Unless a company and a lender contractually agree for the lender to not short against convertible notes it is lawful for lenders to do so.
I could not find any such covenants between any of the Promissory Noteholders and ECIG to not short against the convertible notes.
I used the language in the S-1 that was withdrawn to demonstrate ECIG's awareness that shorting CAN occur, whether it was to be by the Underwriters (since withdrawn) or to be assumed by anyone else, ie., the Promissory Noteholders.
Although it is circumstantial that shorting has occurred by the Promissory Noteholders since the November 18, 2014 10Q the protracted drop in ECIG's PPS from $1.70 on November 18, 2014 to current levels is overwhelming evidence that shorting against the convertible notes occurred, albeit still circumstantial, and it is lawful.
Historical volumes and prices since November 18,2014:
2015/01/09..24,601,751....0.0485
2015/01/08..47,660,210....0.0373
2015/01/07..31,543,752....0.060
2015/01/06..10,707,624....0.069
2015/01/05..27,933,345....0.070
2015/01/02...9,590,166....0.0860
2014/12/31..18,864,429....0.0870
2014/12/30..31,408,558....0.0889
2014/12/29..29,695,398....0.0945
2014/12/26..21,673,932....0.11
2014/12/23..32,524,994....0.0855
2014/12/22..19,831,153....0.12
2014/12/19..24,687,421....0.14
2014/12/18..20,075,417....0.0945
2014/12/17..22,882,115....0.093
2014/12/16..29,910,968....0.1105
2014/12/15..23,179,356....0.0581
2014/12/12..20,663,542....0.10
2014/12/11..14,027,961....0.20
2014/12/10...9,821,569....0.21
2014/12/09...2,819,017....0.16
2014/12/08...3,912,260....0.17
2014/12/05...4,671,721....0.17
2014/12/04...3,947,280....0.20
2014/12/03...3,878,505....0.2405
2014/12/02...5,969,620....0.2405
2014/12/01...1,758,149....0.34
2014/11/28.....637,966....0.6212
2014/11/26......99,943....0.92
2014/11/25.....157,505....0.99
2014/11/24.....324,979....0.98
2014/11/21.....290,931....1.27
2014/11/20.....112,859....1.50
2014/11/19......56,900....1.55
2014/11/18.....165,091....1.70
