Intl BioChemical Industries Inc fka IBCL

[eliaman]

**MUST READ**Interesting stuff on the mechanics of naked shorting....

http://www.sec.gov/litigation/complaints/comp18003.htm

..... 18. After the NASD placed the short restriction on Sedona's stock, Rhino sold short Sedona shares from an account he controlled on behalf of the Client at a Canadian broker-dealer. Canadian broker-dealers are not members of the NASD and are not subject to its short sale restrictions. Beginning on March 30 and continuing through mid-April 2001, Rhino executed short sales through the Canadian account.

19. Rhino sold short 350,500 shares in the Canadian account during this period. The shares were not delivered by settlement date. The Canadian broker-dealer neither bought nor borrowed stock to cover these sales and continued executing short sales. Rhino's short selling in the Canadian account continued to put downward pressure on Sedona's stock price. Between March 1 and April 16, Rhino, through the two accounts it controlled on behalf of the Client, accumulated an open and undelivered short position in Sedona stock of 1,193,296 shares. ......

IN a sense, Rhino was lucky, because it could ultimately close out the short position from stock isued on conversion of the debenture it had arranged on behalf of its client (in Europe?). I can't help wondering what offshore broker-dealers who have naked shorted U.S stocks do, when no stock can be counted on as forthcoming in order to close out an open short position.....?