Stock in Corona del Mar-based online retailer Shopping.com fell 31% Monday after critics questioned its prospects as well as any role the brokerage that sold its stock in November may have had in keeping the price high.
The stock, which trades over the counter, fell $10.14 to close at $21.88, though some trades in the $24 range were reported after regular trading hours.
The brokerage, Waldron & Co. in Irvine, denied wrongdoing and doesn't exercise enough control over the stock to keep its price artificially high, Waldron lawyer Tom Fehn said.
He said Waldron stopped buying and selling Shopping.com shares for clients Monday "to let the situation settle down."
But NASD Regulation Inc., the enforcement arm of the National Assn. of Securities Dealers, said it had been advised that Waldron was no longer being allowed to clear deals through its clearing broker, Wedbush Morgan Securities in Los Angeles.
The regulator wouldn't say if it has launched an investigation, but a Texas broker who complained about Waldron to the NASD last week said Monday that both the Justice Department and the Securities and Exchange Commission have called him about the situation. The agencies declined to comment.
"Waldron completely dominates and controls almost every share and can basically place the price anywhere [it] wants," said Anthony Elgindy, chief analyst for Key West Securities in Hurst, Texas. "This is not a fair or real market."
However, Key West and another brokerage house have recommended that investors sell their Shopping.com shares for other reasons. The head of one of the brokerages said the advice was based solely on an analysis of the company's publicly disclosed information.