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Yes the hedge funds know. The Market Makers short along with the hedge funds.
Very interesting. Do the hedge funds know that they are buying fails-to-deliver from the MMs or are these disguised somehow? And what would happen with the MMs if the market took a sudden dip and they are holding all these shorted puts? It seems like they are taking an awfully big risk.
Yes, the Market Makers sell puts to hedge funds and then sell an equivalent amount of shares of fails to delivers to the hedge funds. This why they are called married puts.
These fails to deliver are then used as bullets to drive the price down.
If the SEC or FINRA approaches the hedge fund and asks why they are selling fails to delivers, the hedge fund answers that they didn't know.
Is this true for OTC stocks too since no options are traded on them?
Married puts. This is how they hide the fails to deliver. The hedge funds are doing this.
I think there are still many naked shorts out there. The MMs are using at least three advantages to their benefit:
1. Flipping stocks - by selling and buying stocks repeatedly they can void their naked short reserve.
2. Shakedowns - dropping stock price to cause traders into selling cheap shares to them to cover naked shorts.
3. Time(2 benefits)
A. discourage traders with long periods of low PPS and causing them to sell and move on.
B. collect interest over time on the money received from selling short naked shares.
Its a big puzzle. There are many of us trying to figure out what is going on and how to stop this naked short selling. If you come up with anything, please share.
no covering yet why? what happened to all of the naked shortcovering from year 2000 to present?
Darn...all this after I figured out how to read them.
The quote below is information from Dr. Jim Decosta (if you google his name, you'll see he's deeply involved in many things about NSS in general)
Here is the URL:
http://www.finra.org/Industry/Regulation/RuleFilings/2010/P121892?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+FINRARuleFilings+(FINRA+Rule+Filings)
Quote:There’s 3 new laws gaining attention in the NSS market reform arena: FINRA 4320 goes into effect on 2/28/11. It mandates 13 day buy-ins for open delivery failures FINALLY applying to shares of non-reporting corporations. FINRA 2010-043, also starting on 2/28/11 reinstates the “short sale exempt” (SSE) marking requirements for trade reporting and the OATS system. Those MMs accessing the bona fide MM exemption from executing pre-borrows or “locates” before admittedly naked short sales must now FORMALLY acknowledge the accessing of that universally-abused exemption. Being that these trades are theoretically being made to “inject liquidity” then the excuse to hide the related trade data from the public’s eyes goes out the window. You can’t have it both ways and claim the bona fide MM exemption and later claim that the related trade data needs to be kept secret because it might reveal a “proprietary trading strategy”.
Truly bona fide MMs that are able to legally access that universally-abused exemption cover their naked short position on the next downtick after their short sale when buy side liquidity is in need of being ejected as share prices fall. The 3rd new rule which is in effect now states that the offers and bids that MMs post must be of approximately the same size. No longer can the offers be of 1 million shares and the offsetting bid good for the minimum 5,000 shares.
The verbiage in 4320 is especially well done as it FINALLY puts the clearing firms that aid and abet this crime wave on the spot. With the FFETF, which is made up of 25 different agencies, now on the scene the transparency has increased markedly. You can imagine how critical the lack of transparency is to a crime involving selling nonexistent securities and then refusing to ever deliver that which you sold AFTER being allowed access to the funds of the investor being defrauded.
Here are the links to the rules SR-FINRA-2010-028 and SR-FINRA-2010-043:
www.finra.org/Industry/Regulation/RuleFilings/2010/P121522
Notice the part I marked in bold in the quote above:
"FINRA 4320 goes into effect on 2/28/11. It mandates 13 day buy-ins for open delivery failures FINALLY applying to shares of non-reporting corporations."
--------------------------------------------------------------------------------
http://www.finra.org/Industry/Regulation/RuleFilings/2010/P121892?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+FINRARuleFilings+(FINRA+Rule+Filings)
your sources please, urls?? also
"The 3rd new rule which is in effect now states that the offers and bids that MMs post must be of approximately the same size. No longer can the offers be of 1 million shares and the offsetting bid good for the minimum 5,000 shares" so the cure is they show 5000 size each side which doesn't show any transparency at all. could be millions but show 5000 on most cellar boxed wonders triple zip stocks
Sorry, I think you're on the wrong board. I could answer that question but I don't want to enable.
is there any online broker that lets your short stocks under 1.00? iv contacted sogotrade they told me not under 5.00 iv contacted think or swim they told me not under 1.00 so is there any broker you can?
FINRA new laws are effective Feb, 28th so let's hope there is some covering to do here and that pinks across the board get some justice:
There’s 3 new laws gaining attention in the NSS market reform arena: FINRA 4320 goes into effect on 2/28/11. It mandates 13 day buy-ins for open delivery failures FINALLY applying to shares of non-reporting corporations. FINRA 2010-043, also starting on 2/28/11 reinstates the “short sale exempt” (SSE) marking requirements for trade reporting and the OATS system. Those MMs accessing the bona fide MM exemption from executing pre-borrows or “locates” before admittedly naked short sales must now FORMALLY acknowledge the accessing of that universally-abused exemption. Being that these trades are theoretically being made to “inject liquidity” then the excuse to hide the related trade data from the public’s eyes goes out the window. You can’t have it both ways and claim the bona fide MM exemption and later claim that the related trade data needs to be kept secret because it might reveal a “proprietary trading strategy”.
Truly bona fide MMs that are able to legally access that universally-abused exemption cover their naked short position on the next downtick after their short sale when buy side liquidity is in need of being ejected as share prices fall. The 3rd new rule which is in effect now states that the offers and bids that MMs post must be of approximately the same size. No longer can the offers be of 1 million shares and the offsetting bid good for the minimum 5,000 shares.
The verbiage in 4320 is especially well done as it FINALLY puts the clearing firms that aid and abet this crime wave on the spot. With the FFETF, which is made up of 25 different agencies, now on the scene the transparency has increased markedly. You can imagine how critical the lack of transparency is to a crime involving selling nonexistent securities and then refusing to ever deliver that which you sold AFTER being allowed access to the funds of the investor being defrauded
Wondering about this part:
Gee, is there a version of those regs that comes with a concordance?
Don't need a red letter version, just a concordance.
I was trying to wade through some of that today. Thanks for the summary.
Have you seen the three new changes to the laws regarding naked short selling?
The quote below is information from Dr. Jim Decosta (if you google his name, you'll see he's deeply involved in many things about NSS in general)
Quote:There’s 3 new laws gaining attention in the NSS market reform arena: FINRA 4320 goes into effect on 2/28/11. It mandates 13 day buy-ins for open delivery failures FINALLY applying to shares of non-reporting corporations. FINRA 2010-043, also starting on 2/28/11 reinstates the “short sale exempt” (SSE) marking requirements for trade reporting and the OATS system. Those MMs accessing the bona fide MM exemption from executing pre-borrows or “locates” before admittedly naked short sales must now FORMALLY acknowledge the accessing of that universally-abused exemption. Being that these trades are theoretically being made to “inject liquidity” then the excuse to hide the related trade data from the public’s eyes goes out the window. You can’t have it both ways and claim the bona fide MM exemption and later claim that the related trade data needs to be kept secret because it might reveal a “proprietary trading strategy”.
Truly bona fide MMs that are able to legally access that universally-abused exemption cover their naked short position on the next downtick after their short sale when buy side liquidity is in need of being ejected as share prices fall. The 3rd new rule which is in effect now states that the offers and bids that MMs post must be of approximately the same size. No longer can the offers be of 1 million shares and the offsetting bid good for the minimum 5,000 shares.
The verbiage in 4320 is especially well done as it FINALLY puts the clearing firms that aid and abet this crime wave on the spot. With the FFETF, which is made up of 25 different agencies, now on the scene the transparency has increased markedly. You can imagine how critical the lack of transparency is to a crime involving selling nonexistent securities and then refusing to ever deliver that which you sold AFTER being allowed access to the funds of the investor being defrauded.
Here are the links to the rules SR-FINRA-2010-028 and SR-FINRA-2010-043:
http://www.finra.org/Industry/Regulation/RuleFilings/2010/P121522
http://www.finra.org/Industry/Regulation/RuleFilings/2010/P121892?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+FINRARuleFilings+(FINRA+Rule+Filings)
Notice the part I marked in bold in the quote above:
"FINRA 4320 goes into effect on 2/28/11. It mandates 13 day buy-ins for open delivery failures FINALLY applying to shares of non-reporting corporations."
The real price of Naked short selling:
http://www.deepcapture.com/michael-milken-60000-deaths-and-the-story-of-dendreon-chapter-1-of-15/
This post is in memory of my father, who died of prostate cancer on December 26, 2006. This naked short selling event kept a drug that could have helped him off the market.
While the SEC has passed a lot of rules to supposedly deal with the problems, they have totally blown it when it comes to dealing with incoming complaints, so the real incidence of NSS is probably way underestimated.
Here is a SEC memo about internal audit of how NSS complaints are handled by the SEC - they admit there is reason for concern and they admit that they have blown it:
http://www.sec-oig.gov/reports/AuditsInspections/2009/450.pdf
I have not been able to find out if these problems have been corrected.
How To Fight Naked Short Selling:
http://investorprotectioncoalition.org/Corpdefenses.html
Defensive Actions For Companies And Share Holders
When naked short sellers strike and manipulate your stock price and attack your company, the most
important step is to decide to do something quickly and defend your interests - avoid doing nothing.
1. Stand up and Defend Your Reputation, Employees, Customers, Securities and Investors
It seems only too logical that when you are attacked, that you defend yourself. Unfortunately, the vast
majority of executives and their board of directors decide to do nothing. Perhaps it is because they do not
fully understand how the markets work and how the manipulators can do what they do - that's our hunch.
Most executives are honest hard working people and think that if they just run their business correctly, that
the financial results will speak for themselves and that the securities markets will respond accordingly.
Even the SEC and their staff don't seem to understand that by being complacent, they are allowing the
short sellers to run amok. Jim Cramer put it fairly well in this short article. Since the regulators won't help
you, you need to help yourself.
Those who have targeted you and attack your shares love a complacent attitude, because it makes it
easier for them to tear down their targets, without resistance and thus succeed in reaching their goal. It's
also true that these manipulators usually know far more about the securities markets than the executives
of the companies they are attacking. The manipulators also have the advantage in that they know what
they intend to do in advance, while the executives do not know what's coming.
The executives, because they usually do not fully understand these manipulation schemes in the
securities markets do not take the threat to their companies as seriously as they should. Not only can
rumors and false or misleading reports cause great damage to their reputations and increase the cost and
access to capital, but they can overwhelmed buyers by manipulating and creating selling pressure with the
leverage that short sellers can bring to bear, especially via settlement failures.
Not only are the funds that are brought to bear in attacks usually very large, oftentimes even larger than
the market cap of the attacked issuers themselves, but they can get away with violating rules that are in
place to protect investors and issuers because they know certain important ones will not be enforced. Most
important are the violations to the settlement rules. By violating settlement rules and creating
settlement failures, the manipulators can force the price downward at will. Regulators simply will not
enforce these rules. That's just the way it is.
See the section in this Website as to the rules on the books that are not being enforced. The most
important thing to know is that the attackers can sell unlimited amounts of your securities without delivering
them or having them on hand, borrowed or located. While this is happening, there is almost nothing you
can do to stop it. But you can respond after the attacks have started.
It seems to us that those issuers that do nothing are almost always plowed under by the manipulators or
are oftentimes permanently damaged. Those that prominently stand up and at least try to do something
seem to have a better chance. The most vocal of the issuers under obvious attack, Overstock.com, has
been able to claw its way back and stabilize its share price. We suggest issuers that are under attack by
illegal short sellers, that is any issuers that are on the REG SHO threshold list or otherwise have evidence
that their shares are being manipulated by short sellers, learn from the past actions of other issuers who
have defended themselves and been through this already.
So what can issuers do? You can file a lawsuit and go straight to number #6 below, and also do one or
several of the following:
2. Publicly Expose The Price Manipulation
The best thing you can do as soon as possible, is to bring this out into the public light and publicly expose
and explain what is really happening. Otherwise the short sellers and their agents will frame the mystifying
market activity in a way that is beneficial to them and harmful to you. This is a battle for your survival,
make no mistake. Do not underestimate the resources, craftiness, patience and determination that will be
deployed against you. They will be considerable.
Bringing the battle out into the public light makes things more difficult for the illegal manipulators for
several reasons and forces them to expend more resources. And not only can you pacify customers,
employees and investors by dragging this out into the open, but you show you are aware of the issue and
are acting to protect them.
PR Release
A first response may be a simple PR that says that you have become aware that there are "fails to deliver"
and possibly "fails to receive" securities distorting the market in your securities harming you, your
employees and investors and that you will be looking into the matter and taking appropriate action to clear
out the market in your securities of these illegal and harmful securities.
Depending on how detailed you want your response to be, you can end it there or continue by stating that
you will do all possible to ensure that, in the market for your securities, the delivery of securities sold
occurs per the mandatory settlement date delivery requirement in the settlement cycle rule, 15c6-1 and
that you will do all possible to ensure that state corporate and state securities laws are not violated. You
can state that recent activity and data indicate that the market in your securities is being distorted and
manipulated by violating federal and/or state laws. Do not use the term T+3.
3. File Lawsuits Against Those Releasing False Reports
If there are any false reports being released about your company, which you think is deliberate and
harmful to you, do not hesitate to sue those responsible immediately. The sources can be analysts,
brokerage firms and TV or print journalists. Check with legal counsel on how to proceed. If you doubt that
journalists and analysts are in cahoots with illegal short sellers, please see the names named at
Deepcapture.com in the articles written there showing the hard proof and connections. Please also see
the Fairfax lawsuit, that reads more like a novel and also the Overstock lawsuit against an analyst firm
releasing false information in cahoots with a hedge fund - Rocker Partners.
4. File Complaints With Regulators
File official complaints with the SEC, FINRA, the CBOE (if options are traded on your security) and
whatever exchange SRO your shares trade on, signaling that the settlement date delivery
requirement in 15c6-1 is being violated in the market of your securities by someone and ask that the
violators be identified and punished and 15c6-1 be enforced. Don't take the explanation that REG SHO
regulates "fails", when 15c6-1 already makes them all illegal. Settlement failures are never legal. In
addition to violating rule 15c6-1, mention that as a consequence of violating the settlement rule 15c6-1,
the rules below are also being violated:
1. Section 9 of the Securities Exchange Act of 1934, prohibition on appearance of trades
2. SEC Rule 15c3-3, the customer protection rule
3. Section 17A of the 1934 SEA, accurate settlement and clearing
4. Section 6(b)(5) of the Securities Exchange Act of 1934, prohibition on discrimination against investors
and issuers
5. UCC 8-501 Securities Accounts
Keep riding these federal authorities as they'll delay and make false promises to you. Later it will be shown
that you exhausted your options through the authorities. If it takes longer than they promise to do and
finish an investigation or otherwise lie to you, call the Inspector General of the SEC, the Department of
Justice and your political representatives about possible illegal personal behaviour that is harming you and
the failures to enforce settlement laws, allowing the manipulation of securities.
You should also contact and file a complaint with your state securities regulator and NASAA, claiming that
state securities laws are being violated regarding the manipulation, delivery and misleading statements,
etc....regarding your securities. Cite the violation to UCC section 8-501 (see UCC analysis),
5. Demand Securities in Certificate Form
Skip this step and go to the next if you do not have confidence that the majority of your shareholders can
act in a concerted and coordinated fashion.
Do not even try to smoke out the illegal short sellers with things like paying out cash or non cash
dividends, trying to register all beneficial owners, etc.....why? Because those exercises, while interesting
and may yield some useful information, generally is a waste of resources and time.
One strategy that could be very effective is a so called certificate pull. That is if all or at least a large
percentage of investors in your security simultaneously demand that the securities you have issued and
that they have purchased through brokers be delivered to them in physical form by their brokers. This
should only be considered if you are confident that you can communicate with a very large percentage of
the share holders and that all are on the same page and that you can all act as one to the end.
This is mandatory, because there will be several steps that all will have to cooperate with to make this
strategy effective. All share holders will need to act as one. When it becomes obvious that the brokers can
not deliver the physical certificates in the numbers that they should to all share holders, a lawsuit in state
court needs to be filed by those not receiving physical certificates. The others who did receive physical
certificates would need to disclose to the plaintiffs the numbers of certificates they did receive, so an
aggregate tally can be kept and shown as proof. If your security is a pink sheet or otherwise a non NMS
security, proving wrongdoing is even easier as none of these types of securities are permitted to be lent
out per REG T of the FED. The short interest should be zero and there should not be any "fails to receive"
or "securities entitlements" reflecting unsettled securities or IOUs of any kind.
Plaintiffs
Those not receiving their securities in physical form
Defendants
The brokers of the above, who do not or can not deliver the securities in physical form
Cause of Action
The violation of state laws and the UCC that control the form of securities and that confer on all investors
the right to demand their securities in physical form. Brokers can not deny this right, even if
customer/brokerage account agreement explicitly say they are not entitled to physical certificates.
We suggest that the number of plaintiffs be less than class action size in order to allow the lawsuit to
remain in state court, as all class actions regarding securities are automatically moved to federal courts. A
lawsuit filed to compel delivery of physical certificates should be filed in conjunction with a second separate
lawsuit in state court that includes you the issuer as plaintiff alleging violations to state laws and seeking
damages. See below.
But you may want to consider and discuss with legal counsel if you want to include all damaged
shareholders in the lawsuits, making this a class action lawsuit after all. The disadvantage is that the
process is slower and gets heard in federal court, even if the causes of action are state laws. This decision
should be a strategic one.
6. Strongly Recommended Lawsuit in State Court
Any issuer or share holder groups can go directly to this step as a first action of defense and skip the
others above. Ultimately, this fourth and last step is mandatory if you really wish to wipe out the "fails" and
price manipulation from the market in your securities. It is very powerful and the legal trail has already
been blazed for you by others. Please feel free to email us to discuss, coordinate and assist you in any of
this.
What not to do
As background, it is important to understand, that suing the SEC and SROs is a waste of time, because
they have legal immunity to a great extent and that is not a promising path. However, state laws have just
as strong an effect on securities and in protecting investors and issuers as the federal laws and rules do.
The U.S. Congress explicitly left certain areas of securities regulation to the states. Since on the federal
level, the SEC and SROs are apparently deliberately not enforcing federal laws and rules and are coming
to the aid of defendants in federal lawsuits via testimony and Amicus Briefs, we should side step that arena
entirely and apply state laws to the violators.
What to do - sue the broker-dealers
Novastar share holders and Overstock.com the corporation, have blazed the trail already, creating
case law along the way by suing the prime brokers. All you really have to do is file a copy cat lawsuit in
California state court to get you to discovery. The Novastar shareholders filed their case first in 2006 and
Overstock.com followed a bit later with a basically identical lawsuit. Both have now been consolidated into
one as the nature, course of action and the defendants are identical in both cases. These lawsuits were
filed in California state court with California state laws as causes of action. A copy of the original filing can
be downloaded here: Novastar Shareholder filing
The Defendants moved the case to federal courts, but were not successful in keeping it there as the
federal court remanded the case back to the California state court : Case back to Ca State Court. The
defendants then petitioned the California Supreme court, which also ruled against them in denying to
review the case: Novastar Answer to Petition Request. The petition for review, that the defendants
requested, was denied by the California Supreme Court on 4/30/2008, paving the way for discovery to
begin, which is now ongoing. As of 4/17/2009 the claims under Code § 25400 have survived all challenges
by the defendants.
If the cases are filed in California, you can claim violations of the:
California Corporations Code § 25400, and (2) unfair business practices in violation of California Business
& Professions Code § 17200 and §17500.
In addition, you can claim violations to the California Blue Sky laws governing Delivery § 8301, those
governing securities accounts § 8501, obtaining and maintaining the contracted securities § 8504, false
statements § 25401 and those addressing manipulation § 25216
Nakedshorting of commodities, (silver contracts, by JP Morgan)
will affect far more than the metals-markets.
sen ted kaufman had a plan that apparently
the sec *couldn't* embrace .. <gee i wonder why>
anyhow here is one of kaufman's many comments on
the subject of *shorting*/counterfeit NSS with
imo a brilliantly simple solution that should
should appeal to everyone .. except the crooks who've
corrupted the system in place
the interview imo is well worth the time to watch and learn
sadly kaufman was not running for re-election
but folks can still contact their respective congress
persons and senators and pass this clip along to them
at some point in time *most* figure the bs out .. whether
their still have a soul or a conscience is another matter
----
TED KAUFMAN/CNBC/NSS
--
4kids
all jmo
It is a bummer what you told me about the reverse split. So shares were continually sold while you were waiting to get your shares? Were they sold by the company or naked short sellers?
The SEC are in essence accomplices to this crime of naked short selling. I don't think there is any other way but to attack the SEC directly. Suing the short sellers directly is just a band aid for one company, but doesn't solve the problem.
That would get tied up in litigation for years and years unless you had a large enough group with deep pockets and blood hungry attorneys....I just recieved notice that a stock I own went through a large r/s, was unable to trade it for weeks but the company was selling shares, now my holdings are worth .60 and my brokerage firm is charging me $19.99 for the transaction of the r/s, this all after a letter confirmed NO R/S would happen in 2010, followed by the split less than 5 days after that letter......Now you tell me how the SEC lets these f'rs keep selling their securities to the retail??? Legalized robbery enforced by the SEC......
Sue the government, perhaps the SEC
Unfortunately our Govt. is too big and IMO is part of the damn problem. I believe in free market but not a single elected official has the balls to step up and put regulations in place that protect the retail investor. What do you suggest as a step towards taking affirmative action??
We need to get the word out about this crime of NNS that steals from the public with impunity.
The problem is, so many investors don't want to admit their stock is under NNS because they are afraid it will cause a panic sell.
But the truth can get the investors to band together and find a way to fight this insidious crime in some way or other.
EIGH will die a slow death on the greys. The SEC has spoken loud and clear. Suspension,greys,civil/criminal charges are the next stop.
Just discovered this board and I must say, Bravo to the person/persons who created it! Don't you just love how the govt. makes theft legal??
wormwood, maybe the bolsheviks 666banksters -
kings of destruction -
and their gov. allow illegal nss -
want the People to get nothing -
more than gulags of tent cities and
fema camps? -
we do need to see different views -
than only elitez 666media brainwashing bs -
Yes that would be sweet.
Or even earlier before Christmas. What a gift that would be!
Hopefully we'll have it all sorted out by years end.
There was some good news on EIGH today. This is about to get very interesting.
nice to see this board active again
marked
--
here are 2 recent articles imo worth the read
(take note of this term *expert networks*)
what i like is even the financial talking heads
can't even *ignore* this anymore
U.S. in Vast Insider Trading Probe
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=56941211
Goldman In Insider Trading Probe?
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=56954115
both links courtesy of alanc
--
4kids
all jmo
Completely agree with this post.
NYbob: Please excuse me sir but I didn't get the AG. I do get the other part wholeheadedly.I COR.15:1-4 plus nothing.
it would take a lot of Ag bullets
to make a difference -
a better solution is our trust
in God -
http://www.888c.com
God Bless
Do you truly believe Frank will make a difference? Look at his record.Look at the housing market.
Naked short selling can be fought. Never give in to criminals.
Let me know if you need assistance.
Excellent Post!!! Thanks for the info.
lol
http://www.stopfraud.gov/news/news-12092009-02.html
II. Recent Accomplishments and Initiatives
The Division of Enforcement has long combatted fraud in the financial markets, and our recent efforts continue this record. Although case statistics cannot tell the whole story, and I caution against placing undue emphasis on them, they are one indicator of the Division's accomplishments. This past fiscal year, the SEC:
Brought 664 enforcement actions;
Ordered wrongdoers to disgorge $2.09 billion in ill-gotten gains (an increase of 170% compared to $774 million in fiscal 2008);
Ordered wrongdoers to pay penalties of $345 million (an increase of 35% compared to $256 million in fiscal 2008);
Sought 71 emergency temporary restraining orders to halt ongoing misconduct and prevent further investor harm (an increase of 82% compared to 39 in fiscal 2008);
Sought 82 asset freezes to preserve assets for the benefit of investors (an increase of 78% compared to 46 in fiscal 2008); and
Issued 496 orders opening formal investigations (an increase of over 100% compared to 233 in fiscal 2008).
Since January, we already have filed more than twice as many emergency temporary restraining orders in all cases across the board, as compared to the same period last year. In addition, where possible and appropriate, we return funds directly to harmed investors. Overall, since the 2002 passage of the Sarbanes-Oxley Act, the SEC has returned approximately $6.6 billion to injured investors.1
The Basher's Handbook
Reprinted here as a service to those who doubt this actually exists, or is simply an unfounded urban legend.
Is the "Bashing" of a stock an essential part of the online investment landscape?
Our Constitution guarantees us free speech and we have always valued the lessons gleaned from dissent. When does dissent cross over that imaginary line and become "Bashing"? To often we find well grounded dissent capriciously labeled as "Bashing" by over zealous investors bent on protecting a stocks reputation at any cost. The "Bashing" that is addressed on this site is quite different from dissent. The Anatomy of a Basher strives to look at the calculated erosion of confidence in a given stock. Erosion by means that are, in every sense, void of truth, hinged on deception and innuendo, and motivated by greed at the expense of others. This compendium is offered to aid in identifying the telltale signs of "Bashing", and hopefully provide a counter balance to this heretofore unchecked manipulation of investors fears for personal gain.
IS IT EASIER TO SCARE PEOPLE INTO SELLING THAN IT IS TO SCARE PEOPLE INTO BUYING A STOCK? I have asked some knowledgeable investors this question and the answer is always: "YES, OF COURSE YES!"
WHO BASHERS PREY UPON
Consider the elderly that are investing for retirement, they find their way to the message boards for validation only to see false posts about "SEC Violations" and "Class action suits"... or the head of a "typical growing family", with children to put through college, who is monitoring a message board only to read posts by a "pack of 15 to 20 Bashers" (probably 5 or 6 under various alias's) posting continuous disinformation... what do you think these new investors will do? It's safer to not buy or even sell the stock, put the money back in the bank than to deal with all this whirl wind of "unsupported" negative chaff.
The Internet has lured a whole new class of investor into the market. A new investor is just that - New! This new investor, while learning the basics, is particularly vulnerable to the tactics of professional Bashers. New investors tend to lurk in the background of message boards, content to form independent opinions based on what they read with their own eyes. Very often, honest, intelligent and cautious people can easily be overcome by a well orchestrated propaganda effort.
You must always remember that their is a lot of money to be made in just the motion of a stock UP or DOWN it doesn't matter! And Bashers have money at risk just as you do. But they have the edge of fear, lies, and falsehoods to post while preying on the un-initiated. The average investor dose not have the edge of organized deception.
Recent revelations have indicated that even Market Makers (those charged with keeping the playing field level) have been involved in stock manipulation by Bashing on a stock message board. HAVE NO DOUBT THAT THIS IS A REAL THREAT!
Lesson 1: Remember, BASHERS NEVER Bash A BAD STOCK. Check the boards for stocks with no potential. They never have any Bashers. Bashers only go after stocks that are moving up or have excellent potential to do so. Bashers work to bring the price down to either increase their position at the expense of others or help a Short make their bones.
Lesson 2: BASHERS ALWAYS BRING UP OLD NEWS THAT YOU HAVE HEARD MANY TIMES. New startup companies always have a few bits of bad news. The Basher will post this over and over again. Unsophisticated Bashers will try to freshen up old news with a new date or by-line in an attempt to fool you.
Lesson 3: BASHERS POST MANY TIMES A DAY. They try to wear you out. They comment on everything, every other post, and can answer every question. THEY KNOW IT ALL! There is no positive comment they won't Bash. They try to control the board. True longs may have to confront the Bashers or they will appear to the newbies as being the people with all the information. This is best accomplished by posting positive, well researched data on the company, repetitively, while trying hard not to engage the Bashers in direct repartee. REMEMBER - LONGS... RESIST USING THE BASHERS ALIAS!
Lesson 4: BASHERS WILL LIE TO YOUR FACE. Never trust a Basher. The truth on startup companies is that they make mistakes. What new company hasn't? The Basher will compare your issue to a another companies, financials - deals - management, etc., trying to lure you into making an Apples to Oranges comparison. Remember each company is unique and while it is prudent to seek out established indicators, do so with care and don't take someone else's word for it. Strive to come up with at least a "six-pack" of indicators so your vision of the state of a company is not tied to a single barometer. Not doing so is tantamount to going to a Race Track and betting on the "Pretty Brown Horsey". BASHERS WANT TO WHISPER IN YOUR EAR - PLANT A SEED OF DOUBT, AND HOPE THAT YOU ARE NOT SAVVY ENOUGH TO RESEARCH THE TRUTH ON YOUR OWN. This is how they achieve their greatest success.
DOUBT + FEAR + LAZINESS = BAIL OUT!
This is your investment... work for it, protect it and don't panic on the words of very shadowy figure that "has your best interest in their heart". Consider that one factor: Someone you have never met, is not a member of your family, is now, out of the goodness of their hearts - GIVING YOU FREE ADVICE (that you didn't ask for). It's a no brainer. They have motives $$$$$$$$$$$$.
Lesson 5: Bashers know YOU CAN'T VERIFY THEIR STATEMENTS. That's why they make the vague statements they do. They rely on you being to lazy to research their droppings other than to scan the board for others opinions. This is particularly dangerous when you consider that Bashers work in packs and often validate and back up each others nonsense with what appears to be "innocuous and unsolicited" verification by comrade Bashers. Let's face it, we are all conditioned to "believe" everything we see in writing. If others by virtue of their "posts" also confirm this belief, then we are subconsciously doomed to swallow the hook, line and sinker... Basher - 1 Honest Investor - 0
Lesson 6: The Bashers PLAY ON YOUR LACK OF KNOWLEDGE. They can lie about information and you won't know the difference (unless you have done your own DD on the company and know the truth and facts).
Lesson 7: Bashers play on your lack of patience. You have held a stock for a while. You knew it will be a big stock someday, but the BASHER CAN GET TO YOU BECAUSE YOU ARE TIRED OF WAITING FOR YOUR GAIN. That's when the Basher is best. You are tired. You have forgotten the goal for the stock was to hold it for one year. The Basher is bothersome, so you dump it on a bad day. Some others also dump. Then you get mad for your loss and return to let everyone know how mad you are. Then you turn into a semi-Basher as well. THE BASHER HAS WON, AND GAINED A NEW ALLY - YOU!
Lesson 8: BRING THE PRICE DOWN. That is the Basher's job. The truth is not important. Lies are the norm. Post continuously on the board every day. They are trying to scare the newbies that are just investigating a stock. They are trying to wear down the faithful longs on the board and gain free reign and control.
A BASHER HANDBOOK:
Do not underestimate a Bashers influence on a stock. The Pro's are good at what they do and what they do is profit from your losses. Below is their "hand-book". Learn from it or you will be donating your hard earned money to them!
Rules for Successful Bashing:
1. Be anonymous
2. Use 10% fact. 90% suggestion. The facts will lend credibility to your suggestions.
3. Let others help you learn about the stock. Build rapport and a
support base before initiating your Bashing routine.
4. Enter w/ humor and reply to all who reply to you.
5. Use multiple ISP's, handles and aliases.
6. Use two (2) or more aliases to simulate a discussion.
7. Do not start with an all out slam of the stock. Build softly.
8. Identify your foes (Longs) and the boards "guru" Use them to
your advantage. Lead them do not follow their lead.
9. Only Bash until the tide/momentum turns. Let doubt carry it the
rest of the way.
10. Give the appearance of being open minded.
11. Be bold in your statements. People follow strength.
12. Write headlines in caps with catchy statements.
13. Pour it on as your position gains momentum. Not your personality.
14. Don't worry about being labeled a "Basher". Newbies won't
know your history.
15. When identified put up a brief fight, then back off. Return in an hour unless your foe is a weak in reasoning powers.
16. Your goal is to limit the momentum of the run. Not to tank the
company or create a plunge in the stock; be subtle and consistent.
17. Kill the dreams of profits, not the company or the stock.
18. Use questions to create critical thinking. Statements to
reinforce facts.
19. DO NOT LIE, NAME CALL or USE PROFANITY.
20. Encourage people to call the company. 99% won't. They'll take your word for claims made. If they do call you can always find something that is inaccurate in how they report their findings.
21. Discourage people from believing Press Releases.
Encourage them to call the company. They won't out of laziness.
22. If the companies history/PR's are negative constantly point to that. Compile a list of this data prior to beginning your efforts.
23. If the price rises blame it on the hype or the PR, temporary
mass reaction, the market, etc. Anything but the stock itself.
24. If other posters share your concerns, play on that and share theirs too.
25. Always cite low volume, even when it's not.
26. Three or four aliases can dominate a board and wear down the longs.
27. Bait the Longs into personal debates putting their
focus/efforts on you and not the stock or facts. Divert their attention from facts.
28. Promote other stocks that would-be investors can turn to
instead of the one your Bashing.
30. Do not fall for challenges on the "values" of what you are doing, it's a game and you are playing it with your own rules.
Grade 'A' Basher:
If you post lots of old news, respond to all positive posts with a negative side. Never respond to being called a Basher, never post on another board with same alias. Can spend up to 80 hours a week Bashing a stock.
Grade 'B' Basher:
Very good way with words, always claims to be your "friend" taking the positive poster into confidence, never posts on another board, spends about 60 hours a week.
Grade 'C' Basher:
Spends less time than the others but is somewhat effective and gets a C grade due to getting excited when Bashers rules say not to get excited, spends about 40 hours a week.
Grade 'D' Basher:
Needs to learn the basics about being convincing when making a negative statement. Spends a good amount of time working the stock, maybe 20 hours a week.
Grade 'F' Basher:
A complete idiot, most readers are not convinced he knows anything about stocks in general. The type that says a stock "sucks", but gives no rationale, shows up every so often but no regular schedule.
LEARN ABOUT HOW BASHERS WORK: For instance: did you know that some Bashers are paid?
Golden Rule:
IGNORE THEM ...learn how professional Bashers are paid: When you REPLY to Bashers you give them an opportunity to earn appox. 5-7 dollars. The service agreement they enter into with their employer states their messages will be monitored for content, profanity, lies, etc. but Overseers and the like don't have the time to check all their Bashers messages. Only occasional spot checks are done. Those who manage the Basher will generally read the headlines to see if a Basher is replying to other posters by name. That tells them the Basher isn't just "posting blindly" or repeating the same message over and over since they won't pay for those.(True to form a Basher will put the bite on anyone, even their unscrupulous employer). A Basher will attempt to milk three to five replies per post at one to two dollars each. This way the Basher spreads negative influence to as many stockholders as possible. A Basher will create this discussion thread because it takes less time reading more messages than is necessary. This ultimately allows the Basher more time to post and make money. In general, NEVER ENGAGE A BASHER. Make them read all the posts and think up ways to enter the discussion. NEVER ENGAGE A BASHER; if you do so then YOU BECOME THE BASHER,S AID! If you feel compelled to challenge a Basher do so without mentioning his/her true alias in your response. This will make it hard for the Basher to use your post as a revenue stream. Read the news, do your own homework and make your own decisions. Get real time quotes and follow the stock for a couple of weeks. Due Diligence is key here. Know that there will be a time when the stock runs up which will be followed followed by the Bashers and those that missed the boat. The Bashers will trash the stock by saying such things as "it's a Pump and Dump" and "the company is lying" and deceiving. There goal is to scare off newbies and potential new investors by "shaking" you out of your shares. Take the time to confirm your DD ,trust your own judgement and believe in yourself, pick your point of return or loss and live with it. Don't listen to hype or Bashers trust your own judgement. Live by the rules you have created .
HOW TO IDENTIFY A BASHER
1. Check the "Born on Date" Bashers create identities on a regular basis. Rarely do you find a Basher with older "Created On" date. So click on the Identity icon for more details.
2. Take the time to look at the Basher's history of Posts. Go to other boards and see if their is a pattern to the theme of the posts. Bashers rarely waste time trying to blend in with "positive" posts, unless they are cultivating a new uninformed assistant.
3. When did the Basher show up. Bashers rarely show up when activity is in at a Lull. They show up when activity up/down..
4. Bashers never answer direct questions except with another question.
5. Bashers do work in teams (sometimes themselves as a team). So be suspicious of someone showing up and automatically having a Shadow to converse with who supports their argument.
6. Bashers always select "an argument" that can never be resolved by research.
The Basher 'Pack' Mentality
Bashers love to work in packs. It provides the quintessential cover to achieve supposedly "independent" validation of an argument. It is neither independent nor validating.
Pack Structure: Basher Packs can be comprised of any number of Bashers. They can be purposely formed within an organization or they can be "ad hoc" formed during a conclave on a particular board. In fact a pack mentality can be achieved by an ambitious "party of one" with a few select aliases.
Once a pack is formed, a leader emerges. This leader is usually acknowledged by other Bashers because of 1. Knowledge of the stock. or 2. Recognition by current board Longs (high visibility). Once established the Leader will usually work the Pack members up in to a posting frenzy. Constantly changing themes and even occasionally biting the ear of another pack member (this earns instant credibility), and it doesn't offend the bitten Basher because he/she knows it is all part of the effect. Quite sophisticated.
Packs will disband and slink away without notice. Usually this is the call of the Pack Leader who is adept at recognizing overplay. More often than not, Pack members must move on because they have other Bashing commitments to fulfill. They will return to the site of a good hunt over and over again, until hamstringing is achieved.
What calls a pack together. The Cry of the Leader. Certain Bashers love to work together. They know each others bite, how to feign in and out, it is a well choreographed Bash when pack members have worked together before. They constantly check their "Sites Du Jour" for signs of Pack activity. Occasionally they will throw out a "Nibbler" Bash to see if the pack responds or if not they can work the site themselves. It's all about effectiveness, time and earning money.
< BEWARE OF THE PACK >
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