RespireRx Pharmaceuticals Inc (fka RSPI)

[DewDiligence]

>The inability to use naked shorting would presumably be less of a factor when using the registered direct approach, as opposed to an unregistered PIPE.<

I think the opposite is true.

Again, the issue is not so much naked shorting, but rather that the financial crisis has made any shorting of small illiquid companies a less attractive undertaking. This affects both PIPEs and registered direct placements inasmuch as the buyers in both kinds of deals often made money on the short side as described in the previous post.

However, the consequence of the financial crisis is greater for registered direct placements than for PIPEs because the kinds of schemes described in the prior post were much easier to implement in registered placements.

(Using the terminology in the prior post: a registered placement allows Company Z to cover its short position quickly but a PIPE incurs a waiting period for the shares to be registered before they can be used to cover.)