ERHC Energy Inc (ERHE)

[nordicroots]

Great summary Krom - here are some additional points in some light reading for those interesting in researching the issue a bit more:

"In 2010, the Commission adopted Rule 201 of Regulation SHO. Rule 201 restricts the price at which short sales may be effected when a stock has experienced significant downward price pressure. Rule 201 is designed to prevent short selling, including potentially manipulative or abusive short selling, from driving down further the price of a security that has already experienced a significant intra-day price decline, and to facilitate the ability of long sellers to sell first upon such a decline."

"Regulation SHO’s four general requirements are summarized below:..."

https://www.sec.gov/investor/pubs/regsho.htm

"CNS did not prevent FTDs and FTRs from increasing without limit and permitted some brokers to postpone delivery indefinitely. “The fact that there is no automatic mechanism preventing the substantial buildup of short positions at the clearing corporation and of fails to receive in brokerage firms carries the potential for serious problems, particularly in the event of crisis market conditions” (Pollack, 1986, p. 69)."

https://ftalphaville.ft.com/2016/06/06/2165019/when-fails-to-deliver-prompt-stock-market-under-performance/

What is 'Failure To Deliver'
"Failure to deliver refers to a situation where one or both of the counterparties in a transaction does not meet their obligation. The failure can be when the party with a long position does not have enough money to pay for the transaction. It can also be when a party with a short position does not own the underlying assets and so cannot make the delivery. Both equity and derivative markets can have a failure to deliver occurrence."

"Whenever a trade is made, both parties in the transaction are contractually obligated to transfer either cash or assets before the settlement date. Subsequently, if the transaction is not settled, one side of the transaction has failed to deliver. Failure to deliver can also occur if there is a technical problem in the settlement process carried out by the respective clearing house."

"Failure to deliver is critical when discussing naked short selling. When naked short selling occurs, an individual agrees to sell a stock that they borrow from their broker because they do not own it. Subsequently, the failure to deliver creates what are called "phantom shares" in the marketplace, which may dilute the price of the underlying stock. In other words, the buyer may own shares on paper which do not, in fact, exist."

https://www.investopedia.com/terms/f/failuretodeliver.asp


"Short sellers sell borrowed shares in hopes of profiting from declining prices. While short selling is legal, SEC rules require short sellers to locate shares to borrow before selling them short, and they must deliver the borrowed securities by a specified date. Market makers are excepted from the locate requirement when selling short in connection with bona-fide market making activities in the security for which the exception is claimed. Naked short selling occurs without having borrowed the securities to make delivery."

" As Jeffrey Wolfson stated in a recorded telephone conversation, “What I sell them is not guaranteed, it never gets delivered, it’s funny paper.” "

https://www.sec.gov/news/press-release/2012-2012-22htm