True, in sense. The selling of CLBE stock is not naked shorting in it’s true definition, since they are likely using the CD underlying stock conversion to borrow. It’s all legal and for some reason the name Cornell comes to mind.
The practice I thought was outlawed is the true naked shorting ahead of buying the debenture and then after you close on the CD, convert immediately to cover. This used to be (is) very common practice in the pinky Reg 504 reg D financing arena.
The financiers would make inquiries to your newly founded pinksheet company to see if you are interested in an instant Reg. D financing. 1 million could be yours tomorrow. As soon as you show interest, the financier will start naked shorting your company. So once (a month later or so) you and the financier agree on terms, the financier has already shorted you into the ground.
The next step for the financier is then to run the stock up and then dump the stock a second time. Two for one ain't bad
Do a google search on 504 Reg D financing and you’ll see just how many there are out there
What I think is going on here is on the legal side of shorting ahead of conversion (Although we all agree it should not be legal). Just as you have stated and if it is correct that one of CLBEs debentures is about to mature (haven’t researched it in depth) then the CD holder is shorting the shit out of the stock so that his conversion rate will be so much more favorable. Once converted look out for the pump.
However, convertibles with floors are becoming much more common, although the floor may be at 50% or even 25% of the current pps and they usually include some anti-dilution provisions
"You can't be a real country unless you have a beer and an airline - it helps if you have some kind of a football team, or some nuclear weapons, but at the very least you need a beer". F Zappa
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