gatticaa...My belief that the stock is being "stabilized" by the buyers' representatives comes from 50 years as an investor and 20 as a broker. I cannot point to a particular SEC reg., but I believe that once a company announces its engagement of a broker, and its intention to sell securities, that broker is allowed to short stock in order keep the price within a range that is amenable to both parties. So, no, it isn't insider trading. (perhaps OD could dig for the regs. surrounding this situation)
When you think about it, this only makes sense. Doing this type of deal is a very fluid situation. If the price target for the deal were to go way below a certain range, the seller would walk away. Conversely, the buyer would walk if it went way above this range.
As far as the actual execution of the "stabilization" is concerned, these days, it is very easy for the broker to stabilize (manipulate) the price. Their ability to short stock, without locating and borrowing real shares (the Madoff Exemption) and the ability to sell these shares on down-ticks (2007 removal of Up-tick Rule) makes it a piece of cake. So, for the most part, these shorted shares are covered quickly as the stock price is moved down and loose hands sell. I wouldn't be surprised if they were flat by the end of the day. JMO.
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