Comparator Keeps Sliding in Private Trading

Shares of Comparator Systems Corp. continued to slide back to their penny stock origins Thursday, falling 50% in price in private trading outside any stock market.

Comparator stock closed at 5 cents per share, as 6.58 million shares changed hands two days after the company was removed from the Nasdaq stock market for failing to answer regulators’ questions about the company’s finances.

Though the stock is not listed on any exchange, including small stock domains such as the OTC Bulletin Board, a handful of brokerage firms were handling privately negotiated transactions. Wien Securities Corp. in New Jersey, for instance, was offering to buy Comparator shares for 1 cent and sell them for 5 cents.

Comparator, a maker of fingerprint scanning devices, set trading records on Nasdaq last month as its stock soared from 6 cents to as high as $1.88 per share before trading was halted. The Securities and Exchange Commission has since filed a suit accusing the company of lying about its assets and stealing its product. The company denies the allegations.

Those buying and selling the stock on Thursday seemed to be engaging in a sort of investment housecleaning, some observers said.

“I think the people selling it are either taking a tax loss or selling stock they’ve had and missed the boat when it went nuts,” said Stephen Wien, a partner in Wien Securities. The buyers, he said, “are either people covering their short positions, or people who think [Comparator has] a piece of equipment that is real.”

A short position is basically a bet that a stock will fall in value. Investors borrow shares and sell them, hoping to replace them later with new shares purchased at a lower price.

Comparator stock also continued to be a hot topic in discussion groups on the Internet, where regulators believe a great deal of touting last month helped fuel the stock trading surge. Recent postings have ranged from vicious attacks on those who touted the stock to pleas for help unloading shares.

“Can someone cease the dramatic talk long enough to explain to me how this stock can be trading?” one posting said. “I’d take 10 cents on the dollar just to remove the nightmare from my portfolio.”

Thursday’s trading was still light compared with volume in early May, when more than 100 million shares changed hands each day.