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Far too many. Any company that is not current with their filings should, at the very least, be suspended from trading. And if the delinquency is not remedied in a reasonable amount of time, certainly no more than three months, then they, too, should be revoked.
The presence of other delinquent filers in our markets does not in any way excuse Megas from his responsibilities to his shareholders to make timely financial filings with the SEC.
Indeed. Over a ten+ year period, BCIT filed exactly two out of their forty-two required filings on a timely basis:
http://www.sec.gov/litigation/admin/2009/34-60920.pdf
No, he never did bring them current. If he had, the stock would not have been revoked.
Here is their filing history:
http://sec.gov/cgi-bin/browse-edgar?company=energy+source&match=&CIK=&filenum=&State=&Country=&SIC=&owner=exclude&Find=Find+Companies&action=getcompany
When were they last current? How many times during their history were their filings made on time?
By not staying current with his filing requirements, he has effectively walked away.
Are you saying that naked short sellers played a role in the way BCIT's financials appear? How would you make that argument?
Are you saying that, somehow, naked short sellers are the reason BCIT only had $495 worth of total assets at the end of 2007?
What portion of BCIT's $425K in expenses from '06 and '07 do you attribute to naked short sellers?
Did naked short sellers prevent Megas from staying current with his filing obligations? If so, how did they do that?
Yes, BCIT was definitely damaged. If you understood how to read a set of financials, you'd know exactly who did the damage.
Ultimately, if you're going to allege in a court of law that you've been damaged by someone's failure to deliver something to you, then the value of what hasn't been delivered must be taken into consideration by a jury.
Valuations, at the corporate level, always and without exception come back to the financials. And any reasonable juror (which would obviously exclude you), confronted with the reality of BCIT's finances, is going to rightfully conclude that the "damages" suffered by anyone who didn't get their BCIT certificate is zero.
Although, if you're lucky, maybe you could get them to consider TRIPLE damages! Yeah! That's the ticket!
I'm sure that the jury would look at the last set of financials BCIT submitted and unanimously agree: "zero".
No, there is no central database for worthlessness. Sometimes it just comes down to common sense.
Eventually, there will be no more "paper" stock certificates. That day can't come soon enough, as this idea of buying a stock in order to get a certificate has been an integral tool for so many pump and dump jobs.
Once it's worthless? Yes. Forever.
Now some people have misinterpreted this to mean that capital gains taxes aren't paid on naked short positions that never close. However, that's not the case. Once a security is deemed worthless, for a naked short seller, that's a taxable event. If you're naked short derivatives with an expiration date and those derivatives expire worthless, then you recognize that gain on the date of expiration. If you're naked short a stock that goes bankrupt and the plan of reorganization stipulates that the old equity is to be cancelled upon emergence from bankruptcy, then you recognize the gains on your naked short position on the day the plan of reorganization becomes effective.
Naked short sellers aren't walking away from their tax liabilities just because they never have to cover if they've found a worthless security to naked short.
If the security in question expires, gets cancelled, or otherwise ends up worthless, then there is no need to cover a naked short.
Bottom line? There is NO bottom line at BCIT. It was a blank check company that's been revoked.
Nobody puts anything of value inside a revoked, worthless entity.
Of course I've heard of shell companies. I know exactly what they are: remnants. And the only reason shells have value these days is because it's significantly more difficult to throw together a blank check company to rip off a bunch of gullible investors. (In fact, if FINRA determines that a new registrant is nothing more than a "blank check" company, in many instances now they won't issue a symbol for it.) The reverse merger into a shell is a classic pump and dump play.
There is no prohibition against naked short selling a security that has value, and sometimes that's worthwhile strategy as well. For instance, if you spot a company that's trading around $40 that you've determined isn't worth much more than $5, then naked shorting that security is a smart move. Obviously, finding the worthless securities to short are the most fun and the most profitable, but riding a short from $40 to $5 is nothing to be ashamed of either.
A rational investor would look at a company with no operations, no revenue, total assets of $495 in cash, and a half a million dollars worth of debt and rightfully conclude that the stock was worthless.
I find plenty of other worthless securities to naked short, especially in the derivatives pits.
For the record, I have not naked shorted BCIT. Finding eligible contra-parties for such blatant pump and dump jobs as BCIT and CMKM is virtually impossible.
HOWEVER, if I HAD been able to line up a contra-party for such a feat? Yeah, I would've naked shorted BCIT in a heart beat.
There are still plenty of other worthless securities I've managed to naked short in the past, especially amongst the mortgage originators back '07 and '08. But that was before most people realized they were all gonna die.
Why do you keep buying into worthless stocks?
Very few brokers, especially in this market, want to be wasting time on worthless, revoked securities. If you've tapped out your account buying into a bunch of worthless pump and dump jobs, it shouldn't surprise you that no one wants to talk to you. Time is money, and the brokerage community at large doesn't want to waste theirs servicing dead-end accounts.
Probably because they have no interest in wasting time or money messing around with a worthless, revoked stock.
Unless there's a 10-12G in your "tasty juicy bits of dirt", you and your friends will just be spinning your wheels.
Of course. Most of them are fluent when it comes to securities laws and regulations.
Then what is BCIT's SEC File Number?
You can't tell me BCIT is still a publicly registered company and then point to an SEC File Number for an entity that is revoked.
And I seriously doubt the SEC, or anyone else, is gong to go along with your nit-picking game about the revocation. Call your entity what you want. Energy Source... BCIT... the name doesn't matter. The entity was not compliant with their filing requirements. The entity is revoked.
Not everyone at the SEC has been suckered into the naked short seller scam.
Except there was no "distort".
There are no rewards to be earned for throwing your money away on fundamentally worthless stocks.
Pump and dumps are not a good thing to have occur in our securities markets.
The Administrative Proceeding pretty much speaks for itself:
http://www.sec.gov/litigation/admin/2009/34-60920.pdf
If Megas had stayed current, there would have been no revocation.
The only people who think naked short selling is "criminal" are those people who don't know the law.
Our nation's securities markets are not a charity ward. And for that matter, we don't permit worthless companies to go public. That's the whole point of requiring companies that wish to go public file a 10-12G before their shares can trade.
Naked short sellers are only "guaranteed" to make money if their read on a company is correct. If you naked short a company where your take on their fundamentals are wrong, and they end up making money when you expect them to go broke, then you will pay dearly for your mistake.
Every now and then, I do wonder if naked short selling will continue to be as profitable in the future as it has been in the past. Surely investors will smarten up some day and stop buying into worthless pump and dumps, right? But all I have to do is visit a handful of boards here on iHub to get affirmation that there are still plenty of investors who don't know how to do even basic financial due diligence. And so long as there are enough of them, naked short selling will be a profitable endeavor.
Legal precedents seldom get overturned, Alan. Flawed verdicts get appealed and then, occasionally, overturned.
The Sullivan & Long v. Scattered Corp case was taken to the Seventh Circuit of the U.S. Court of appeals. And the case was upheld.
You don't need a rule to permit an act. Rules, regulations, and laws in general address prohibitions, not rights.
I have posted several links in the past that established the legal precedent behind naked short selling, but every time I do, someone mysteriously deletes them.
If you REALLY want to do the research though go read up the case law surrounding Scattered Corp and LTV. Every issue that's come up recently on this board about the legalities of naked short selling, and naked short selling in quantity, and naked short selling with no intention of ever covering the position, are addressed in that decision.
There is nothing fraudulent about naked shorting a worthless security. It is, and will always be, the correct position to take when confronted with such a security.
Their last filing was for the period that ended December 31, 2007.
http://sec.gov/Archives/edgar/data/1076779/000114420408020290/0001144204-08-020290-index.htm
Revoking a stock doesn't help the suckers that bought into the pump and dump any more than stopping a chain letter scam helps the people who got suckered into it early on. But it does prevent future suckers from being ripped off in both cases. With BCIT revoked, there will be no more new BCIT bagholders.
The revocation was predicated solely on BCIT's failure to file. There were no other mitigating factors.
The SEC did play by the rules. They caught a company that was years behind with their filings and they revoked the stock.
No cover is necessary when a security is worthless.
And yet, at no point, did you ever come to suspect that wasting your money on a non-reporting pump and dump was a bad idea?
Naked shorting a worthless security is always justified, regardless of the volume in question.
I look forward to seeing how you intend to get around the 10-12G requirement for getting BCIT shares publicly traded again. (It's alright. I know that's not possible.)
The name of the company itself doesn't really matter at this point. BCIT is no longer attached to an SEC File Number of a publicly registered company.
Either get public with a 10-12G or accept that the game is up.
Naked short sellers might point out those companies that are delinquent with their filings, but they're not the ones who are causing these companies to be delinquents.
To the extent that naked short sellers are helping clear the garbage out of our markets, it would actually be good public policy on the part of the SEC to just let them do their jobs.
Yes, I am. Cox is a politician and a bureaucrat, not a financier or for that matter, a particularly smart man. And if you read anything analytical about his bans on naked short selling of the financials back in 2008, you'll find that his policies actually exacerbated the problem and made things worse.
If a naked short seller is correct about his or her assessment of a company, then obviously they're not going to have to cover. But it's not the naked short seller that's causing these hideous companies to get their stocks revoked.
The difference between "counterfeiting" and naked short selling is that in the case of the "counterfeiter", they are attempting to pass off some form of a device that closes out their liability to their contra-party, thereby walking away from any potential future liabilities they might have.
A naked short seller makes no such fraudulent attempt to close out his or her naked short position. They will keep the position on their books, recognizing it as a contingent liability, until the position is closed out or the security is deemed worthless. But at no point does a naked short seller attempt to fraudulently walk away from what they might need to buy back in the future the way that a "counterfeiter" does.
It is alleged that BCIT was counterfeited by Pino. Whether Pino actually counterfeited BCIT shares is still a matter of debate, given that he was an employee of BCIT at the time and under the supervision of Megas. The outcome of the civil case between BCIT and Pino makes that allegation all the more questionable.
There is nothing abusive, or fraudulent, about naked short selling.
As for the two sections of the code you've cited, those refer specifically to securities counterfeiting, not naked short selling. The two activities are completely unrelated.
If you need to learn more about securities counterfeiting, visit http://www.secic.com/