One Step Ahead

[perc]

EARLY COMPLIANCE replies / comments / discussion

may be carried on dorectly with the author at canuck's proboard32

here is the direct link to that particular thread

http://tinyurl.com/6wl6r

Georg Burns is the author;
he REQUESTS COMMENTS, PERFECTION, POLISHING, ETC
the post originated at canuck's board;
SO PLEASE COMMENT THERE TO ENGAGE THE AUTHOR DIRECTLY

THANK YOU

RE:

by Geroge Burns @ canuck's proboard32 http://tinyurl.com/6wl6r

EARLY COMPLIANCE

My thinkings 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 occur 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 05. 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.

*********************************
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.
*********************************

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

Thanks for reading. Any additional comments and thoughts will be
appreciated.

[Burns]