Replies to post #8171 on First American Scientific Corp. (fka FASC)

[TRCPA]

Beischens......its a fine line, granted, but short-selling is a practice that is undertaken with the intention of buying back the shares at a cheaper price.

That practice is supposedly illegal in the OTC markets......at least in the U.S......although it is quite clear that MM's abuse this to some degree, and can therefore create their own conditions for a falling pps, while profiting themselves on the buybacks, at their discretion.

At issue here was naked shorting, or naked short-selling. That is a situation where the MM in this case, simply sells shares that he doesn't have....and that he has no intention of ever buying back. There is no check and balance system here. Non-existent shares are being sold to unsuspecting buyers. The MM doesn't want to buy them back....in fact, he would prefer the company's pps go to zero, so this situation never gets uncovered. And guess what? He has then profitted on all of the non-existent shares that he created himself and sold.

Pretty good deal, eh?

Now, when this type of activity occurs, you open up the possibilities for the situation you find with the Michigan man, who purchased 100% of his company's shares.

Only to find millions more traded thereafter.....the MM's trading shares of their own creation.

[Jagman]

OT: beischens: TRCPA's post has it right, borrowing shares to short versus naked shorting. MM's I think can "naked short" for a short period of time to "make a market", that is, sell shares they don't have, but have to buy shares to balance out over several(?) days time. An example would be good news on a drug stock and nearly all buying, the MM's "make a market" to satisfy orders coming from your brokers, Fidelity, Scottrade, etc., and fill orders without having enough shares (if they don't have a large enough inventory). Then, over a period of days they have to accumulate shares from sellers "locking in profits" to balance out. They are allowed to do this to keep markets stable, and they can lose money doing it, but they have to keep their customers (brokers) happy to assure future business.