I don't think it's long side liquidation, necessarily, though I do agree with you in general. I believe that the insiders do sell short "against the box," meaning that they are selling shares that they have not yet issued. It's the sort of shenanigan that calls for a gagged TA. If they did not have the AS published by the state, they could get away with unlimited fraud.
Happens all the time. People need to realize that the insiders of these companies use "investors" as a means to line their own pockets. No matter how many shares of this common anybody owns, the insiders will continue to own and control the company through preferred shares, etc. Common shareholders are dirt, from their point of view--a source of money that they can soak up like a sponge.
A good bottom's hard to beat.
e
