Shares of a Cayman Islands holding company with ties to a Hong-Kong financial firm exploded higher Friday, ending up 441% and prompting a cryptic statement from the firm.
Shares of Top Financial (TOP) rose $88.21, or 441.05% to close at $108.21. Earlier in the wild trading session, the stock changed hands for as much as $256.44. In after-hours trading, shares fell sharply, losing $49.21, or 45%, to $59.
In a statement issued after the close, the company said “we caution investors and all other persons to rely solely on statements and filings with the United States Securities and Exchange Commission issued by the Company itself or its authorized representatives.” It added that “The Company does not intend to make further statements regarding this matter.”
There was no immediately obvious trigger for Friday's move. Top falls into the category of low-float Chinese-related companies that have in the past become favorites of meme stock and other very short-term traders.
Top operates as a financial services firm in Hong Kong offering trading services in stocks and option products.
The company changed its name to Top Financial, shortly after conducting an IPO last year. It was originally named Zhong Yang Financial Group Limited, according to SEC filings.
In the prospectus for the IPO, the company wrote that “Investors are cautioned that you are buying shares of a Cayman Islands holding company with operations conducted in Hong Kong by its subsidiaries.”
It said that “As a holding company with no material operations of its own, ZYFGL conducts its operations in Hong Kong through its subsidiaries, Zhong Yang Securities Limited (“ZYSL”) and Zhong Yang Capital Limited (“ZYCL”), both incorporated in Hong Kong, and WIN100 TECH Limited, incorporated in the British Virgin Islands."
In addition, “The Ordinary Shares offered in this offering are shares of ZYFGL, the Cayman Islands holding company, instead of shares of the Operating Subsidiaries. Investors in this offering will not directly hold equity interests in the Operating Subsidiaries.”
Chinese companies have increasingly turned to complicated financial structures based in the Cayman Islands as a way to access U.S. capital markets without violating Chinese laws restricting foreign ownership.
