Ralph Norman is falling down a huge rabbit hole after conspiracy over latest meme stock

charles gasparino

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by charles gasparino

Ralph Norman is a little different. Don’t just take my word for it. If you interview several Republican staffers who work with the South Carolina Republican, as I do, they’ll tell you about some of his biggest hits. Among them: Trump’s former chief of staff Mark Meadows, known as the “Marshall Act,” to allow the former president to remain in office after losing to Joe Biden in 2020. One example of this is the fact that they urged the government to enact the law in writing. Norman’s powerful suit.

I could go on and on, but I’ll stick with the latest part of Crazytown that Norman has embraced: a conspiracy theory involving the meme stock known as MMTLP. Considering all the things that actually affect South Carolina voters (immigration, the economy, inflation, terrorism), the congressman is clearly in trouble between securities regulators and perhaps the nefarious forces that defraud people on Wall Street. He seems to think something fishy is going on. These are the people who bought into this as the next get-rich-quick scheme in so-called meme investing.

He is calling for an investigation and a hearing from House Financial Services Committee Chairman Patrick McHenry. Norman solidifies his status as a financially clueless wing nut.

Most people have never heard of MMTLP, and many wish they hadn’t. Its history is complex, even if its trajectory follows a similar pattern to the meme era. In other words, the get-rich-quick scheme turned into ashes in the end. Remember how memes (individual investors who share trading tips on social media and then pile into stocks) flocked to AMC theaters and the now-defunct Bed Bath and Beyond? When the irrational enthusiasm wore off and the social media promotion stopped working, they were devastated.

That’s what happened to the poor people who started buying MMTLP at the end of 2022. MMTLP is preferred stock issued after a public company known as Torchlight Energy Sources reverse merged with something called Meta Materials. The stock was designed as a claim on a portion of the oil and gas that is believed to exist in West Texas. Eventually, MMTLP will evolve into non-tradable stock in a new private company called Next Bridge Hydrocarbons.

welcome to crazy town

Yes, I know it sounds crazy. Oil wells in west Texas. Reverse mergers, nascent private companies, and preferred stock appearing on the over-the-counter market, the so-called pink sheets.

And it gets even trickier. Towards the end of 2022, the meme crowd, which derives most of its research from social media touts, was influenced by MMTLP and saw it as the next great “short squeeze.” They will buy up the float and make a fortune. Hold it until the very end when the shorts give in.

Of course, short sellers make money by betting that the stock’s value will fall. They start by borrowing stock, selling it, and eventually replacing the borrowed stock with lower-priced stock.

Squeeze turns the tables on the shorts — that’s what the meme was hoping for. They socialize the lofty story that they can crush the short sellers by bidding the price so high that the short sellers will have to cover their borrowings at ever-higher levels. The media started spreading the word.

Let’s just say things didn’t go as planned. First, it turns out that short sellers weren’t all that interested in MMTLP. There was no squeeze like the one that occurred with GameStop stock in early 2021 and forced short hedge funds out of business.

Additionally, the meme did not appear to read company press releases or understand how stocks were settled or some of the unique characteristics of MMTLP. Meme fans thought they could make the most money by selling by December 9th. However, MMTLP was scheduled to be dissolved into Next Bridge’s non-tradable shares on December 12, 2022. That means, based on settlement rules, if they don’t sell by Dec. 8, they’ll end up with non-tradable Next Bridge shares that most holders didn’t want. .

The people who tried to sell after December 8th, and there are a lot of them, as you can tell from the cries on social media, were, as they say, SOL (out of luck). Their MMTLP was turned into non-tradable stock in Nextbridge.

Oops.

Mr. Norman has heard these cries and believes that some grand scheme is involved among the Securities and Exchange Commission, its sister agencies, the Financial Industry Regulatory Authority (FINRA), and perhaps some unscrupulous Wall Streeters. He seems to be thinking about it. He’s now “demanding answers” even after FINRA provided him with pages of detailed answers, which are like memes he didn’t read or understand.

According to FINRA, FINRA suspended trading in MMTLP on December 9 to prevent people from purchasing securities that do not exist. It seems reasonable to me that the agency should also offer mandatory investor education courses for those who still complain that they lost money to this profiteering.

To do anything substantive, Mr. Norman needs the buy-in of Mr. McHenry, who, like most Republicans, is not a fan of the notoriously left-wing SEC Commissioner Gary Gensler. . That doesn’t mean McHenry is keen on following Norman down the rabbit hole, including MMTLP. One Republican committee official told FOX Business’ Eleanor Terret that the leadership consensus on MMTLP is “too much smoke, not much fire.”

McHenry seems to know that the lack of financial literacy extends beyond the meme crowd to certain members of his team.

Mr. McHenry and Mr. Norman declined to comment.