Shorts Exposed

[ThePennyGuru]

The shorting of OTCBB/OTC stocks due diligence:

The OTCBB/OTC markets do not allow US Citizens to short these stocks: That leaves only Market Makers and off shore Hedge funds the ability to short these stocks.

Link for checking daily short volumes on Finra's regsho tracking site:

http://regsho.finra.org/regsho-Index.html

This data first became available to the public last Thursday as best I can tell.

Link for tracking monthly Market Maker volume for each stock:

http://www.otcbb.com/dynamic/tradeact.htm


Link to the OTCBB Bi- Monthly short interest report:

http://www.otcbb.com/asp/OTCE_Short_Interest.asp

Based on daily shorts volume, you would think that many short positions will last for an extended time. By looking at the Bi-weekly report, you see that most of the shorts have covered. This tells us that the short and covering is done every day. This is called shorting and covering for profit.

Link for tracking Knight Securities(NITE) monthly volume on every stock:

http://www.otcbb.com/asp/tradeact_mv.asp?SearchBy=mp&Issue=nite&SortBy=volume&Month=12-1-2009&IMAGE1.x=11&IMAGE1.y=10

As you can see Knight Securities(NITE) owns 80% of the OTCBB/OTC market
They traded 102 billion shares in the month of December.

Knight Securities (NITE) most recent 10k-

http://yahoo.brand.edgar-online.com/DisplayFiling.aspx?dcn=0001193125-09-042277

Excerpts from Knight’s(NITE) 10k:

The majority of our Global Markets revenue is derived from trade executions, making markets and providing market access services in U.S. equities. Generally, market-makers display the prices at which they are willing to bid, meaning buy, or offer, meaning sell, securities and adjust their bid and offer prices in response to the forces of supply and demand for each security. As a market-maker operating in Nasdaq, the over-the-counter (“OTC”) market for New York Stock Exchange (“NYSE”), NYSE Alternext and NYSE Arca listed securities, the OTC Bulletin Board, and the Pink Sheets, we provide trade executions by offering to buy securities from, or sell securities to, institutions and broker-dealers. When acting as principal, we commit our own capital and derive revenues from the difference between the price paid when securities are bought and the price received when those securities are sold. We conduct the vast majority of market making activity as principal, through the use of automated quantitative models. Our traders offer execution services for complex trades and a variety of order types. We also provide trade executions for institutions on an agency or riskless principal basis, generating commissions or commission equivalents, respectively. Also, our trading strategy employs the use of high velocity algorithmic trading models which interact with street flow.

Net trading revenue 43.2 %


Net trading revenue (millions) 446.7



As you can see Knight Securities(NITE) derives 43.2% of their net revenue or 446 million dollars trading stock.

There has been continued scrutiny of market-makers, specialists and hedge funds by the regulatory and legislative authorities. New legislation or modifications to existing regulations and rules could occur in the future and could materially impact the Company’s revenues and profitability. For example, in November 2008, FINRA enacted rules regarding the OTC Bulletin Board markets which required that all non-Nasdaq securities be subject to limit order protection. Also, further amendments to Regulation SHO and related short sale rules, could make it much more difficult for market makers to sell securities short.


Knight Securities(NITE) trading as a principal and not as a market maker would have to physically locate the shares of over 2500 companies that they short daily. That would require over half their manpower daily on the phones making calls to borrow shares. There is no way this is being done



Employees

At December 31, 2008, our headcount was 1,045 full-time employees, compared to 868 full-time employees at December 31, 2007. The increase in headcount is primarily related to the acquisitions of Knight Libertas and EdgeTrade, as well as the overall expansion of our Global Markets offerings in 2008. Of our 1,045 full-time employees at December 31, 2008, 924 were employed in the U.S. and 121

I would venture to say that Knight(NITE) is using their Market Maker exemption and lack of need to locate shares and are actually naked shorting and covering daily to make money and a lot of it.

A check of Knight Securities(NITE) from Finra’s site:

http://brokercheck.finra.org/Support/ReportViewer.aspx?FirmCRD=38599

As anyone can see, there are numerous violations for illegal trading practices.

In summation- Knight Securites has used it's market maker exemption to illegally short the entire OTCBB/OTC market for profit. They have destroyed 1000"s of startup companies for profit. In a time when 10% of the US is unemployed how can we let this happen?