Tesla Motors acquired Riviera Tool LLC, a tool and die company based out of Michigan, for an undisclosed sum on the 7th of May. What followed was a buying frenzy of the wrong stock, which led to the industry regulator stepping in.
Not long after the acquisition announcement by Tesla Motors, stock speculators suggested that shares in Riviera Tool LLC would be a good purchase, given the company’s acquisition. Unfortunately, the same stock speculators issued the advice for the wrong company — Riviera Tool Co, not Riviera Tool LLC.
This incorrect advice caused the share price of Riviera Tool Co to rise from less than US$.01 to US$.22 and eventually peaking at US$.60 before the Financial Industry Regulatory Authority had to step in and stop trading on the shares.
Unfortunately for investors, Riviera Tool Co has no current connection or association with Riviera Tool LLC or Tesla Motors, making the shares effectively worthless.
Riviera Tool Co was originally purchased in 2007 and delisted from the stock exchange. It was then transformed into Riviera Tool LLC, which is the company that Tesla Motors bought. However, some shares remained on the share market as Riviera Tool Co, according to The Detroit Free Press.
Ironically, Tesla Motors plans to rename the company to Tesla Tool and Die in the not too distant future.