On April 2nd, Namaste Technologies (OTCMKTS:NXTTF) the management cease trade order (MCTO) it had applied for in March was granted. Notably, the orders preclude the trading of the company shares by the members of the management team. According to a March 18 statement, the company applied for the MCTO since it had delayed filing earnings results for the FY2018.
CEO terminated for malpractice
In early March, two members of the company’s board of directors handed in their resignations. The resigned directors said they were leaving to pursue other interests. Nonetheless, investors have not been blind to curious developments at the company. In Mid-February, Sean Dollinger, the then CEO of Namaste exited after the company announced his termination.
According to the company, the termination became necessary after evidence of self-dealing became apparent. Further, the company established that the CEO breached the fiduciary duty expected of the occupant of the CEO office. As a result of the exit, Namaste said it would review its strategic option. Interestingly, the company made it clear to investors that an absolute sell of the company was among the options under contemplation.
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The MCTO a good step in the right direction
In the immediate aftermath of the announcement, the stock price tanked to sub-$1 levels. For starters, a single share of Namaste traded at an average of $3 in September 2018. In particular, problems for the company set in after short-seller alleged fraudulent activities at the company. Immediately, an internal investigation followed.
Therefore, investors would have all the justification to fear the Namaste stock after the two board members announced their exit, no matter the nature of their reasons to leave.
However, the acquisition of the MCTO is the first step towards regaining investor confidence. Further, the company made a commitment to regularly update the market about the default status of the MCTO.
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Disclosure: we hold no position in $NXTTF, either long or short, and we have not been compensated for this article.