IIROC briefly halts Facedrive stock after two days of heavy trading

facedrive

The Investment Industry Regulatory Organization of Canada (IIROC) briefly halted trading in Facedrive’s stock twice on September 17.

The Toronto-based ridesharing company’s stock, once worth as much as $60 a share, suddenly rose 131 percent today before beginning to dip back down. As of press time, the stock was worth $4.66 CAD up from $2.17 at the market’s open. It had been as low as 87 cents on September 15.

Both times IIROC imposed a circuit breaker, a pause in trading when stocks become too volatile.

Following the halt and resumption of trading on the TSX, Facedrive issued a release saying it would like to “confirm, at the request of IIROC, that its management is unaware of any material change in the Company’s operations that would account for the recent increase in market activity.”

In recent weeks Facedrive’s stock has been the subject of a sell-off by one of its founders, creating tension between the founder and former president, and the current company.

In recent weeks Facedrive’s stock has been the subject of a sell-off by one of its founders, creating tension between the founder and former president, and the current company.

The Motley Fool reported on September 17 that Facedrive’s stock “surprised markets with its huge 128% jump yesterday [September 16]. The surge came after 10 consecutive days of a heavy selloff that collectively wiped off 83% of its market value. Speculators seem to be betting big on the volatility in this oversold name, which led to the recent surge.”

On September 13, Facedrive co-founder and former president Imran Khan issued a news release saying that he had disposed of 8.4 million Facedrive shares, transferring them to a family trust for “estate planning.”

Khan also said that his company, ISRR, exercised control over 19.7 million shares, representing approximately 20.7 percent of Facedrive’s issued and outstanding shares. ISRR moved portions of those shares to a numbered company that Khan holds a 33 percent stake in.

Khan said that with the shares dispersed between ISRR and the numbered company, 263 Ontario, he no longer has enough shares to materially affect control of the company. Accordingly, Khan said he can “immediately commence selling shares” he holds along with those held in the two companies without being subject to a lock-up or escrow agreement.

Khan noted that he intends to “decrease his investment, directly or indirectly, in securities of the Issuer from time to time, depending on market conditions or any other relevant factors and subject to contractual lock-up periods and escrow arrangements.”

Facedrive stock has been the focus of fighting between Khan and his former company. The embattled company filed a statement of claim over alleged insider trading against Khan in August.

For his part, Khan has alleged the company could be facing insolvency proceedings.

Khan could not be reached for comment, and it was not clear at time of publication whether he had filed a statement of defence.

In a statement of his own released on September 7, former Facedrive CEO Sayan Navaratnam – who resigned from the company on September 1 – alleged that Khan’s sell-off of his shares have “had a dramatic impact on the stock value, and has caused it to trend negatively almost every day thereafter.”

Charles Mandel

Charles Mandel

Charles Mandel's reporting and writing on technology has appeared in Wired.com, Canadian Business, Report on Business Magazine, Canada's National Observer, The Globe and Mail, and the National Post, among many others. He lives off-grid in Nova Scotia.