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I'd read the 10-12G first before I came to that conclusion, if it really exists. Which I highly doubt.
The 10-12G is done? That's excellent news. When are you guys filing it?
Our capital markets are not a charity ward.
Unfortunately, as I mentioned in a previous post, BCIT was not on my radar when it was still publicly traded. I never got a chance to short it.
But if it had been on my radar, then yes, I definitely would have shorted it, naked if necessary, and I would have never intended to cover it. The short that never needs to be covered is our Holy Grail.
No. Anyone (if there is anyone out there) who successfully naked shorted BCIT made the right call.
I doubt you have the financial acumen to succeed as a short seller, naked or otherwise.
But if you're REALLY inclined to give it a try, read through the Securities Exchange Act of '34 VERY carefully and pay careful attention to the exempted entities, and exempted transactions, contained therein.
This is not something to be undertaken lightly. If you screw up with a compliance issue, even as an exempted entity, the consequences can be severe.
The entity I manage is not a registered broker/dealer.
You can print them all you want. Pass them to whoever you like. I've been in this industry for decades.
Wanna know where the best opportunity is right now for naked short sellers?
US Treasury securities.
Dig out this post in a couple of years, and maybe it'll make sense to you then.
Quite frequently, yes.
I'm not subject to Reg SHO, so it's not a violation for me.
Our markets are actually in pretty good shape, especially considering where we were three short years ago. This country underwent one of the most severe asset bubble collapses in its history. In early 2009, everything looked bleak. Some people were convinced that our banking sector was hopelessly and irretrievably lost. We're obviously not back to our pre-bubble levels, but the whole finance sector is in recovery mode now.
Our markets are a self-correcting mechanism. It was inevitable that the excesses in the real estate sector from 2004ish through 2007 were going to need to be wrung out at some point. The markets might not turn on a dime, and if you're an investor you have to have a certain amount of patience and intestinal fortitude to make it through a period like 2008-2009. But if you understand finance and invest responsibly, the "system" will handsomely reward you.
Probably not. I suspect that the fails to deliver in BCIT were an entirely innocuous event. But who knows for certain? Maybe there were some shrewd characters who managed to naked short it before the whole thing got shut down. If it had been on my radar screen back in the day, I certainly would've tried it.
First of all, there is no law against naked short selling. It is a procedural violation, if committed by a registered entity of an SRO. (Reg SHO applies in that case.) However, if you operate an entity that is exempt from registration, and your transactions meet certain requirements, then there is no prohibition against naked short selling.
"Longs" can drive up the price per share of a company at any time. What do you think a hostile takeover does? What do you think the Volkswagen-Porsche short squeeze was all about? If you have the capital and you're convinced that the market price of a company's stock is deeply discounted relative to its intrinsic value, there is nothing to stop you from taking that company private.
As for my own financial activities? I am driven to find discrepancies between a security's market value and its intrinsic value. Isn't the whole point of investing to increase one's "personal" financial gain? Surely you don't buy stocks with the intent to be charitable, do you?
There is no 10-12B or 10-12G for Bancorp International on the EDGAR site. That would be the first step he'll have to take to get registered again.
They're not "phantom shares" either, even though they do not play a dilutive role in a corporation's capital structure.
When I naked short a security, the entity on the other side of my trade (the "contra party") has a claim against me for the value of those shares, and I carry it on my books as a contingent liability that I frequently mark to the market. The position is real. It exists. And if I'm wrong in my analysis, the time may come where I have to close that position at a significant loss.
(And, yes, I have had several naked short positions over the years where I lost money.)
Not at all, if Megas really goes through all the steps to get the stock registered again.
But I doubt he will.
No, I'm quite serious. "Dilution" is a financial term that has a very specific meaning, and it is directly related to the number of shares authorized and outstanding. From a corporate finance perspective, "unauthorized" shares has no meaning.
Your fractional ownership in a corporation is determined solely by the number of shares issued and outstanding, and that number does not change when I naked short a stock. Only your management team can increase those numbers, and thereby dilute your holdings.
Absolutely not true. The number of shares issued and outstanding on a corporation's books is wholly unaffected by naked short selling. No dilution takes place when people short, or naked short, a stock.
Fair enough. However, at some point, you might want to consider the possibility that "principle", and making things right, is involved for those of us who do engage in naked short selling.
Won't be the first "naked short" case that got laughed out of court.
And it probably won't be the last.
If you're not waiting for BCIT to trade, then what exactly do you care? Is your idea of "investing" accumulating pretty pieces of paper?
The E*Trade case is unlikely to be repeated. That was a consequence of a paralegal who foolishly stipulated to the decision of a temp judge to settle the case. (Given that there was only $800 at stake, maybe E*Trade didn't care that much about it.)
Nobody is fighting hard to keep BCIT from trading again. Megas could get BCIT registered any time he wants. But he does have to follow the SEC's rules to do so.
We're not talking about cars. We're talking about securities, which are ultimately intangible.
If the security has value, or if the management of the company is busily creating value for shareholders, then investors needn't worry about "naked short sellers".
"Naked short sellers" are not a "cause". We're an "effect". When we see a company that's being wrecked from within, or when we recognize a security that is absurdly over-valued, we short it. And then wait for the fundamentals to play themselves out. We don't "harm" anyone. But if/when our analysis of a situation is correct, we make money.
If the security ends up being worthless, there's no reason to ever cover it.
That's goal of every decent short seller, "naked" or otherwise.
You can.
But it has no impact on the company itself.
Now if ever there was a man who ran his own company into the ground and then blamed "naked short sellers", it was Patrick Byrne.
You ever take a careful look at what he did to his company and investors?
There were no crimes committed "against" BCIT.
"Naked short selling" has no impact on a company's finances at the corporate level.
The SEC can't stop everyone from committing financial suicide.
There'd at least be a lot fewer stuck bagholders.
The ratios don't matter. There could have been two trillion shares of BCIT naked shorted with DTCC only holding 100 shares. The legality of naked short selling would not change.
I hate to break it to you, but naked short selling isn't illegal.
They didn't kill the company.
The company was extinguished from within.
Shorting a security that's overvalued, even "naked shorting" it, is the correct position to take when confronted with a stock like BCIT.
So you thought buying stock in a blank check company, with no meaningful assets, several hundred thousand dollars worth of debt, and an unknown (at the time) number of shares outstanding was a good idea?
What in the world were you thinking when you decided to buy?
Did your broker stop you from unloading your shares prior to the revocation?
Because I'm fascinated by the people who keep falling for these kinds of cons, Alan.
I'm unaware of any brokers who forced their customers to buy BCIT's worthless stock.
Oh, yeah. It's the sucker stock that keeps on giving.
I'm sure it would be a very entertaining read.
Would have been nice if he had filed them before the revocation.
I think the BCIT goofballs might give them a run for their money.
I think BCIT has bent over backwards in an attempt to provide an opportunity to remedy this travesty.
Then where were all their 10-Q's and 10-K's?