3. SPQS Pump and Dump, Mina Mar Group, Regulation FD
Blatant manipulation or just playing by the rules?
This article will show how SPQS pumped its stock from .0013 to .0088 in one month.
These actions are exactly the reason the SEC has decided over 5,000 stocks no longer deserve to trade in the US - and on September 28th, nearly 60% of the entire OTC Market will be deleted from brokerage accounts - including yours. Read more about this upcoming change here.
I will be going through a timeline of events from around June 25th 2021 through July 28th 2021. You will learn how SPQS’s share price rose 600% over this time period, and how the stock fell 70% immediately following the publication of a document the company had been hyping up for weeks. Here is a chart of the time period we will be looking at:
The SEC’s “file financials or disappear” deadline on September 28th is forcing companies that do not file timely reports to either file financial statements, or simply be blocked from every major brokerage firm in the US.
By most definitions, SPQS is a shell stock. Before last week, the company had not filed a financial document since 2011. OTC companies typically have two ways to file investor disclosures - with OTCMarkets or with the SEC, and for nearly 10 years, SPQS did neither. In addition to being behind on the required market filings, the company was also behind on their normal business license fees and tax bills with the State of Delaware.
Let’s learn how SPQS did not just quietly begin to file financial reports to “reactivate” their stock, but instead chose to hype up this event for weeks, create inflated demand for their stock, and then falsely claim to be a victim of social media disinformation.
Background Info: Mina Mar Group
Before I can proceed let me quickly introduce Mina Mar Group, an “investor relations firm” that helps private and public individuals/companies connect, merge, and raise money. All you need to know for today is that Mina Mar has notoriously leaked nonpublic information in what they call “Friday Tips” for over 10 years. I personally have emails as far back as 2010 where Mina Mar would proudly share information about their clients that could ONLY be found via their email service.
Here are some actual excerpts from emails as far back as 2010:
“MSLP - We signed this client up 2 weeks ago and started working the IR on MSLP immediately. We came in when the share price was 25c and we are at 36c now. Congratulations to the followers of MMMG Friday Tips.”
“EVDR, NBDR and SSYO are in the same boat as MSLP was. Don't say we didn't tip you on a Friday.”
“ADHC - The company has commenced merger negotiations.”
I have not received any emails in recent years, but it seems Mina Mar has never stopped leaking information, and they must have facilitated SPQS’s comeback because they have over 20 tweets about SPQS with information typically only insiders would know:
SPQS Reinstatement:
At some point this year Mina Mar, or SPQS, or someone controlling SPQS decided they didn’t want the stock to disappear forever.
On June 25, SPQS paid all applicable business license fees and taxes. This allows them to legally “do business as” a company again. In other words, any company cannot really open a business bank account, sign up to a press release service, or open credit lines without a valid business license. They also cannot file the required financial reports until they have a valid business license, so being “reinstated” in Delaware was the first thing they had to do.
Traders that monitor these business license websites caught this change and organically traded the stock, with SPQS nearly moving 100% in one day.
The next step for SPQS to remain a stock before the SEC’s deadline would be for them to file updated financial reports either with OTCMarkets.com or the SEC. Let’s review what happened in the time between the company satisfying state requirements on June 25th, and their first financial report on July 28th.
I have since learned that after this June reinstatement, SPQS created a Twitter account on July 9th:
Over the next several weeks the SPQS and Mina Mar Twitter accounts inflated demand for shares and hyped up investors for the next step in the process - financial reports.
Manipulation or Dissemination?
A grey area arrives when you look into an SEC rule called Regulation Fair Disclosure.
Regulation FD states that “when an issuer discloses material nonpublic information to certain individuals or entities, the issuer must also make public disclosure of that information.”
In 2018 Elon Musk was fined under Regulation FD and other rules for Tweeting important company information instead of issuing an official press release, and I believe a similar issue could be occurring here.
According to the SEC, “companies can use social media outlets like Facebook and Twitter to announce key information in compliance with Regulation FD so long as investors have been alerted about which social media will be used to disseminate such information.”
In other words, SPQS is allowed to release “key information” on Twitter, but only after they put out an official press release with a link to the Twitter account, and state that news will disseminated there.
But here’s the problem - SPQS or Mina Mar never did this before sending these tweets.
SPQS has never put out an official press release that would actually hit investors brokerage accounts or major stock market websites:
In my opinion this non existent press release is the only difference between manipulation and dissemination. Without issuing a press release stating that you will be Tweeting company news, there is no way for investors to know the Twitter page even exists. When you only share information with a subset of investors, the lines blur between manipulation and dissemination.
So without any true notification to shareholders, SPQS and Mina Mar go on a Tweeting spree almost immediately following the Delaware reinstatement:
Mina Mar’s July 2nd Tweet is just one example that non public information is potentially being leaked:
“$SPQS - The company is negotiating a new merger. They are trading in hundreds of thousands on a daily basis. Subscribe to Friday Tips”
- Twitter @MinaMarGroup - 10:44am - 2 Jul 2021
During this time period SPQS share price moves from a low of .0013 to a high of .0088. I estimated an average volume of ~$250,000 per day traded during this time frame. This was not a low volume stock, the attitude and volume of tweets coming from SPQS and Mina Mar were definitely doing their intended job.
SPQS 8-K SEC Filing:
A reinstatement is simply used as a signal that a company is up to something; no real information can be gathered from this filing alone. The real information or intentions of the company are always released via press release or SEC filings.
SPQS’s next step was to file financial reports to get current with the SEC or OTCMarkets - essentially the only two places a company is allowed to file documents if they wish to remain a publicly traded company due to new rules that go in effect September 28.
Only July 22, SPQS would leak more non-public info to their followers that they have been granted SEC filing access. This Tweet alone sent SPQS from .0064 to .0081 as followers frontloaded the stock in anticipation of the company’s first SEC filing in 10 years:
A whole 6 days after that tweet, the company’s first 8-K SEC filing hits every brokerage firm and just like every 8-K, investors, traders, and other parties reviewed the contents.
At 10:49AM on July 28th, SPQS’s SEC filing hit public newsfeeds. Just by the fact that is has been 10 years since their last filing, demand instantly increases and for nearly 20 minutes the stock moves upward from .007 to .008.
But as the minutes pass, things start to go south very quickly, and after the initial 20 minutes of excitement, SPQS begins to go negative on the day:
Inside of this 8-K filing, the company attached a supplementary document containing 8 years of financial reports, most likely one for every year that they had skipped.
But inside this document was a very importance sentence that almost every OTC trader searches for on every news release - a reverse split.
The company included the following sentence 10 times in their first 8-K of 10 years:
The company anticipates doing a reverse split of its common stock.
One of the financial reports was for “the three months ended March 31, 2021”. Within that 2021 section was the same reverse split sentence.
When you put that statement in the most recent financial report, it should be no surprise that traders and investors get hesitant. Traders that read the entire 8-K started to share their findings on Twitter and chat rooms, and within an hour of release, the “SPQS is coming back” hype was over, and the stock was down 65% from its peak.
The Victim Card:
Within hours of this crash, SPQS hilariously claimed they were victims of an organized short selling campaign and went into damage control mode:
As an OTC trader for 10 years, this is truly laughable. There is a 0% chance that this drop was due to do an “organized short selling campaign”.
Traders were simply reading the most important/most recent financial document that they themselves put out, and took action by selling, or simply stopped buying.
SEC filings outweigh tweets 100% of the time, and this is yet another example. The company’s multiple, desperate attempts to clarify this reverse split sentence has done absolutely nothing to the share price. SPQS is still at .0037 or 50% below where it was pre-filing.
If you read the company’s Twitter account, their current strategy is to make you feel like the crazy one for believing something that is in their first 8-K filing in 10 years.
The End
I simply wanted to share the details of this stock for your knowledge.
Some of my personal questions are: Is Mina Mar bound to Regulation FD? Is SPQS bound to Regulation FD? Are insiders allowed to Tweet an 8-K is coming? Are insiders allowed to Tweet they are considering a merger? Are major affiliates of the company allowed to share information to a small subset of investors?
As far as the reverse split is concerned - if you have shares of SPQS I believe you have no choice but to at least consider a reverse split may happen in the future. I personally value SEC filings over Tweets, and with the 8-K as the only official document or press release under SPQS in my brokerage account, that is what I would be using for reference.
I have no position in SPQS nor do I ever plan to.
-Rumors