Replies to post #97197 on BB's Stock Haven

[lakers17]

NNOS moving because of 447 million short? Strange coincidence it has gone up since the release.

NEW YORK, Aug 31 (Reuters) - A shareholder of NanoSignal Corp. (Other OTC:NNOS.PK - News) has sued a stock settlement body and one of Nasdaq's biggest traders, accusing them of profiting from a stock scam that drove down NanoSignal's share price, the company said on Tuesday.

The lawsuit, filed on Monday in Nevada state court in Las Vegas by NanoSignal shareholder Gary Walters, accuses Depository Trust and Clearing Corp. of mis-using its stock borrowing program to create artificial shares in NanoSignal.

Walters owns 20 million super-preferred shares of the company, according to NanoSignal officials. Super-preferred shares would carry voting rights of 10-for-1 in the event of a merger or acquisition, NanoSignal said.

The suit also names Knight Trading Group Inc. (NasdaqNM:NITE - News) as a defendant. Knight Trading has a short position in NanoSignal of 447 million shares, -- more than double the number of outstanding shares in the company, NanoSignal said in a statement.

Neil Bruckman, a consultant for NanoSignal, said a DTCC stock borrowing program has allowed financial institutions to take short positions in the company. The firms then profit by committing a form of "naked" short-selling, Bruckman said.

In traditional short selling, investors borrow shares and then sell them, betting that the stock price will fall, letting them replace the borrowed shares at a lower price.

In a "naked" short-sale, shares are borrowed but never returned. The practice can result in more shares traded than are actually issued, which dilutes the stock's value and may spark panic selling. In the process, a "naked" short-seller profits by selling a stock it never intended to own.

"We don't believe the suit has any merit," said DTCC spokesperson Steve Letzler. The DTCC is self-regulated body that provides clearance and settlement information and services for equities, bonds and other securities.

Margaret Wyrwas, a spokeswoman for Knight Trading, said it was the company's policy not to comment on such matters.

NanoSignal shares closed at about 3 cents on Tuesday in over-the-counter trade. The shares over the last 52 weeks have traded in a range of 2 cents to 35 cents.