Zeev's Turnips Patch-No Politics (ZEEV)

[Bruce A Thompson]

You said

Nobody has ever had the right to sell counterfeit shares.

Early last year, there was a put transaction on the options market of 20,000 contracts of Novastar. Four minutes later, there was a sale of 2 million shares of the company on the Chicago Exchange. At the time there was not a single reporting shareholder who owned that many shares.

Over the next three days, the shares were dumped into the market decimating the share price of Novastar.

That single transaction was never documented either by the buyer or the seller via forms to the SEC even though it represented 20% of the authorized shares of the company. The transaction was watched, in real time, by a dozen or so Novastar current and former shareholders. I personally documented it by date and exact times in a comment on the then ongoing changes in Reg SHO which the SEC was considering at the time.

Nobody did anything about it until the day before yesterday when the SEC ended the options MM exception from the borrow rule.