FINRA Cautions Against Investing in Blockbuster, Inc.
Yoomi Lee | Bloomberg Law
The Financial Industry Regulatory Authority (FINRA) issued an alert to address investor confusion regarding trading shares of Blockbuster, Inc. (Blockbuster), which filed for Chapter 11 bankruptcy on September 23, 2010. FINRA warned that some stock promoters may be exploiting the confusion resulting from the lack of current and accurate information concerning the company’s securities. Further, FINRA noted that bankrupt companies can be targets of online stock tips that can be confusing and misleading.
According to FINRA, DISH Network Corp. (DISH Network) acquired almost all of Blockbuster’s assets and the remaining entity changed its name to BB Liquidating, Inc. (BB Liquidating). Although BB Liquidating has no further business operations or assets, its shares continue to trade under the BLOAQ and BLOBQ symbols. The SEC, however, has temporarily suspended trading in BLOAQ as a result of inaccurate third-party assertions regarding BB Liquidating’s current financial condition and business prospects. For instance, stock promoters have been telling investors that Blockbuster has exited Chapter 11 protection and “is now becoming a promising comeback story.” FINRA stated that Blockbuster has not exited bankruptcy and that the company stated in a recent filing that there are no further business operations or assets to liquidate. Moreover, the filing also disclosed that the financial success of DISH Network would have no impact on the value of BLOAQ and BLOBQ shares. Accordingly, FINRA advised investors that buying or holding shares in bankrupt companies in the hope that those shares will increase in value is extremely risky and can lead to financial loss.
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