The shares of online retailer Shooping.com resumed trading yesterday following their 10-day suspension by the Securities & Exchange Commission (SEC). The SEC suspended the Corona Del Mar, California company’s shares because of a lack of accurate information about the securities of the company, but more importantly because the activity up until March 24 may have been the result of manipulative conduct, according to the SEC. However, due to a clause in the SEC’s regulations, the stock wasn’t being traded through market makers yesterday who are prevented from trading the stock until the additional financial information has not only been supplied; but put in the form of a filing with the SEC. The stock opened down $10.25 at $12 but recovered to close at $25.00; shares have been as high as $32.875 after going public last November at $9 a share. And here’s where the story gets even more interesting. The theory is that the company was the target of a ‘short squeeze’ – the practice driving a share price higher in order to prevent short sellers – who buy borrowed shares, hoping that the stock will fall and they can sell at a profit – from making money. The squeeze really only works when so few shares are publicly traded, short sellers cannot buy enough to cover their potential losses. Analysts at Chatfield Dean & Co and Key West Securities Inc both initiated coverage of the company last month with ‘sell’ recommendations. On the other hand, Waldron & Co. Inc gave the stock a buy rating straight after Key west’s ‘sell’ and the same day as Chatfield Dean negative recommendation. However, it should be said that Waldron is Shopping.com’s investment banker, having been appointed last July (CI No. 3,205), and led the company’s initial public offering. And Waldron is also the major investor driving the short squeeze. Former Waldron brokers who left the company, have been speaking about goings-on at the brokerage, which resulted yesterday in a lawsuit from Waldron seeking $10m damages against five of them for defamation and additional charges of interference with business relations. On a lighter note, the company chose yesterday to tell the world that not only had its shares resumed trading, but that it also been busy overhauling its website, which it has now ‘re- launched.’
