Regulators halt trading on stock confused with Tesla bid

Market regulators put a stop to wildly speculative trading on a penny stock from a defunct Grand Rapids-based company that investors mistakenly linked to a Tesla Motors acquisition.

The Financial Industry Regulatory Authority (FINRA) ordered investors to halt trading on the old shares of Grand Rapids-based auto supplier Riviera Tool Co.

The stop-trade order came about 12 minutes after the Free Press reported late Thursday afternoon that confused investors had plunged cash into potentially worthless stock in the wake of a Tesla acquisition of a similarly named firm.

What happened was fairly simple. Riviera Tool Co. ceased to exist in 2007, and its shares were delisted from the American Stock Exchange following a transaction financed by Laurus Master Fund.

The company's assets were transferred to a new entity called Riviera Tool LLC, which Tesla announced late Wednesday it would acquire and rename Tesla Tool & Die.

Tesla's deal was widely celebrated as the company's first acquisition and its first manufacturing presence in Michigan, the back yard of the Detroit Three automakers.

But investors mistook over-the-counter shares of Riviera Tool Co. that were still lingering on the so-called pink sheets market for Riviera Tool LLC, which is not publicly traded.

The Free Press reported at 5:05 p.m. Thursday that shares of Riviera Tool Co. closed at 22 cents, up 4,400% for the day, after briefly soaring to impossible heights of 60 cents per share, a gain of more than 10,000%.

At 5:17 p.m., FINRA put a stop to trading on the shares.

It's unclear whether trading will resume at some point or whether market regulators will attempt to unwind any of Thursday's trades on the penny stock.

Contact Nathan Bomey: 313-223-4743 or nbomey@freepress.com. Follow him on Twitter @NathanBomey.