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Bad advice buddy. First of all, the maximum percentage one can make from shorting any stock is 100%. Maximun percentage for going long is infiniti. Just look at paiv 1500% in three weeks.
Second, If you sell restricted shares to a third party and those shares end up in the U.S. market before they vest, both you and the third party could be liable according to some stringent SEC rules. Of course since the SEC won't be able to locate the third party because of jurisdiction issues, then you could be liable for all the fines on your own. Do not mess with the Securities Exchange Commission (SEC). They made these rules for a reason. If you invest in any stock using proceed from the sale of restricted share certificate, then you need to make sure you have lots of $$$ to pay for possible fines. Ask Martha Stewart what it feels like to interfere with market forces (even with her millions)
I have taken several business law classes and I believe my opinion on this issue is close to accurate.
Pejani, this is what I think it means. When shares are short sold, these shares have to be bought back because they were borrowed form a brokerage. When shorts buy back these shares, they would have to buy them at the already high price. shorts make money only if the stock keeps going down from the day they sold, but if the Price goes up beyond their selling price the higher price they pay it be considered a loss because they can only make money when it stays lower the price they sold it at. Now, if shorts cannot afford to buy these stocks within the specified period, them the broker is required to buy them back on their behalf. The broker would then cash out the entire portfolio (does not matter what kind of stocks they have) of the short seller in order to recover the money that the broker spend to buy back the borrowed share. Now, if the short sellers do not have any other stocks for the broker to buy the shorted shares, the brokerage will have to spend its own money and assume that it will never get back that money from the defaulting short seller. Thus, broker takes the loss. Of course you know what happens if a creditor cannot collect from you. They report to the credit bureau and thus ruin your credit. Either way, someone has to buy those billions of shares, either the short sellers or the brokerage. Even though these shares were really not borrowed in the normal manner for short selling, but were supposed to be tagged as restricted, which the broker was responsible for, but did not, I think the sellers would have a strong case infront of the SEC and force the Brokerage to buy these shares, thus a loss for the broker.
Emulwa, can you please explain to me the following sentence of the article:
"There is no official indication whether TD Ameritrade will repurchase potentially billions of shorted shares on their own, or force their customers to bear the brunt of the loss. With primary blame for this incident not yet assigned, it's anyone's guess."
Are they saying that it is possible that the customers would not receive their shares and loose those shares? Can you please clarify this?
Fireman. This is for you
http://www.investorshub.com/boards/read_msg.asp?message_id=12082069
SHARES OUTSTANDING ACCORDING TO YAHOO IS CLOSE TO WHAT PAIV SAID THEY HAVE
Shares Outstanding: 43.59M
Float: 27.06M
http://finance.yahoo.com/q/ks?s=PAIV.OB
PAIV "Phantom Shares" Debacle Unresolved
UPDATE (July 14, 2006): The following previously published article is presented as background information on the continuing situation involving PAIV, which skyrocketed 990% May 23 - 24 on initial news of a potential short position involving possibly billions of shares. Following the initial May rally, PAIV settled into a horizontal trading pattern until June 29, when Paivis issued an update on the situation. As of July 14, PAIV has posted gains as high as 920% ($0.005 to $0.051).
May 25, 2006 1:30 PM
(By InfinitiStocks.com) There is still no official word from TD Ameritrade or Paivis, Corp (OTCBB: PAIV) on the potential squeeze play of the year, involving "phantom" shares, million dollar margin calls, and locked trading accounts. On Wednesday, InfinitiStocks.com contacted both TD Ameritrade and Paivis for a statement. To date we have not received a reply from either firm. Telephone hold time at Ameritrade's Reorganization and Safekeeping department ranges up to an hour for investors calling in to inquire about their account status.
Ghost Shares?
Last week, shares of unknown origin were delivered as part of a merger/tender offer to former JPHC shareholders holding accounts with TD Ameritrade, a popular online brokerage firm. However, Paivis news on Monday clearly states, "The Merger Shares...have not been allocated to the Jupiter shareholders of record." The press release continues, "Merger Shares have not been physically received by Depository Trust Company." Reports are that major online brokerage firms including Charles Shwab, Scottrade, Fidelity, and others, have not yet issued JPHC merger shares to their own customers.
Panic Sell Off Sparks 990% Rebound
Nonetheless, alleged merger shares that (according to TD Ameritrade) did not bear the restricted legend began appearing in JPHC shareholders' Ameritrade accounts late last week. Investors who contacted AT claim they were informed via telephone and email that their new shares of PAIV were unrestricted and freely tradable. The result was a panic sell off last Friday as some investors began to sell, and more joined in to avoid the near-total loss. The flood of new PAIV shares caused the price to tumble 90%, to $0.0011. Monday the stock rebounded in a big way, and by Wednesday reached an intra day high of $0.0012 - a whopping 990% above last Friday's close. At the time of this writing, PAIV is trading approximately 450% above Friday's level, yet still substantially lower than before the sell off. While day traders and short term speculators have cashed in on this week's rally, we can't help but wonder what existing PAIV shareholders are thinking as they see their own investment ravaged by such powerful market forces.
Restricted vs. Unrestricted
Obviously something is terribly amiss. Paivis stated quite clearly in official filings that the merger shares would be unregistered, and the press release reads, "These Merger Shares to be received by the Jupiter Shareholders are restricted securities as defined by Rule 144." Yet according to TD Ameritrade last week, the shares they issued to their own customers did not bear the restricted legend, and thus were eligible for trade. Ameritrade customer correspondence submitted to InfinitiStocks.com admits, "These new shares were to be restricted. However, Ameritrade allowed clients to trade the security unrestricted on Friday 5/19/2006 and Monday 5/22/2006." The correspondence also reads, "Former holders of Jupiter Global Holding who have sold PAIV will have a short position that may need to be bought back." Unofficially, word from Paivis is that these shares should not have been allowed to trade.
Buy-in Possible, Blame Not Yet Assigned
The net effect appears to be a sizeable uncovered short position. Paivis claims there are just 56.5 million PAIV shares outstanding, yet total trading volume since last Friday stands at almost three billion shares. Many Ameritrade customers who sold the (admittedly) unrestricted stock issued to them by their broker awoke this morning to find their account locked, a negative balance, with one customer reporting a margin maintenance call of over $1,000,000. That's certainly a hefty penalty for selling a stock that currently trades under a penny per share. The question remains: in this extremely unusual situation, who will be required to repurchase the shares? Today, Ameritrade is informing investors who call that no decision has been made pertaining to a buy-in. Further, if a forced buy-in is required, "investors will be notified." There is no official indication whether TD Ameritrade will repurchase potentially billions of shorted shares on their own, or force their customers to bear the brunt of the loss. With primary blame for this incident not yet assigned, it's anyone's guess.
InfinitiStocks will continue to monitor and report new developments as they occur. Retail investors with written correspondence from their brokers that helps explain this unusual situation are invited to forward it to us at: team-infiniti@infinitistocks.com. Any personal information will remain confidential.
InfinitiStocks.com Copyright © 2006
Have you all read this?
http://www.infinitistocks.com/index-main.htm
Update on short Squeeze
On June 29, InfinitiStocks reaffirmed a Short Squeeze Alert for PAIV (originally posted May 23), pending Friday's market reaction to a physical share exchange announced by Paivis Corp June 29. According to Executive Registrar & Transfer, authorized merger shares are not expected to be delivered for several weeks, providing some confirmation that the hundreds of millions of "phantom shares" distributed to (and subsequently sold by) Ameritrade customers in May 2006 were not issued by Paivis Corp. To date, no other brokerage has issued merger shares to their own customers. Infiniti further notes the float for PAIV is approximately 57M shares.
http://www.infinitistocks.com/index-main.htm
Thia one is juicy
http://www.infinitistocks.com/index-main.htm
I agree with you totally. I think the brokerages are trying to shake off some investors and make them sell so that the shorts can cover without liquidating their portfolio. Incase the shorts do not have enough on their porfolio too cover their positions, then the brokerages have to do it and take the losses, something they are not willing to do, but they are in for a big surprise. I am not selling nomatter what. I 2600% to buy a new house and my wife has been bugging me for a new car, plus I want to keep up with the Johns.
This baby is taking off 1 hour before close. Keep an eye on it as well as the volume. Something sweet is happening.
Something is going on. The volume has never been this low in months. 9 million shares trades today would mathematically indicate that all these are sells. Which makes me believe that someone out there is trying to hold this stock down so that the shorts can cover their positions an a lower price. Otherwise, if they freed this stock and let it trade as normal, then the price would rocket and the brokers would loose a lot of money by covering when the shorts default on their margin accounts. If this is a short squeeze then the buys would ne more than the sells.
Could it be the brokers working from the inside?
Was anyone able to get his/her order filled today?
Hey 1millionfl. I saw the 1,000,000K. That makes an ASK of 1,000,000,000 Shares. Assuming no one sells on monday morning, 178% UP on monday morning as we stand. But, my question to you is, how do you tell on the indicator whether those shares are ASK or BID?
A regulatory addition by the Securities & Exchange Commission, expanding and updating the restrictions placed on short sale transactions. The updated regulations came into effect on Jan 3, 2005 and help to address several key issues in the short sale market.
One of the primary goals of Regulation SHO is to address potential abuses in the practice of naked short selling, which is the act of short selling without actually confirming that shares have been borrowed. The regulation addresses this issue by including two main short sale requirements: the "locate" and "close-out" requirements. The locate requirement is placed on broker-dealers to reasonably assure that there are in fact shares to borrow to be short sold. The close-out requirement is also placed on broker-dealers to close out positions in securities if the position has failed to be delivered or returned for an extended period.
http://www.investopedia.com/terms/r/regulationsho.asp
By the way, substituting PAIV for MSFT in the previous post, Short-Interest Ratio for PAIV could be 12 days assuming all the numbers posted by serfdom are correct.
Short-Interest Ratio = shares shorted to date/shares outstanding
802,000,000/56,000,000 = 12 days
Serfdom might be right on the numbers. If all these numbers are right, then I see 1.05 in less than a month. Remember that if the shorts don’t cover their positions, then the brokerage firm liquidates the borrower’s portfolio so as to get its money back.
http://www.investopedia.com/
That's where I got my material for short seller's refresher course that is posted below. http://www.investopedia.com/ is a good tool for new investors. If you are not sure what a word means, this tool will break it down for you and even walk you through with examples and threads that are related to that particular topic.
Refresher course for short sellers
With the way PAIV rebounded on Friday from 35% DOWN to end at 13%, I am loading up some more PAIV because is believe that the stock might open above .0. 5, and also because I believe the company is turning around. And if all these shorts sellers are covering their positions from short selling in may, then this stock will be a rocket. They say that so many people have become millionaires just from investing in pennystocks and I hope I will be one of them through PAIV.
Short Squeeze - If a stock starts to rise rapidly, the trend may continue to escalate because the short sellers will likely want out. For example, say a stock rises 15% in one day, those with short positions may be forced to liquidate and cover their position by purchasing the stock. If enough short sellers buy back the stock, the price is pushed even higher.
Short-Interest Ratio
The short-interest ratio is the number of shares sold short (short interest) divided by average daily volume. This is often called the "days-to-cover ratio" because it tells, given the stock's average trading volume, how many days it will take short sellers to cover their positions if positive news about the company lifts the price.
Let's assume Microsoft has a short interest of 75 million shares, while the average daily volume of shares traded is 70 million. Doing a quick and easy calculation (75,000,000/70,000,000) we find that it would take 1.07 days for all of the short sellers to cover their positions. The higher the ratio, the longer it will take to buy back the borrowed shares - an important factor upon which traders or investors decide whether to take a short position. Typically, if the days to cover stretch past eight or more days, covering a short position could prove difficult.
If you have a margin account and your equity level has fallen below the firm's maintenance margin requirements, then the brokerage has every right to sell your securities without contacting you or obtaining your permission. Most often, firms are not required to give you a margin call, so if they give one, they are doing so as a customer service gesture. The actions you can expect from your brokerage are spelled out in the margin account agreement that you signed upon opening the account. To ensure it receives the money you borrowed, the brokerage will sell your account's securities regardless of whether you lose money on the trades - the broker may not necessarily use a strict method when picking the stocks to sell out of your account. Instead the stocks that are sold to cover the entire deficit in the equity level may, for example, be picked in alphabetical order. To top it all off, upon selling your securities, your broker may even charge you a full commission for the transaction.
Hey serfdom. I always do my research before a invest in a company. I have been tracking PAIV since May and have sources to back up what I posted. Here they are.
http://finance.yahoo.com/q/is?s=PAIV.OB
http://today.reuters.com/stocks/QuoteCompanyNewsArticle.aspx?view=PR&symbol=PAIV&storyID=244...
http://biz.yahoo.com/iw/060629/0140620.html
http://biz.yahoo.com/e/060629/paiv.ob8-k.html
I'll bet you that this stock will hit $5 by November. Assume this new guy improves revenues by 50% like he did in one of his previous companies he worked for. Remember that last month PAIV sold the medical unit that had a lot of contigent liability law suits i.e. PAIV can now operate without fear of legal suits that would have taken away from the revenues. Since I strongly believe that PAIV is slowly buying back its shares and all the employees and insiders and their families are buying millions of PAIV shares to their portfolio, the price would PAIV will be up 200% in another week. Then the strong earnings will drive the stock to another 500% gains in August. By this time, the sideliners will start cominf in and the stock will be up 200% a month after earnings and 175% by the time we hit another strong earnigns beginning of November and the stock skyrockets to $5. Buy this time, the company would be having better fundamental in ratios and operations, thus bringing in institutional investors and possible coverage by analysts. YES, buy the time youor restricted stock are freed in a couple of years, this stock could be $20/share.
Here is what happened on Friday when PAIV closed down only 13%. IMO, in the last two weeks, the company has been gradually and quietly buying back its shares so that it can improve its EPS with an expected positive net income this coming quarter, and with a goal of being listed in the NASDAQ or AMEX. If you look at the charts, the volume was about 10million shares 3 weeks ago and the price per share was stabilized at $0.005. Suddenly, the volume started averaging 50million share per day with gradual appreciation of the price. If you look closely, these purchases have been happening at about 9AM and at 1PM. Now, the volume doubled on Thurday the 13th, meaning that some weird investor sold his house to buy PAIV. Good idea, but this person or people should have bought in small chunks for several days so as not to drive the price that high within a day. However, it was hard for limit orders to be filled by brokers on thur afternoon because there was a long queue of buys and that's why some peoples could not buy limits at the market price. I believe PAIV paused on Friday morning from buying because the price was a bit high. Notice the volume on Friday was 56million instead of 108million shares for Thurday. Meaning that the greedy people sold off. I believe the company came in on Friday 10 minutes before the market closed and put their orders. This brought PAIV back from the 35% down to close at 13% down. I believe there is a long queue now of buy orders waiting to be filled on Monday and there will not be any sellers but buyers. Stay with PAIV and enjoy the sweet ride to $1. For those with restricted shares, the consolation is that this company has turned around and in 2 years time, you will all be millionaires. I personally like Scottrade because their commissions are the lowest and they have physical offices where you can walk in, deposit your check, and trade the following day at noon. As for Ameritrade and others, by the time your check is mailed and credited to your account, it would be about 7 day and therefore missing out.
Here is my hypothesis as to why the PAIV was up over 750% in the past 2 weeks.
1. PAIV announced that it was turning the company around with new strategic plans and with the goal of being listed in the NASDAQ or AMEX. To be listed in the NASDAQ, a company must be trading above $1.
2. The company hired new qualified management with excellent track record. Follow the link to see how qualified these guys are
http://biz.yahoo.com/e/060629/paiv.ob8-k.html
3. IMO, I believe PAIV has been quietly buying back its shares in order to achieve its objectives. We all know that PAIV made its first profits ever this past quarter and hopefully will come out with record earnings this coming quarter. EPS=earnings/shares outstanding. Therefore, if the company buys back most of the outstanding shares and they come out with positive net income this quarter, then, attractive EPS and PE ratios would bring the price per share to over $1, thus meeting one of NASDAQ's requirements.
4. There are millions of stocks restricted for 2 years as a result of the recent merger and therefore these millions of restricted shares cannot be sold in the open market until the restriction is lifted in about 2 years. This gives PAIV the ability to continue buying all the possible shares in order to achieve its goals and objectives to be listed either in the NASDAQ or AMEX.