Hello again, Schekin. Care to elaborate for us how this will screw FTDs?
As I see it, anyone who shorts the stock and then fails to deliver has done nothing more than screw honest shareholders who:
1. Had their shares loaned out by their broker for shorting, without their knowledge or consent.
2. Purchased shares that were sold short and were never delivered.
This has effectively created more shares trading in the market than has actually been issued by the company. I see 2 major issues for the company and for shareholders with the expected swap or dividend payment in shares.
1. There will be more shares outstanding than has been issued by the company.
2. Some shareholders will not receive the dividend or share swap as their brokers try to figure out the mess of the numerous FTDs that exist.
I've previously mentioned reading on www.thesanitycheck.com about instances where companies have tried this in the past, and have either conducted a 1-for-1 share swap or repurchased all outstanding shares that were issued, and there still existed millions or tens of millions of shares trading in the market after the exchange. On a more personal note, what concerns me is whether the hundreds of thousands of Globetel shares that exist in my TD-Ameritrade accounts are legitimate shares or phantom shares sold by one of these unscrupulous short sellers who has never covered. Those stories told of many shareholders who never received their new shares, even after months of efforts with their brokerage firms, mainly because the brokerage firms couldn't locate the shares they purchased for their client.
Don't get me wrong, I'm all for a dividend or exchange plan that screws the shorts who have failed to deliver and who hope to drive the share price into the sub-penny range, but the more I think about it, the more I'm concerned this is going to be a big hairy mess for a lot of shareholders when it happens. I'm hopeful such a move will shine a huge SEC spotlight on those short sellers with FTDs, but given the SEC's long history of not enforcing the existing laws in this area, I have my doubts anything will be done.
I'd appreciate your thoughts, as always.
...and on the 7th day, God turned off his Macintosh.
...and on the 7th day, God turned off his Macintosh.
AI
