Replies to post #119764 on Enzyme Environmental Solutions Inc (EESO)

[lbdave]

MM's short stocks everyday, plain and simple. They usually cover during the day therefore no FTD's never filed. It is the way they make the market, and as long as they are allowed to operate in this manner stocks will continue to be manipulated. They will short at the top of the gap, then walk it back down and cover. Not saying it is happening, but they could be shorting this all day from .02 area to the .019 area given the volume, and we would never know.

[Doubledown22]

No but I have something for you. Feel free to read this informative essay on the process and EXACTLY how the MMs get away with it everyday. Some of it will seem all too familiar with the recent activity surrounding this stock but I personally don't think we are being shorted here. BUT IT DOES HAPPEN and here is how...

The Hundred Billion Dollar Loophole (05.07.02):

There's a rule that the market makers use ... a rule
that only has less than two hundred words in it ...
and that rule allows them to naked short an OTCBB or
Pink Sheet stock into oblivion. It allows them to
literally create, out of thin air, as many shares as
they need, to maintain an orderly market.

"(B) Proprietary short sales

No member shall effect a short sale for its own
account in any security unless the member or person
associated with a member makes an affirmative
determination that the member can borrow the
securities or otherwise provide for delivery of the
securities by the settlement date. This requirement
will not apply to transactions in corporate debt
securities, to bona fide market making transactions by
a member in securities in which it is registered as a
Nasdaq market maker, to bona fide market maker
transactions in non-Nasdaq securities in which the
market maker publishes a two-sided quotation in an
independent quotation medium, or to transactions which
result in fully hedged or arbitraged positions."

This rule allows a market maker to create a share in a
company by simply taking the money from the buyer and
making an electronic entry into their brokers'
account, and the broker then electronically credits
the buyer with one share of that company.

But several things that no one is aware of take place
in this transaction.
1. The buyer thinks that his share actually exists,
but unless he or she has read his account agreement
very carefully, he won't understand that all he did is
give money to someone other than the company and never
got any actual proof of ownership. His certificate,
presumably, is sitting at the DTCC.
2. The market maker filling the order for one share
has the buyer's money, and gave nothing except
electronic acknowledgement of receipt of it ... the
electronic entry in the buyer's account.


One very important thing to understand here, is that
at no point in this process, did the company in which
the buyer 'invested' ever get one single dime of the
money paid by the buyer for that share. There is a
tremendous misconception out there that causes many to
assume that when they buy a share of a company's
stock, the company gets the money.

This is only true if the buyer is buying an IPO, or a
private placement of shares from the company. In any
other sale or purchase of a stock by an investor, the
company does not even see the money.

This is particularly vexing when one begins to
understand what happens in naked shorting situations.
Situations where the provision that allows for naked
shorting to maintain an orderly market is abused.

Understand that whoever is doing the naked shorting is
the one receiving the money. They keep it. For as long
as it is convenient to do so. That is where the abuse
of the rule comes in.

That rule was created to allow for market makers, who
by becoming market makers, agree to 'make a market' in
certain stocks. That means that they will sell you a
share, or buy a share from you, even if there isn't
any available, or there are no other buyers for it.
The Market makers' job is at least partly, to provide
liquidity to the market. In thinly traded securities,
or securities where there is a small public float, the
market makers' ability to naked short is crucial to
the liquidity of the market in that security.

The abuse takes place when the market maker for
whatever reason determines that the market for a
particular security has become "disorderly". Too much
buying pressure, for instance, can cause a price spike
in that security that would have no relationship to
the true book value of the security. The market maker
then determines that he will naked short to fill
orders, knowing that by doing so, the price will not
explode on unusually high demand because he can
literally issue new shares under this rule. The market
maker then waits, with an open naked short position in
that stock, until the buying pressure subsides, and he
can buy enough shares back at lower prices to cover
his naked short position.

The rule does not have any time requirements and that
allows for the market maker to keep a naked short
position open for potentially years. In reality, until
the buying pressure subsides enough for him to buy
back at lower prices however many shares he needs to
fill previously filled orders that make up his naked
short position, it simply stays open, and the money
sits in his account.

Someone is going to ask the question, "So, how big are
all those naked short positions, anyhow?"

There is another provision that says that the market
makers do not have to publish their open naked short
positions. Never. At all. All OTCBB and Pink Sheet
securities can be naked shorted - indefinitely - by
market makers under this rule, and there is no way
that an investor can discover if there is an open
naked short position in a stock he may be interested
in, or even how big that short position is.

So far, the SEC does not see a strong need to correct
this situation, either.

Think about it. There are unlimited amounts of shares
that were never authorized or issued by a company made
available to the unsuspecting investor. They are
authorized and issued by the market makers under this
rule, and the company never gets any money from the
sale of shares created under this rule.

The temptation to abuse this rule is irresistable.
Just do the math. A million naked shorted shares sold
by a market maker at 0.01 (one cent) is $10,000 that
the market maker keeps in his account, and that the
company does not get. At 0.10 (ten cents) the market
maker gets to keep $100,000. Now, that is for each
million shares that the market maker creates.

Under this rule, if a company and/or a group of
shareholders begin to suspect a short position exists
in their security, they can not discover this from any
published source. The price of the stock remains
constant, or goes down, even though there is unusually
heavy buying ... buying that goes on for years in some
cases.

The company thinks that there is someone illegally
shorting their stock in an attempt to ruin the
company. The shareholders think that the company is
illegally printing shares behind their backs and is
scamming them. Eventually, this distrust between the
company and it's shareholders becomes so great that
investors start selling, or the company, already
damaged by a suppressed share price, is forced to issue
additional shares into the market because other
collateral-backed loans can not be made with share
prices so suppressed.

This is what the market maker is waiting for ...
sometimes for as long as years. In both cases, the
market maker eventually gets his naked short position
covered, and all it cost was the company's reputation,
the shareholders' money, and the SEC's full
cooperation by allowing this abuse of the rule.

There is a third situation that the market makers
naked short into ... a stock that is a likely prospect
for failure. In that case, they just continue naked
shorting no matter what, keeping the price suppressed,
and eventually the company files for bankruptcy, and
... the company goes out of business, the shareholders
lose their investment ... and the market maker keeps
the proceeds of his continued naked shorting.

A good question for the SEC would be, "Seeing as how
the companies that failed never got the proceeds of
the sale of stock over and above their issued and
outstanding, but the market makers did, isn't the SEC
allowing actual fraud to take place, and condoning it
by the creation and continued existance of this rule?"


Like it or not, the SEC has allowed securities fraud
to run rampant in the OTCBB and Pink sheet stock
markets by simply looking the other way and allowing
the market makers to target the OTCBB and Pink sheet
markets as a source of huge amounts of cash, literally
stolen from investors by the third party creation of
shares by an entity other than the the issure - the
company.

This rule is nothing less than blanket permission by
the SEC for market makers to become the issuers of
company stock, no matter what the company's official
authorized and issued amounts are.

And that, my friends and fellow investors, is
securities fraud on a scale almost beyond
comprehension.


Isn't capitalism great?

One way to fight back on this is to email all the members on the House Committee of Financial Services (click link below). They oversee the SEC. We need 1000's of emails going to the Chairman of this Committee, all members for that matter, stating that this corruption must stop!! Come on people let's stand up for something and fight back on this. It will take a Herculean effort to make our voices known.

http://www.house.gov/house/MemberWWW.shtml

DD22

[Trops]

Plain and Simple.Shareholders have to ask Jared to back up his projections with signed contracts.Won't get fooled again~

[oneinamillion]

No way that number is real at all. I think there could be several hundred million shares short in EESO.

[oneinamillion]

Can investors short sell EESO pink sheet or over-the-counter stocks?

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Short selling is an effective trading strategy that can be employed to hedge the risk of a loss on an off-setting position or to speculate on an equity's price movement. In essence, short selling entails selling a stock that you do not own. An investor does this by borrowing the stock and immediately selling it in the market. If the price of the stock goes down, the investor makes a profit by purchasing the shares and delivering them to the individual from which they initially borrowed them. The profit arises from the difference between the stock's price at the time it was borrowed and the price at which it was subsequently purchased.

In regards to pink sheet and over-the-counter (OTC) listed securities, short selling is allowed. An OTC security is one that is not traded on a formal exchange such as the New York Stock Exchange or the American Stock Exchange. OTC securities are often quoted on the OTC Bulletin Board (OTCBB). Pink sheet securities are very similar to OTC securities in that they are not listed on exchanges, but are quoted on a daily publication issued by the National Quotation Bureau. However, pink sheet securities carry much more risk because they do not require the companies to register with the SEC or stay current in their financial statements.

Although short selling is allowed on these securities, it is not without its problems. Short selling on OTC is extremely risky because these securities are often very thinly traded, which makes them very illiquid. This illiquidity can prove hazardous if an investor needs to cover an increasingly unprofitable short position. If the volume is very low, covering the position may become a very unlikely prospect. Another problem that has arisen with short selling in OTC securities is the use of pump and dump schemes. These schemes are done by con artists who use internet message boards and SPAM emails to heavily promote a thinly traded stock in which they have long positions. When this happens, the result is often a high spike in the price of the stock, followed by a fall. However, the initial spike will devastate any investor with a short position. These schemes often use OTC stocks because they are relatively unknown when compared to exchange traded stocks.

To learn more, see The Lowdown On Penny Stocks, Short Selling Tutorial and the Online Investment Scams Tutorial.

http://www.investopedia.com/ask/answers/06/otcpinksheetshortselling.asp