Because existing restricted shares are let out of their restrictions and are dumped immediately. These shares can be preferred type, where for an example, one share can equal 10,000 common shares that you own. We don't know what the conversion rates are or how many restricted shares there are due to lack of public disclosure of share structure. Every stock I ever owned that did a r/s wound up losing 90-99% of what I had in it and never recovered to this day after years of holding a now worthless stock. During the day of the r/s you may not even be able to place a buy or sell order with your broker due to the slow adminstration of converting your shares by your brokerage and by the time it happens you will have huge loss. The ones that benefit are the restricted and preferred share holders and not the common share holder that includes you and me. They (insiders)know when it will happen and made pre-arrangements with their brokers to sell early when momentum from their P&D is at its max, then it is a falling knife afterwards from panic selling by the ordinary investor to save what they can. Then the insiders that sold early, starts accumulating cheap shares from the panic selling, if it is a good investment and if not, they leave for good a lot richer than you.
AI
