I have a radical suggestion. What about actually talking to a market maker and finding out if any of these things sound remotely plausible? How about asking:
1) Does it sound plausible that there is a large naked short position in a stock which trades at .0001? How would the market maker survive a routine NASD audit? What kinds of things come up during those audits? And, if the naked short is not at the market-maker level, how would a non-market-maker possibly meet margin requirements?
2) How would a large naked short position avoid buy-ins? In all these jeremiads like the one you posted the writers live in a world where fails go on forever. Not two weeks, not two months, forever. And there are never buy-ins. Has any market maker ever heard of such a world? What's the longest the market maker has ever heard of fails persisting?
3) Now that the shares outstanding have been published, how would a stock avoid being on the SHO list 14 days after it resumes trading if, in fact, there are significant fails?
I'm sure you have heard of the concept, six degrees of separation. The idea is that everyone in the world is separated by only six people: you know somebody, who knows somebody,--six times.
I suspect that everyone who is in CMKX is only two degrees of separation from a market maker. That means that everyone knows someone who knows someone who works for a market maker. Obviously they shouldn't talk to someone who is a CMKX market maker because that person might have something to hide. How about the several hundred non-CMKX market-makers who know how the game is played?
I know that most of the faithful are proud of the due diligence they've done. If a naked short position is part of their thinking, I would suggest this as a fruitful area for further due diligence.
AI
