By Rodrigo Campos
(Reuters) - Trading in shares of Cynk Technology Corp <CYNK.PK> was suspended Friday in the loosely regulated over-the-counter market, amid concerns about possible market manipulation after a 24,000-percent surge in the stock price in the last month.
Trading was halted by both the U.S. Securities and Exchange Commission and the Financial Industry Regulation Authority, or FINRA, the securities industry's self-regulatory body principally charged with monitoring activity in the opaque market for penny stocks.
FINRA first posted a trading suspension in the stock early on Friday using its "Extraordinary Event Halt" code. The SEC followed with its own suspension shortly afterward, extending the trading hiatus until July 24.
The SEC said its decision came "because of concerns regarding the accuracy and adequacy of information in the marketplace and potentially manipulative transactions in Cynk’s common stock."
Shares of Cynk, a development-stage company which SEC filings said formerly went by the name Introbuzz and intended "to develop a social network business," rocketed out of the blue over the past month, taking its market capitalization from around $17.5 million to more than $6 billion at one point.
Based on Thursday's closing price of $13.90, its stock market value is $4.05 billion.
The Nevada corporation has a business address in Belize City, Belize, and its business description says it is in "development stage." It has no reported revenue.
Its website, site.introbiz.com, has no phone number listed. A form for contacting the support group warns that it could take two days to respond.
The company's primary shareholder, Marlon Sanchez, owns 72 percent of the 291 million outstanding shares. Sanchez is listed on SEC filings as the company's president, chief executive officer, chief financial officer, chief accounting officer, secretary, treasurer and director.
Calls to the phone number listed in the company's most recent quarterly filing with the SEC, dated Nov. 7, 2013, reached a message saying: "You have reached an unassigned number."
In March, Cynk filed with the SEC a notice of its inability to file its 2013 annual report on time.
Before June 17, Cynk shares had traded on exactly three days in 2014, with volumes not exceeding 2,000 shares in a single day. Trades had occurred at either 8 cents a share or 6 cents, which was its closing price on May 15, when it last recorded trades before mid-June.
Then, activity in the stock exploded.
Volume on June 17 topped 367,000 shares and the price shot to as high as $4.25, before closing the day at $2.25.
It has seen brisk trading every day since, averaging 120,533 shares changing hands and the price steadily rising.
The frenzy culminated on Thursday with a record 386,060 of volume and the price spiking as high as $21.95 a share before closing at $13.90, down from Wednesday's close of $14.71.
The SEC suspension is valid through July 24, but after that date, no quotation may be entered unless brokers and dealers have complied with all rule provisions, the SEC said in a statement, which could effectively extend the suspension.
On FINRA's website, it said the shares were halted as "an extraordinary event has occurred or is ongoing that has had a material effect on the market for the OTC Equity Security (...) or has caused or has the potential to cause major disruption to the marketplace or significant uncertainty in the settlement and clearance process."
The SEC has suspended trading in more than 1,300 micro-cap stocks since May 2012, said Eric Bustillo, regional director of the SEC's Miami Regional Office, who declined to comment specifically on the Cynk suspension.
He said since last year, the SEC has been "placing significant emphasis and resources" on micro-caps as it is "an area that we have seen significant fraud in."
(Editing by Bernadette Baum)