They simply sell more Ftds, not really traditional shorting at all. Also most stocks at this level have already been shorted into oblivion. Then when the company is shorted so low the only way for them to survive is to dilute massively they generally do which only helps the shorter. A fair amount of legitimate companies have been killed this way. Then the trick for the shorters(ftd makers) involved is simply to keep them there. They generally do this by bashing relentlessly and crying fraud, on message boards, etc... And unfortunately because this is the pink sheets it is hard to separate truth from lies. A huge amount of money has been made doing this for years. And the regulators don't have track record of caring at all, well not for the investor or the company anyways.(By the way,the minute I write this there is a good chance someone will say naked shorting is all made up anyone who thinks a company is real is a pumper and prime brokers, hedge funds are your friends, blah, blah, etc,etc...)
This was found on another board it might help explain:
A CONVERSATION WITH AN EXPERT ....
Anthony Kalantzis
Bud , hypotheticaly speaking
lets say you were the CEO of a small developing company whose stock has been raided by the shorts . youv'e somehow managed to stay alive through tiny infusions of capital from various sources and also major dilution .
NOW some powerfull group with 50 million to spare likes your companies ideas ,with this much needed funding would you have an EXCELLENT opportunity to catch the shorters?,maybe by moving to a better exchange ..amex nyse ?
it looks as if the reason they target these companies is because they are broke .
Reply: Such companies as you describe are typically attacked if the SEC gets any work of pending financing of such significance so as to trap the shorts.
The only really safe way is to go to a Foreign exchange in a country where there is mandatory 3 day settlement, no naked shorting, no FTD's or FTR's, and a limiter on dividends equal to the number of legally outstanding shares, NO dividends in lieu.
Double the probability of an attack by the SEC if the company trades below .001.
Levitt has said he doesn't care if US small companies leave here because of SOX costs. Let's see if the SEC agrees with his line. This is the dumbest statement to come out of any SEC Chairman past or present. If this attitude had been demonstrated by the SEC in the 1970's towards such development stage companies as Intel, Microsoft, Oracle, et al, the US would be a bankrupt banana republic, dependent on the largesse of its close friend, The World Bank, for pocket change
His defense of Clinton's policies would be a joke if it weren't so in your face. The rule change sending FTD's and FTR's was done in 1993 by Clinton Executives
Anyone forgetting that misses the entire point of this exercise, and Levitt's attempt to give himself and them cover for WHATEVER.
Best, Bud
Bud,
Have any companies used this strategy before? How does the foreign exchange force them to settle if they are also still trading on an exchange that doesn't enforce rules?
Reply: A pretty significant number of companies have gone to other countries already for funding.
The LSE/AIM market is larger than New York for the last 24 months in terms of number of financings.
The foreign market doesn't force anything here. Rather, they set up a security sold to that countries foreign investors by a unit in that country, thereby imposing its rules on the foreign company. Bermuda has been a favorite haunt for major companies, effectively stepping out from under US rules by listings there.
This will turn into a tidal wave soon, the timing being dictated by the action or inaction by authorities here on corruption of our markets.
Bud.
Bud GWGO is doing a 2000 to 1 r/s, pps is now .0002 and they hope to rase it to .20 ......They are also changing the name, the are hoping on the short queeze play. The R/s take effect Monday morning at the opening of the market....what are you thoughts on this, please reply...Stephen
reply
If they don't move out of the US entirely, they will just be shorted down again.
Suggest they consider putting their operations in the UK or Bermuda, in a unit they then dividend out under UK rules, to beneficial shareholders of record as demonstated by presentation of a certificate.
The holders of counterfeit long shares will force the shorters to buy them however they can.
bud
Is it possible a company cannot move to a foreign exchange because they are tied up in litigation ?
What if a company goes to the AMEX ? it might be harder to short there ....getting listed on the AMEX might not be a sure footed way to forced BUY-INS but can it slow down the shorting ??maybe its harder to borrow ?? this obviously wasnt the case with Viragen as they continue to get fleeced .
and why would the SEC attack if the company goes under 0.001.
wouldnt the shorters attack and not the SEC ???
Reply: The AMEX offers no protection at atll, nor has it ever.
The SEC would attack any cellar boxed stock for anything that would open the shorters' hands to the public.
