Dutch, it's extremely hard to separate fact from myth regarding short selling on the OTCBB. If we were on the NYSE or NASDAQ, where there is a consensus that the rules are actually enforced, then taking physical possession of our certs would mean something for sure. I have read, btw, that brokers are not allowed to lend shares from a SEP/IRA account for someone else to short, and that if your shares are in that type of account you don't make them any more inaccessible to the shorters by taking possession. (In fact, I'm not even sure if you could take possession of such shares without affecting the tax status of your account -- I presume it would be treated as a withdrawal.)
For accounts other than SEP/IRA's, maybe it makes a difference but I don't actually think so. Consider:
On the OTCBB, any MM can engage in "naked shorting" -- meaning that they can sell nonexistent shares without actually borrowing real shares from anyone. The supposed purpose of this is to make it easier for them to stabilize the market without having to be burdened by the cost of maintaining a large inventory. In principle, they are supposed to maintain such a short position only very briefly for the purpose of stabilizing the market, and cover as soon as the market has cooled down. And many MM's may actually play by that rule.
However, the MM is under no obligation to report his short positions to the SEC or any other regulatory body, as they would have to do on the NASDAQ, NYSE, etc. As a result, it is possible for them to short and short and short and short some more, with the goal of driving a weak company out of business so that they will never have to cover. If the company goes belly up, they just keep every penny that they took in for selling nonexistent paper. And, if a MM is in cahoots with a large short-selling client, there is nothing to stop them from letting their client sell short without actually borrowing any shares. It is widely believed that some highly unethical MM's engage in such behavior, though I certainly would not be able to prove it. (I'll leave that to Mr. O'Quinn! LOL!!)
So, if the shorting that is hurting a company's share price is being done by people who do not really need to borrow real shares from anyone in order to sell short, we could take physical possession of the entire float and it wouldn't stop them.
What can stop them? Evidence that a company (like NPCT) is so strong that it will never ever need to sell more shares in order to stay in business and thrive. When that becomes evident, the risk of shorting becomes too great even for the MM's.
So, bring it on, Team NPCT, and let's see the cucarachas run for cover!
Best regards,
Geoff
