MM's & Short Selling Bashers

[gb2k]

NEW RULES FOR SHORT SELLING?

http://ragingbull.lycos.com/mboard/boards.cgi?board=MMMANIP&read=12409

Theoretically, Short selling should be balanced by the buying back of shares by the previous Short sellers, when they cover their positions. "Every Short Sale creates a Buy, to be filled at a later date".

Not So In Our OTCBB Markets

It seems that our Market Makers (MMs) are habitually selling Short positions they do not have. Attention has recently been called to a case where shareholders bought up their company's float ... or so they thought, only to find their actions had NO effect of the stock. Why? Because phantom shares were involved for millions of shares sold Short. The shares being "bought back" didn't exist any more than did the phantom shares that were sold.

The Market Makers have grown so accustomed to selling short, dropping the share price, then covering by buying back at a lower price that they created, that they do this even when there are no shares available to sell, or with companies that are legitimate and on the rise.

If a company does not go belly up, these Market Makers are supposed to account for and return all the shares they sold short. They are unable to just "walk away" as they so often do when a disreputable company on the pink sheets disappears without a trace. They are caught in what is called a "Short Squeeze", or, a situation where the share price starts to go up on legitimate news despite the best MM
Manipulations. So, what to do?

Here is where the Longs get their "bad attitude" toward the "Short sellers" ... there is no equilibrium brought to the price as we expect to happen when previous Shorts become Longs, having to buy back shares. Why
not?

Because, when the Short sellers are the Market Makers who are in a position minute by minute to move the share price wherever they want to, they simply move the price down so they can buy their shares to cover their previous short sales as cheaply as they can. This "Naked Shorting" is supposed to be illegal. So is most of the other MM behavior that has helped make the Stock Market the deadliest game in town.

The days of the "Short Squeeze" are over. Market Makers have learned how to avoid getting caught with their proverbial "pants down".

Let's look at one case, where a Bulletin Board stock has applied for a NASDAQ listing and is waiting for news of acceptance ..This situation should warn off most Prudent Market Makers who would expect that the odds are against such a company willingly subjecting themselves to NASDAQ Discovery if there is nothing but hot air behind their closed doors.

So, this company waits for a NASDAQ listing while the MMs do their daily thing, moving the share price up and down and around their own money producing transactions. Unfortunately, greed enters into the picture. The MMs misjudge shareholder sentiment or the company or the chances of the listing happening this time around. These MMs continue to sell the shares Short, anticipating a drop into the 1s and 2s, and are successful in eliminating all but the most hardy and convinced of those shareholders who still hold on to their
shares due to conviction and much research which shows them the company is legitimate … and ready to explode onto the Market.

As the company continues to insist the lack of substantial news results from many non-disclosure agreements with unnamed manufacturers, the Market Makers feel unafraid to continue to sell more shares, increasing their naked Short positions as the profits from their previous month don't carry over into a new month. At some point rumors of contracts, impending announcements, and NASDAQ approval filters down to these Market Makers. Where there should logically be a situation where the previous Short Sellers are scrambling to cover their positions before the announcements and NASDAQ approval hits the street, we see something interesting …instead of the share price going up as normally responsive to this situation, it unexplainably goes DOWN. Not only does the price fall, but it falls beneath that magic number of 5, the price needed for the stock to be listed and traded on the NASDAQ exchange! And, this happens on a day where the company has issued detailed information about ! Near future prospects, including their own position - which looks excellent!

Now we see the MMM at its best. NASDAQ supposedly needs a company stock to be trading for a minimum share price of 5, for 5 days straight before this stock can be listed on the NASDAQ exchange. The MMs, caught in what should be "Short Squeeze", need to keep this stock on the OTC/BB exchange until they can find a way to repay those shares they sold short. After months and months of manipulating this stock in order to shake the individual shareholders from their shares, these MMs find themselves in a situation where there is no time left for them to cover their Shorts … not if this stock gets listed elsewhere … like on NASDAQ … so, they must keep the stock dipping and closing under the magic number 5 every 5th day until they can buy more time in which to replace those short shares.

There is no logical way for those brokers to get shares cheap any more to cover their shorts. There never was a logical explanation for the shares of this company trading beneath 15 for more than one week but it was taken down into the threes and fours by the end of the Market Maker run. How long are they now going to be able to continue to drop this price every 5th day in order to keep this cash cow on the Boards for their own use? How many honest and hard working people are going to continue to lose money while this
manipulation is allowed to go on?

Think about all the money that was lost by inexperienced shareholders who were too frightened by the gyrations caused by the Market Makers who are supposed to ONLY facilitate trading. Think about the future of the entire Market. What happens if too many irate Baby Boomers present this and situations such as this to the SEC, NASDAQ, and Dow Jones, demanding answers and explanations for the loss of their retirement money?

Why are investors required to deliver the shares of sold securities to their brokers within 3 days of their sale? Why must these same investors pay for shares they purchase within only 3 days? What is the reason for putting such pressure on the investors if there is NO TIME LIMIT on MARKETMAKERS for replacing shares they sell short? Why are these MMs totally excused from providing these shares if a company goes out of business or disappears? This is a great incentive for MMs to knock Bulletin Board and Pink Sheet companies out of business, isn't it? The demise of a company means the MMs are excused from buying back cheap shares or any shares that they previously sold short, adding to their monthly profits, and likely adding to the demise of that company.

On-line trading is here - and it has brought new information to those who trade for themselves. Shareholders are becoming smarter, researching their companies before investing, and now researching those who have access to their money once it is invested. As one of these people, I don't look kindly upon thieves who are stealing from me, whether or not they wear "white collars."

We are considering new rules for Short Selling?

What about first putting into place the most important rule… that of honesty, before getting fancy with the many ways a security can be sold Short?

And, before this, how about cleaning up this disgusting situation before the entire Stock Market becomes a
free-for-all?
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:))