Sphere 3D Corp. (ANY)

[donkschmonk]

Dear Lama, in regards to your question, in short (no pun intended) shares that were sold naked (as the CUSIP change will reveal) will be deemed “failed to deliver” on Nasdaq.

What it means: Leaving even a mildly significant naked short i.e. “failed to deliver” position (above 0.5% of outstanding shares, so in our case less than 175'000 naked short position), would place ANY on the Reg SHO list after five so called “failed settlement days”, making the short's life MUCH harder, and actually impossible to continue to play their manipulative naked short games, which is exactly the intent. They will not ANYmore be able to continue to freely sell shares they don’t own or have borrowed and have to settle their "failed to deliver"positions within 13 days. Basically, the regulation intends to fight shorts who aim to bring down a security by endlessly dumping shares that don’t exist thereby driving shareholders into panic.

Should somebody still go short on a security that is on the Reg Sho list (same holder or anybody else) then they have to buy back the shares on the same day before the close or their broker dealer will have to prove that they borrowed against the shares they went short (expensive and limited shares available), one of the two. Now, while some may be sad about the short not having to immediately cover (he das get 13 days after being on the list), it is very important to put ourselves in the short’s shoes. For very large naked short holders like we suspect in ANY to be exposed in that fashion in a low liquidity stock with no possibility to continue his practice is an absolutely damning and unattractive picture in terms of risk:

1) The shorts would basically become handicapped in their actions and be exposed to everybody… particularly short squeeze hunters!
2) Management might then also be tempted to light the fuse under their exposed and handicapped almighty with some good news..
3) "When a broker-dealer has a fail position in a "threshold security," and that fail position has persisted for 13 consecutive settlement days, the broker-dealer must take immediate steps to close-out the fail by purchasing securities of like kind and quantity. Even market makers that have such persistent fails in threshold securities must close-out their positions." (source SEC, link below)

Normally, stocks that will make it on the Reg Sho list are penny stocks, biotech stocks, Chinese stocks and some ETFs (that are so liquid that the shorts can get out anytime anyway, so no risk of getting squeezed in them). Naturally, should there be a large “failed to Deliver” position be uncovered in ANY by the CUSIP change (somebody here said “the count down” would take a few days to start following the CUSIP change (don’t know the source) as the countdown itself is five consecutive days), then ANY would stick out on that list quite strongly. Also, short squeeze players would be attracted, wishing to exploit the short’s confirmed large naked exposure, handicapped position and his obligation to over within 13 days..which is exactly why you see so very few stocks in which shorts’ take that immense risk of getting themselves on that list in a low liquidity stock…never mind in large numbers like we suspect..

As mentioned before, my understanding only, and only applies if indeed a legacy large short naked position is uncovered from our time at the lovely TSX...

Below are a few links that could help:

The SEC on Reg Sho:
https://www.sec.gov/spotlight/keyregshoissues.htm

List of Nasdaq tickers on list (notice only 7 Nasdaq stocks are on there (excluding the AM funds and ETFs for aforementioned reason)) showing that only very few shorts take the risk of being on there, and usually aim to get off asap anyway:
http://www.nasdaqtrader.com/trader.aspx?id=regshothreshold

Link to Failed to deliver chart supplied by Lama (notice the little spike in ANY.US (even when we were still on the TSX before announcement of completion of merger):
http://failstodeliver.com/default2.aspx