Innovation Pharmaceuticals Inc (IPIX)

[loanranger]

Can someone explain to me why "Naked shorts have to cover when the CUSIP # changes", as has been stated by several individuals here?

A naked short is created when an entity executes a short sale without borrowing the shares. It would seem that there wouldn't be any need to replace borrowed shares ("cover") when none were borrowed.
A broker knowingly executing a naked short sale is as culpable as the entity placing the order, if not more so....based on the requirement to locate the shares to be borrowed.

If someone can explain why Naked shorts have to cover when the CUSIP # changes maybe they could also simultaneously explain why Naked shorts have to cover under ANY circumstances.

I'm hoping the explanation can be expressed clearly and without the use of any links.


It has been suggested that the fact that there are apparently no naked short beneficiaries in this company was exposed by the lack of significant buying (presumably to cover) at the time of the name/Cusip changes. It seems to me that the same lack of significant buying could have occurred as a result of the failure of the theory that "Naked shorts have to cover when the CUSIP # changes", so I hope someone can explain the mechanics of the theory.