Encino Firm Halts Trading as Units Fall
Discovery Associates, a one-person management consulting firm in Encino, called a halt to the trading in its securities Monday after the price of the company’s investment units plunged nearly 50% in over-the-counter trading.
Discovery’s president and sole employee, Stephen Berglas, said he did not know why the price of the units fell. Berglas said trading is scheduled to resume today.
Berglas said the company’s units fell from a bid price of $8.125 to about $4.25 before trading was halted about 11 a.m.
Units are securities sold as a package, such as common stock combined with warrants that may later be converted into additional stock. A Discovery unit is equivalent to one share of common stock and one-half of a warrant that could be used to acquire additional stock and warrants.
Article Mentions Underwriter
Berglas speculated that trading might have been influenced by an article published last weekend in Barron’s, a financial weekly newspaper. The article mentions Discovery’s underwriter, Tidd, Lackey & Co. of Chico, but does not mention Discovery.
The article, which appears in a column on over-the-counter stocks, questions why the stock price for Hammer Technologies of Lakespur soared even though the company has no earnings. The article noted that Tidd, Lackey & Co. underwrote a company in which Hammer Technologies owns a 79% stake.
Discovery, which Berglas said has no significant revenue, provides financial management services, such as helping prepare documents for public stock offerings.