Anecdotal. That is the thing about transactions that fall within the sphere of private securities transactions. You get no transparency at all. (Which is why the idea of Reg SHO was silly to begin with and why the proposed amendments are sillier still.) So can I give you a third-party reference to the 90-95% number that I quoted? (Which, by the way, reflects a tiny portion of their business being geared towards the other activities I've described.) No. It's just my impression of what's taking place out there. Furthermore, I don't claim to have polled everyone out there who is playing around with private transactions.
The scenarios that I've outlined are not the same as non-recourse stock loans. I thought I had made that clear. However, some of the parties engaged in the non-recourse stock loan sector WILL let the right investors take leveraged positions in stocks that aren't margin eligible. And why not? It's good money. They might not do the same 90% LTV ratios in a nasty pink or an OTCBB that you'll see them offer to shares of more reputable companies, but they will certainly let a buyer do things that aren't possible with a registered broker/dealer.
Most of the bozos who get caught up in the sub-50 cent pennies don't have deep pockets and are obviously NOT candidates for contra positions to naked short selling. But if I catch a rumor that someone out there wants to dump a pile of money into one of these cesspools, I won't hesitate to try to get them a better deal than what they'll get on the open market in order to sit contra to my naked short.
"The penny stock investor may be the most dangerous creature in the investment world, at least to himself.[...]His hypocrisy becomes most apparent when he then blames his losses on the greed of others." Robert C. Dugan, Director - JRM Capital
AI
