Thomas Laresca, a 52-year-old market-maker and father of three, said he lost his Wall Street job because of CYNK Technology — a penny stock that’s shocked the internet with its 25,000% rise in just a few weeks.
CYNK Technology is connected to a “social network” site called Introbiz that purports to help people connect to celebrities and business leaders for a fee. However, CYNK does not appear to have ever had assets, revenue, or more than one employee. It has also been a mystery who is behind the company.
CYNK’s surging stock drew the attention of the SEC, which halted trading in the stock last Friday citing “concerns regarding the accuracy and adequacy of information in the marketplace and potentially manipulative transactions in CYNK’s common stock.”
The SEC’s move was too late for Laresca, who is now critical of the regulatory agency for being too late to act on CYNK.
Laresca, who first shared his story with Bloomberg News, told us on Tuesday that he resigned from his job as a market-maker with Buckman, Buckman & Reid after racking up “insurmountable” losses from shorting CYNK.
As a market-maker, Laresca’s job is to provide liquidity and help match up buyers and sellers of stocks.
Laresca said he watched CYNK go from six cents to $US6. Laresca, who has spent 25 years on Wall Street, told us that he thought the stock was a “scam.” He shorted the stock thinking the SEC would step in.
“I’d be glad to sell some,” he recalled. “When you sell it, you’re caught in it.”
Eventually, he got caught in a short squeeze as the stock continued to skyrocket. That’s because market-makers have to buy back shares every five days, which sends the stock price higher, he explained.
“The day it went from $US5 to $US15, I was short. The stock kept running. As it runs, there’s nothing you can do. You’re selling it.”
Eventually, his firm decided they didn’t want the risk anymore, he said. As a result, he had to buy back the stock and that locked in a loss that was “insurmountable.”
“[My firm] did what was right. They took the stock from me. I’m not allowed to trade anymore. I can’t have any positions. I don’t fault them. They are doing what they had to do.”
If he stayed short, he thinks he would have been OK.
Now he’s questioning the SEC and why they didn’t halt the stock sooner.
“I came home and was trying to explain [CYNK] to my oldest son — He’s a smart kid. He’ll be a senior at William & Mary. That’s when my ten year-old jumped in and said it was a scam. If a ten year-old knew it was a scam, why didn’t the SEC know?”
He’s also going to be looking for another job now. It’s unclear if he’ll stay in financial services.
“It isn’t the end of the world. I’ve been through cancer and things like that. You just pick you head up and know that God is going to do the right thing,” said Laresca.