Longfin Plans to Trade OTC in Late May

Longfin company logo - Year is 2018.The bizarre Longfin story took another twist on Thursday after the company announced plans to voluntarily delist from the NASDAQ.

Longfin, which was one of the stocks that soared after announcing a cryptocurrency venture, became even more infamous thanks to two undeniably entertaining CNBC interviews featuring their CEO. In addition, shares of Longfin, thanks to a very small float, surged to over $100/share before pulling back.

In early April, after catching fire once again and trading from the low teens to $28, shares of Longfin were halted by the NASDAQ. At practically the same moment, the SEC announced that they were placing an emergency freeze on more than $27 million in trading proceeds "from allegedly illegal distributions and sales of restricted shares of Longfin Corp. stock involving the company, its CEO, and three other affiliated individuals".

Many people assumed that the NASDAQ would move to quickly delist Longfin, though days turned into weeks and nobody was hearing anything. Many people were trapped, including longs, shorts and options holders.

In fact, there was massive open interest in the April 20th calls, especially on the put side, and many people watched as their puts expired worthless. Brokers all seemingly had different ways of handling the situation, with some not allowing puts to exercise due to the halt. Other brokers allowed exercises though charged exorbitant hard to borrow fees, while others allowed exercises with delayed settlement and no HTB fees.

Some traders who found themselves short into the halt were charged HTB fees in excess of 200%. It didn't take a math degree to realize that these traders would have been in serious trouble if there was a long halt.


As mentioned, Longfin announced earlier this week that they were going to voluntarily delist.

In fact, the NASDAQ had already informed Longfin of their intention to delist the stock. Not only was Longfin deficient in their filings, but the NASDAQ was also worried about the public interest and the ongoing financial viability of the company.

So, despite Longfin saying that they were voluntarily delisting, this was a case of them quitting before they could be fired.


According to Longfin's press release, the company will likely trade OTC after May 24th.

Trading OTC is never a good thing for a company, and I would expect that Longfin will have trouble over the long run. The company will most likely never trade on the NASDAQ ever again, and there will be no shortage of shares that will be looking to hit the bid, especially when the company's shares start to become unlocked.


In short, this was a big, big mess that was handled horribly by brokers and regulators alike.

Filed under: General Knowledge

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