CMKM Diamonds Inc (fka CMKX)

[jb1967lbk]

You can do this in Canada OR the United States, and the non-recourse stock loan facility is but one way to approach a naked short position.

In the United States, AND in Canada, you can, if you abide by a number of restrictions, engage in private securities transactions. These have become especially attractive in the United States not just for naked short sellers, but also for buyers hoping to avoid Reg T requirements.

Let me give you an example:

Reg T requires an initial 50% margin for eligible securities purchased in a margin account.

Suppose you were a buyer and you wished to take a $1 million in, oh, say, OVERSTOCK! (no giggling, people), but you only had $250,000 to secure the position.

Obviously, this position could not be taken in a traditional margin account with a registered broker/dealer.

Enter the naked short seller who, in a private securities transaction, can accomodate this buyer, legally, with any set of conditions to which the parties may agree.

There are as many different ways to construct a private securities transaction as there are investors with needs that can't be met within the current regime of securities regulation. But once you take it private, it is possible, it is legal, in the US, and in Canada, too.

Now, again, just the for the sake of an old argument...

You have discovered that my private investment house is naked short a billion shares of CMKM Diamonds.

So WHAT?