Replies to post #170814 on Spongetech Delivery Systems, Inc. (fka SPNGQ)

[ID Supermoney]

They could also issue this many shares as the DICON possible buy out with shares.

Are they wanting to buy another company to go on NASDAQ??

[risk54]

Wadi,

If option c, and they issue new shares for short covering, what happens to the 1+ billion illegal shares already in the market?

Anyhing is possible, but the only way to get rid of these illegal shares is to make them cover in the open market, then retire said shares.

Unless there's another way to rid the market of the illegals that I haven't thought of

[phrantic]

Very interesting Wadi, and again, excellent!

[phrantic]

Wadi, would appreciate your input on this. Do you think we have the HUGE NSS position that so many harp on daily, or do you think there is a good possibility the SP is being manipulated by other than NSS means? Sounds like (b) says just that. I have a real hard time believing NSS are stupid enough to still be around in any significant numbers at this stage in the game. TIA

[OldTymer]

wadirum, picked this up from the SEC's website...

Even though naked shorting is legal, there is one big exception to this rule. Judging by what has happened to SPNG over the past year, would you say the MM's have deliberately manipulated the share price? I say yes. If so (notice the second, 3rd paragraph):

II. "Naked" Short Sales

(3rd Paragraph):

Naked short selling is not necessarily a violation of the federal securities laws or the Commission's rules9/b0. Indeed, in certain circumstances, naked short selling contributes to market liquidity. For example, broker-dealers that make a market in a security4 generally stand ready to buy and sell the security on a regular and continuous basis at a publicly quoted price, even when there are no other buyers or sellers. Thus, market makers must sell a security to a buyer even when there are temporary shortages of that security available in the market. This may occur, for example, if there is a sudden surge in buying interest in that security, or if few investors are selling the security at that time. Because it may take a market maker considerable time to purchase or arrange to borrow the security, a market maker engaged in bona fide market making, particularly in a fast-moving market, may need to sell the security short without having arranged to borrow shares. This is especially true for market makers in thinly traded, illiquid stocks such as securities quoted on the OTC Bulletin Board,5 as there may be few shares available to purchase or borrow at a given time.

Is all naked short selling abusive or illegal?

(3rd Paragraph from a different section):

Selling stock short and failing to deliver shares at the time of settlement with the purpose of driving down the security's price. This manipulative activity, in general, would violate various securities laws, including Rule 10b-5 under the Exchange Act. Regulation SHO does not address this issue.