Readers will remember that Strategic Global Investments, Inc. (OTCMKTS:STBV) celebrated this SEC Investor Bulletin regarding initial coin offerings (ICOs). Additionally, the market pushed up the share price of this company as well as other competitors operating with bitcoins and other cryptocurrencies. Have a look at what happened in the following stock chart:SourceRecent DevelopmentsWith that in mind, let's see what's new. The SEC saw the astonishing amount of shares that changed hands those days and the explosion on the stock charts and decided to halt the trading of the stock. This is the document, wherein the reasons for this decision were explained. The following part explains when it was halted and when trading commenced again:
"The Securities and Exchange Commission (“Commission”) announced the temporary suspension, pursuant to Section 12(k) of the Securities Exchange Act of 1934 (the "Exchange Act"), of trading in the securities of Strategic Global Investments, Inc. (“STBV”), a Delaware Corporation, at 9:30 a.m. EDT on August 4, 2017, and terminating at 11:59 p.m. EDT on August 17, 2017." Source
Is this normal? Well, in our opinion, it is normal. Sometimes, the market becomes very bullish or very bearish about certain news and, in our opinion, the authorities need to intervene. It helps the market stop and assess the news calmly. We believe that the company needed to explain a little further its business model with respect to ICOs, for which more information was needed. We said the following words in our most recent article on this name:
"What is going to happen now? We will need to assess more the next press releases, wherein we expect to learn more about this strategic change in the direction of the business. It is true that the sector elected is growing at a high pace and will make the company grow as well, but communicating the plan is key. We encourage readers to be ready to assess the new announcements." Source
Why is this normal? This is a completely new market, which a few people understand well. It makes a lot of sense that companies and authorities hold conversations in the very beginning. In this time, the companies explain their new business model and the market gets some time to digest the new information. In fact, this is exactly what is happening at the moment. On August 18, 2017, the company released a press release, wherein conversations with the SEC were noted. Garland E. Harris said following:
"I spoke with officials from the SEC at 1 pm EDT yesterday and was impressed (and surprised) by the desire and determination of the regulators to make sure that the markets are safe and transparent for the investing public. Yes, they are just doing their jobs, and very difficult jobs at that, in the midst of perhaps the fastest paradigm shift in SEC history - decentralized blockchain trading and ICO’s" Source
Regarding other matters, some information about the 100 for 1 stock split, which was announced on August 11, 2017, were noted in the same press release:
“The price of the last trade on the DEX prior to the 100 for 1 split was $0.20, it is up to market makers to determine the post split trading price on the OTC, but on the DEX the new price should start at $0.002. All shareholders will receive the 100 for 1 shares, but those with shares on the DEX have started receiving them as of 08/18/2017. Here is the best link to use to check current prices (valued in XCP) so a little math is required. https://xchain.io/asset/STBV. Once you have a wallet with your shares in it, the math is done for you, which see a post split example." Source
What were the consequences of this event?First of all, the company is trading now in the grey market, which is a less liquid market place. It can be seen on the OTC Markets website. Additionally, the caveat emptor signal was placed by OTC Markets. Readers can have a look at the profile of the company on the website of the exchange. In our opinion, the company will have to hold conversations with OTC Markets exchange to remove the bad sign. It may take some time.In addition, we, like many other investment sites, believe that short sellers used this opportunity to profit. It can be seen on the OtcShortReport that an astonishing amount of short positions were recorded. What can we do about it? Very little, short selling is a legal practice, but, in our opinion, a unethical tactic. This is what investopedia.com says about it:
"Short selling is highly regulated by securities authorities around the world, not only because of its risky nature, but also because it is prone to manipulation by dishonest short sellers who may use unethical tactics to drive down stock prices." Source
To sum up, like other investment sites, the decline in the share price was caused partially by those short positions. Readers need to remember that we also need to take into account the 100 for 1 split.ConclusionSTBV suffered a trading halt in the beginning of August, as the SEC needed more information about the company's business model regarding initial coin offerings (ICOs). Management was contacted by the SEC and it was expected that the trading halt would be terminated at 11:59 p.m. EDT on August 17, 2017. In our opinion, the amount of short positions registered by OtcShortReport shows that the activity of dishonest short sellers contributed to push the price down. Additionally, the company is trading now on a less liquid exchange and will have to hold conversations with the OTC Markets to erase the caveat emptor signal placed in its profile. We will keep informing about the new developments of the firm.We will be updating our subscribers about it as soon as we know more. For the latest updates on STBV, sign up below!Image courtesy of Alexander Nordby via via FlickrDisclosure: We have no position in STBV and have not been compensated for this article.
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