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Post# of 114953
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Distracted Scientist

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Distracted Scientist

Re: mosveldbaby post# 61549

Wednesday, 04/18/2007 9:07:55 PM

Wednesday, April 18, 2007 9:07:55 PM

Post# of 114953
This is only speculation, but Interactive Brokers may have sold a lot of shares that do not really exist (NSS).

The following two links will take you to different pages that list the stocks that they make available for short selling (a lot of which are penny stocks):

1. http://www.interactivebrokers.com/en/trading/shortableStocks.php?ib_entity=llc
2. http://www.interactivebrokers.com/en/trading/ViewShortableStocks.php?cntry=usa&tag=United%20Stat...

It has been widely speculated that some institutions like to bet against small companies that trade on the OTC:BB or Pink Sheets markets because they have a high rate of failure, and their stock prices generally decline. Also, if the company were to eventually dissolve, then the PPS would plummet; and if the company were to go bankrupt, then the institution would not have to cover their short position. For these reasons, there is a high likelyhood that massively shortselling a penny stock would mean money in the bank for these institutions.

Additionally, these institutions have been speculated to insure their positions through the following:

1. massively shortselling into any rise in the PPS, which would have the same effect as dilution, and would cause the PPS to either decrease or resist a further increase;
2. hiring people to bash the company on public message boards, so that they stir up emotions, raise doubt, and lead to frenzied sell-offs, as people attempt to save themselves from the irrational nature of an unwarranted decline in PPS (for an example, see: http://www.metnews.com/articles/2006/matr041906.htm ).

In order to make a profit and maintain the decreased PPS, an institution would have to short sell a lot of sub-penny shares. It would also be in the best interests of the broker who provided such services, to ensure that all of the shares that they putatively borrowed against, remain in circulation. Therefore, it is more than suspicious that Interactive Brokers will not relinquish your certificates.

One possibility is that they need to maintain all of the real shares that they own in order to cover any transactions that actually involve the DTCC. Otherwise, the inevitable FTDs would bring their behavior to the attention of the SEC.

Again, this is only speculation...
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