Chiugray,
I've never shorted a stock, but at the current price I've got to believe that most who are short would currently have a profit. The problem they face is if they wanted to acquire all the stock they're short, the stock would rise dramatically and they'd lose their gains. Clearly they don't want to do that, but I would think that they're bashing, to keep the price down, but buying to close their short positions, whether they can fully close the position, or not, I would think they're trying to get out of it. If the MM's are truly a big part of those shorts, which I believe could be the case, they would essentially purchase shares from investors looking to sell and diminish their short position.
Individual investors shorting will face the demand to clear their short position is they reach a point where their position is seriously under water, I don't believe the same is true of the MM's, they'll certainly have losses on the books, but they're not forced to buy to eliminate them. If they have gains on other stocks they've treated similarly they may not have a loss at all, just not as great a gain. If I'm right about this, the bashing will continue as long as a substantial short position exists, but the position will be shrinking. I don't believe that the naked shorting shows properly in any report of shorting as I believe it's largely carried out by the MM's themselves, and I don't believe they report the imbalances in the shares they're supposed to balance. I believe our regulators know what the MM's are doing, but essentially have given them the freedom to operate as they wish, rather than actually doing their jobs as intended. The MM's can virtually create tens of millions of dollars worth of stock with no one but themselves ever seeing the money, that was never the intent of the system, but when they short say a million shares, they bring in what those million shares are worth to the MM, and they're not selling those shares into the market, where they belong. The opposite is the case when the accumulate shares without selling them, normally to meet demands from Institutions that wish to purchase in multi-million share increments. This is no doubt a simplistic view of what they're doing, but it seems like the SEC is in almost no way policing their actions, so while they may have been created to keep markets fair, in reality it's unfair because they're almost constantly violating the laws that are intended to keep the market fair.
I have no idea if Posner's spoofing case against the MM's also shows that the MM's in some way are working together to maintain a massive naked short position that's not reported. I would suspect that it's inferred, but doubt if she can actually get the data from the MM's that would prove it. I really can't say that even the SEC can get all the data that's needed without a court order that would take time to initiate. During that time the MM's would be working to clean up their books. As I see it, any one MM can be short, or long a certain stock legally, but if all were found to be short, or long simultaneously, that would indicate they're working together to influence the price of a particular stock, and that's what would be illegal. I suspect that in our case most, if not all the MM's named in the complaint maintain short positions in NWBO in supporting an effort to keep the share price down. This effort, or course, supports hedge funds the MM's are working with, again probably illegally. Again, I'm no expert, this is JMHO.
Gary
