NorthWest Biotherapeutics Inc (NWBO)

[IkeEsq]

RE: reachjo

How does the SEC handle illegal shorting in terms of the company that was shorted? Are the criminals responsible to compensate the company for the damage they caused?

Not exactly my area, especially SEC administrative actions. However, 'criminals' suggests filing criminal charges and most such charges include restitution to the victim(s). However, is the shorted company a victim? Restitution is generally the compensation of a victim for provable losses or the forfeiture of illegally-obtained profits, which are seized by the government (if there are no victims to compensate).

The issue for the victim company is proving a loss their your shorted stock. If someone illegally depresses NWBO's stock from $1.50 to $0.75, first they need to prove that the 50% drop was a result of the defendant's actions. Then they have to quantify harm.

How is NWBO harmed by its stock selling at $.75 rather than $1.50? It is not good enough to say that it is obviously harmed, that is a conclusory statement. If they need to borrow money, the stock price could affect rates or terms. However, quantifying the effect can be very difficult. If they need to sell stock to raise capital, it is more obvious that they need to sell twice as much stock to get the same amount of money.

Alternately, if NWBO were seeking a buyout or joint venture, their share price could affect negotiations and the eventual amount of the sale/buy-in. But again, quantifying the actual effect could be very tricky.

Personally, I would not expect NWBO (or other shorted companies) to receive much if anything as a result of a criminal prosecution of short sellers, much less from an administrative action by the SEC.