(Reuters) - U.S. regulators are investigating the auditor of Cynk Technology Corp, the social media company that was briefly worth more than $6 billion in June before its shares plummeted, the Wall Street Journal reported, citing people close to the probe.
Peter Messineo, who is being scrutinized, is one of a number of “repeat players” being looked at by the Securities and Exchange Commission, and is related to the stocks that were a part of suspicious trading, the Journal cited the sources as saying.
The SEC is investigating whether lawyers and accountants play a part in penny-stock frauds by signing off on phony information or by not asking the right questions, people close to the agency told the Journal.
The SEC is also concerned that auditors who take on a number of clients may not have time to conduct basic checks, the Journal cited one of the people close to the agency as saying.
Neither Messineo nor Cynk Technology was immediately available for a comment.
The SEC could not be reached outside of its business hours.
Cynk Technology made headlines in June as trading volumes soared and the company was briefly valued at more than $6 billion despite having no revenue and being described as “development stage.”
The stock rose more than 20,000 percent in a matter of weeks, hitting an intraday high of $21.95 on July 10. U.S. regulators on July 11 halted its trading for 10 days.
The stock has fallen more than 97 percent since then.
Reporting by Kanika Sikka in Bangalore; Editing by Ken Wills