CMKM Diamonds Inc. (fka CMKX)

[BadBassPlayer]

Posted by: marcq4
In reply to: None Date:10/2/2004 10:50:37 AM
Post #of 15437

Interesting post on EARLY COMPLIANCE
By: georgeburns90210
02 Oct 2004, 10:40 AM EDT
Msg. 90233 of 90235
(This msg. is a reply to 90210 by silverbulletgirlny.)
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Sorry... I had written that in my original draft knee jerk post. Here is the update:

EARLY COMPLIANCE
My thoughts on D. Roger Glenn’s Plan.

This is all based on SEC rule 7-23-03 §§ 242.203. I decided to use this as the basis for this theory because this is what D. Roger Glenn has to work with.

203 ensures that locates for shorted stocks must be located within 13 settlement days of a short sale. This is going to be a beautiful rule; once everyone has to be compliant with it… they don’t have to be compliant till 02 Jan 04. Which means they don’t have to cover their short sales prior to that date. They can fail to deliver as much as they want. Their excuse will be that a system was not in place. They will not be penalized for this, even though it will be obvious that huge amounts of failure to delivers occurred.

THIS IS WHERE IT GETS GOOD.

However 203(b)(3) [short sales in threshold securities] will have to be complied with even though the compliance date is also in January. The effective date has passed.

A threshold security is any equity security of an issuer that is registered under section 12 or that is required to file reports pursuant to Section 15(d) of the Exchange Act where, for FIVE consecutive trading days: there are aggregate fails to deliver at a registered clearing agency of 10,000 shares or more per security; that the level of the fails is equal to one half of one percent (.005) of the issuer’s total shares outstanding; and the security is include on the list published by an SRO. In order to be deemed a threshold security… a security must exceed the specified fail level for a period of FIVE consecutive settlement days.

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THE UCAD DIVIDEND CAUSES CMKX TO BECOME A THRESHOLD SECURITY. This is clear cut and nobody can make an excuse that there is no system in place to handle this. The system is already there. (From 203: Since the proposing release was issued, Commission staff and the SROs have developed new procedures to identify and inquire regarding failures to deliver that achieve the goals of this notification requirement. The proposed release was 4 years ago.)

They can not cover a dividend of UCAD because the dividend is restricted. They can not cover a dividend of CIM because CIM is a private company. So… when these dividends are released, they are forced to cover their shorts. They WILL fail to deliver. They WILL fail to locate. They will fail to cover. This is good. (If it exceeds the .005 it is good)

400 Billion OS = 2,000,000,000 shares we need them to fail on.
Everything in between
40 Billion OS = 200,000,000 shares we need them to fail on.
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After they fail on this… we will be named as a THRESHOLD SECURITY. As a Threshold Security different rules apply.

All short sales by the broker dealer must deliver the security no later than TWO days after the settlement date. If for any reason such security were not delivered within two days after the settlement date, the rule will restrict the broker dealer INCLUDING MARKET MAKERS from executing additional short sales for the NEXT 90 DAYS for the person (offshore hedge funds) for whose account the failure to deliver occurred, unless the broker dealer or the or the person for whose account the short sale is executed, borrowed the security to or entered into a BONA-FIDE arrangement to borrow the security, prior to execution of the short sale. This means after they violate us once if they want to short… they can not do it with a NAKED short. It has to be a real short with the borrowed share located ahead of time.

This means. After the UCAD dividend… which they can not cover. They (offshore hedge funds) will not be allowed to short us for 90 days unless they pre locate the share to borrow. No More Naked Shorting.
If they fail to deliver they are forced to buy a real share to cover. They will be monitored by a self-regulatory organization (SRO). They will be reported to the NASD. This will be the squeeze.

ANOTHER PENALTY (Cut and pasted… tired of typing)
The following examples illustrate potential scenarios involving threshold security XYZ: (i) If a participant has a 100 share fail to deliver position in XYZ for 13 consecutive settlement days, the participant is required to purchase 100 shares; (ii) If a participant has a 100 share fail to deliver position in XYZ, and the fail to deliver position increases by 100 shares each day for 13 consecutive settlement days, yielding a 1300 share fail to deliver position, then the participant is required to purchase 100 shares at the end of the 13th day, 100 shares the next day, etc., until the entire fail to deliver position is closed out; (iii) If a participant has a 100 share fail to deliver position in XYZ, which is then reduced to a 50 share fail to deliver position during the following 13 consecutive settlement days, then the participant is required to close out 50 shares; or (iv) If a participant has a 100 share fail to deliver position in XYZ, which is netted to zero five settlement days later, and then a new 100 share position is established the following day, the participant would not be required to close out the initial 100 shares, but would be required to close out the subsequent 100 share fail to deliver position if it remained for 13 consecutive settlement days.

This doesn’t mean anything for the some of the shares that they are trying to cover for the UCAD short… as they happened before the first failure to deliver.

The killer is the CIM dividend. At the time we will be a Threshold company because when they try to cover for the UCAD dividend, they will fail. After the CIM Dividend, they will not be able to cover within thirteen or five or even two settlement days. Thus the above penalty applies and they have 13 days to cover ALL naked shorts and regular shorts now.

You have to be filing to be declared a threshold security. I think this may have been a major reason for the delay of the UCAD dividend. Maybe they wanted to pull off the Crystalix deal before filing, or maybe it was because of the paperwork. Either way, I believe we will have filed before the UCAD dividend is released.

Because of the 90 day restriction on these hedge funds… it will take us all the way to the 2 Jan 05 enforcement date of the better part of the 203 rule. I believe D. Roger Glenn found a way to make this rule enforceable early.

Please help me by adding additional comments. Show me where you think I am incorrect. Show me where you think I should add more. Please read the following:
http://www.sec.gov/rules/final/34-50103.pdf

[Burns]


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