NO QUARTER FOR CORRUPTION (Focussing on The Fed./FRBS)

[rrufff]

I don't think that's the issue. The issue is fairness and open access to information.

Markets involve risk. Through a monopoly of information, a hedge fund or MM or an insider is able to trade without risk, at the expense of retail investors. IMO, this is something that would not be the policy of anyone claiming to want fairness and regulation in the markets.

The fact is that retail investors don't know about convertibles or discount PIPE's or insider sales until AFTER riskless sales are made or there is shorting into these deals.

The rule, put in a simplistic way, that I would recommend is that there could be no sales by insiders, by hedge funds, by vulture lenders, or by their associates, until AFTER the terms of a convertible or a PIPE is fully disclosed to the public.

What's the result? You are right in that none of us would buy until the stock tanked to the price of the discount or lower depending on how toxic the financing would be. That way, retail shareholders would not be sitting there with "sucker" written on their faces.

The purpose of markets is not to scam retail investors.

If the net result is that these type of deals don't get done, then so be it.

As I re-read what I wrote, I'd probably go further and prohibit trading that affects the price of a floating convertible. I believe that insiders are prohibited from BUYING to raise a conversion price, by regulations relating to trading on non-public information. Similarly, I believe that those acting to lower a conversion price, should be prohibited from selling or shorting to lower the price. I believe that this is the case, but the issue is less than clear. The regs, including 10(b)-5, others re manipulative behavior and others re trading on non-public info, would seem to cover these cases. There is an inherent conflict of interest in having a deal which gets better and better the more that one trades on non-public information. In my mind, this is manipulation, which is covered by the SEC acts and regulations thereunder.