#Chedsblog - @BigCheds IHUB:Cheds: Grey Market Trading

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GREY MARKET TRADING --

*last update 8/5/2017

Here are some previous grey market tickets I have played, and lost $$$ on
$PHOT
$GLER
$XUII
$CRGP

$PHOT was a special one, it got suspended, and greyed near the height of the MJ rush of 2014. I had roughly $65,000 in $PHOT at the time.

http://www.investopedia.com/terms/g/greymarket.asp

DEFINITION of 'Grey Market'

1. A market where a product is bought and sold outside of the manufacturer's authorized trading channels.

2. The unofficial trading of a company's shares, usually before they are issued in an initial public offering (IPO).

BREAKING DOWN 'Grey Market'

1. For example, if a store owner is an unauthorized dealer of a certain high-end electronics brand, the product is considered to be sold in the grey market. If the product is illegal, it would be selling on the "black market".

2. The grey market is an over-the-counter market where dealers may execute orders for preferred customers as well as provide support for a new issue before it is actually issued. This activity allows underwriters and the issuer to determine demand and price the securities accordingly before the IPO.

SEC SUSPENSION, HOW DOES IT WORK?

(the following sequence is from a person familiar with the process)

The three weeks for a suspension is based on what an SEC attorney once told me, and on my own observation. First, of course, the issue with whatever the stock is has to come to the SEC's attention. Then it's assigned to an attorney, who's expected to put in about 40 hours of work on it. We were talking about a specific suspension; I knew a lot about the story. From the time the SEC became aware of it till the time it was suspended was about three weeks. Once the attorney's finished with the initial investigation, his or her regional director has to approve, and then it's sent to the Commission. Their staff has to go through everything, and then the Commissioners themselves have to approve. That seems to happen at their weekly meetings, which take place on Wednesday and/or Thursday. Which I suppose is why there seem to be more suspensions on Thursday and Friday than on other days of the week.

Of course, things can move more quickly if there's a big promo by a notorious promoter. And probably there're other kinds of exceptions. If, for example, the scam being run poses some kind of public health threat, it'll get quick attention. Many years ago, an "AIDS cure" stock got shut down in the blink of an eye. And post-9/11, a few "anthrax cure" scams were suspended with equal speed.

What is a U3 halt? This is the type of halt where your OTC ticker is suspended

FINRA: ORF Trading halts

FINRA will review and evaluate available information to determine whether a trading and quotation halt in an OTC Equity Security is appropriate under the terms of FINRA Rule 6440 (Trading and Quotation Halts in OTC Equity Securities).

Pursuant to FINRA Rule 6440, in circumstances in which it is necessary to protect investors and the public interest , FINRA has been granted authority to halt trading and quotations in OTC securities (as such term is defined in FINRA 6420) if:

The OTC Equity Security or the security underlying an American Depository Receipt ("ADR") that is an OTC Equity Security ("OTC ADR") is listed on or registered with a foreign securities exchange or market, and the foreign securities exchange, market, or regulatory authority overseeing such issuer, exchange, or market, halts trading in such security for regulatory reasons because of public interest concerns or for news pending; provided, however, that FINRA will not impose a trading and quotation halt if the Foreign Regulatory Halt was imposed solely for a regulatory filing deficiency, or operational reasons ("Foreign Regulatory Halt");*
The OTC Equity Security or the security underlying an OTC ADR is a derivative or component of a security listed on or registered with a national securities exchange or foreign securities exchange or market ("listed security") and the national securities exchange, or foreign securities exchange or market imposes a trading halt in the listed security ("Derivative Halt"); or
FINRA determines that an extraordinary event has occurred or is ongoing that has had a material effect on the market for the OTC Equity Security or the security underlying an OTC ADR or has caused or has the potential to cause major disruption to the marketplace and/or significant uncertainty in the settlement and clearance process ("Extraordinary Event Halt").

Cheds Breakdown:
If we are talking about Grey Market, you are pretty much screwed. Nothing good here. Can your ticker come back? In theory yes with a form 211, but it never happens.
*** UPDATED, PHOT (Growlife) has been re-instated. This is beyond unprecedented.

Awesome article, by none other than Janice Shell

http://promotionstocksecrets.com/the-sec-just-suspended-my-stock-now-what/

The following is from a twitter rant I did a few months ago on trading Grey Market.

The gig is up, game over. Your ticker no matter how special is not going to come off the grey sheets.
Exit on day 1. Every day after that volume will decline until you can no longer exit, and be stuck.
Set sells in even blocks. You need to match exact orders, so set limit orders at 50k, 100k, 250k etc.
Your goal should be to get back around 40-50% of the value of the stock when halted. This is a victory.
When the ticker opens it will likely drop about 80-90%, bounce back to 50% down, and close down about 70%
Watch the tape to see what block sizes people are using, set your sell and move on. Stay liquid my friends

Will my ticker ever come back?
No! However, it is in theory _possible_

A Market Maker would have to file a form 211.
http://www.investopedia.com/terms/f/form-211.asp

However, this has only happened once or twice. Sell on day 1 and move on, trust me.