Nite could be shorting the stock for off shore accounts...considered naked shorters because they try to never cover... Under the new SEC rules, there is some pressure being applied to block such naked shorting, but it is not clear yet whether the new SEC rules will do the job... there are strong interest in the broker industry aligned against changes in the rules that would stop naked shorting...
QBID complained about naked shorting sometime ago, around July... if Nite is naked shorting, it could be doing that for its own account [and then Nite is taking the risk] or it could be doing it for the account of a third party [and, if that is the case, Nite probaly holds some security to protect itself against losses if the stock rises, ie the third party is at risk]...
Naked shorting is when MMs sell the stock short ie even though they dont own it and they dont ever cover for a variety of reasons... this is not possible on NASD stocks[ or at least it is harder due to better regulations and more watching by the SEC], but the pinks are under different rules, and it is widely believed that the MMs exploit these rules...
However, one certainly must wonder why anyone would naked short a stock with strong upside prospects...unless they were sure that no one ever could make them cover... or bear losses in the event the stock rises...
There is a potential problem in the brokerage industry of great magnitude if the naked shorting is going on as suspected... The Berlin market has been reputed to be one of the places where naked shorting occurs when companies find their stocks being sold there without ever requesting that their stocks be registered for that exchange...
The sec has limited ability to regulate trading that occurs off shore... the object of those that engage in naked shorting is to sell the stock, pocket the money and keep the stock price down... permenantly...
