I found this on the SEC website. It contains a portion of an interview with the SEC (from 2003, which I believe was a part of the movement that ended up divulging information about short positions recently). I am trying to understand the latest trading activity, but of course I can't know that this is what is going on for certain. The sceneraios posted over the last week make a lot of sense, as the price does not seem to represent the value of the company (ask Frank!). My belief is that eventually, the quality of the company will win the day, and the price will rise. . .which is why I am continuing to buy in small chuncks, keeping in mind the possibility of more downward movement (I wouldn't mind one more crack at the 2's, but I don't see it happening!). It appears to me that folks are holding on to their shares and causing the MM's a bit of grief, and I don't think they are doing too well with this sideways movement and little volume, and they can't keep doing this forever. (I have had bids in the mid .05's for the last three days with no takers until late today, with trading all around my bid!!!). However, it also seems that new investors are not exactly breaking down the door quite yet, and until they do, MM's can do whatever they need to to take care of business. They know how much time they have left to make it work to their advantage. Next month should be exciting, though! So, to entertain myself in the meantime, I am doing some research about MM's in pinkie land (most of my experience is in larger markets, so I am out of my element with the amount of control the MM's seem to have on this one). Forgive me for speculating above my experience, everyone. I would also like to understand exactly what is going on so I can spot it and take advantage of it in the future. I am grateful to those who have provided their insights on this board. Here is a segment that may help novices like myself in this department. The phrase "sitting on the ask" caught my eye.
Q. What harms result from naked short selling? Conversely, what benefits accrue from naked short selling?
A. Naked short selling harms securities in many ways. The first being the downward selling pressure it places on stocks. When these abusers are simply allowed to counterfeit shares of a particular stock and sell into the bid or constantly be sitting on the ask, it can drive a stock into the ground or never allow for it to rise in price reflect the true market value. This can further be exacerbated when legitimate shareholders began to panic and sell as the stock is plummeting. The Illegal activity of Naked Shorting, also causes MASSIVE DILLUTION to the company and its existing shareholders. This MASSIVE DILLUTION most often crushes small companies.
I personally see NO benefit to Naked short selling, as it is simply a manipulative, abusive loophole, used to steal and drain all the equity from the current shareholders, while destroying the company whose shares they have counterfeited.
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