
share distribution. Any MMTLP shares settled after the record day would not receive Next Bridge shares
and thus would have zero value. FINRA halted MMTLP trading on Friday, December 9. Figure 2 details
this timeline. After the conversion, because Next Bridge’s registration statement became effective, FINRA
has expressed that Next Bridge shares (although unlisted) could become listed and tradable upon
receiving a new trading symbol.
Congressional Research Service
3
Figure 2. MMTLP Deletion and Conversion Key Dates
Source: CRS using information from FINRA and MMAT publications.
Short Selling and “Short Squeeze”
Short sellers are investors who profit when the price of a stock falls by borrowing the stock, selling it, and
then later buying it back at a lower price in order to return the stock to the lender. If the price rises
between the time it is borrowed and sold and the time it is bought back and returned, short sellers lose
money. A “short squeeze” happens when the shorted stock’s price goes up substantially, but short sellers
still need to purchase shares at a higher price to close their positions. These purchases put further upward
pressure on a stock’s price because of the increased demand, potentially further escalating losses for short
sellers and generating larger gains for the investors holding the now rapidly appreciating stock.
Many retail traders reportedly targeted MMTLP because it was perceived to be heavily shorted, and they
hoped to profit from a last-minute short squeeze, during which short sellers would have to purchase
MMTLP shares at a (potentially high) prevailing market price to settle their borrowed shares.
However, an MMTLP short squeeze did not happen. Some observers attribute this to the unexpected
timing of the FINRA trading halt affecting the possibility of a last-minute gain for MMTLP investors.
Others see the potential of illegal naked shorts, which would not involve corresponding borrowed shares.
FINRA states that broker-dealers have adjusted their operational conversions to accept Next Bridge shares
to close out the MMTLP short positions. As such, the MMTLP trading halt and deletion may not have
affected short sellers’ capabilities to close their MMTLP positions so long as they had access to Next
Bridge shares.
Policy Discussions
The MMTLP event illustrates the existence of significant investment risks during meme stock trading of
complex and speculative instruments. Many investors suffered financial losses. Policymakers’ initial
responses could include examining retail investors’ access to these high-risk investment opportunities and
investigating potential illegal, fraudulent, and manipulative activities. Some Members of Congress sent
letters to the primary capital markets regulator, the Securities and Exchange Commission (SEC), to voice
concerns about investor retirement savings losses. They also requested further investigations into the
MMTLP transactions to identify any regulatory or legislative gaps that could be addressed in order to
enhance investor protection and market integrity. Potential policy concerns include:
• Whether investors knowingly entered into risk-taking with a full understanding of material
information and without misleading guidance from social media or elsewhere. For example,
the SEC has charged social media influencers with manipulation schemes in the past.
• Whether there are better ways to provide transparency and clarity regarding risk disclosures
that could enhance market integrity and reduce market disruptions. For example, retail
investors and experts (e.g., OTC Markets Group’s vice president) were reportedly confused
about MMTLP’s final trading date. As such, investors may not have been able to optimize
their investment decisions.
• Whether there is the existence of fraud and manipulation, such as illegal forms of naked
shorts and counterfeit shares, that could distort markets.
Congressional Research Service
4
• Whether there are signs of insider trading and pump and dump. For example, Brda’s MMTLP
transactions have drawn related suspicions.
Author Information
Eva Su
Specialist in Financial Economics
Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff
to congressional committees and Members of Congress. It operates solely at the behest of and under the direction of
Congress. Information in a CRS Report should not be relied upon for purposes other than public understanding of
information that has been provided by CRS to Members of Congress in connection with CRS’s institutional role.
CRS Reports, as a work of the United States Government, are not subject to copyright protection in the United
States. Any CRS Report may be reproduced and distributed in its entirety without permission from CRS. However,
as a CRS Report may include copyrighted images or material from a third party, you may need to obtain the
permission of the copyright holder if you wish to copy or otherwise use copyrighted material.
IN12228 · VERSION 1 · NEW