Replies to post #6937 on CAVU Resources Inc (CAVR)

[shermann7]

There is selling short and there is naked shorting. Two different things.

Shermann

[johnsyn]

I believe the most important part is the last paragraph which says they can waiver the whole rule whenever they deem fit. We'll never see the argument because it is the money makers doing the request for waiver. IMO, the MMs will always get the waiver because they control the market. It will NEVER be in the interest of the market to shut out the MMs. This is why your friend has had supposedly 70 days of being listed.
More interpretation to follow after I look at the other rules they divert to.

[johnsyn]

IMO ONLY-could be wrong, MM's can claim the sellers backed out, or are also holding shares long and on loan to another broker, etc. It's not that they are not following the rules, they are (supposedly)following the exemptions, or until someone complains and an investigation proves they were not truthful, Following is excerpt from SEC RULE 203:

After considering comments received, we are adopting the changes proposed, with one modification. Pursuant to proposed Rule 203(a), one of the circumstances in which a fail or delivery of borrowed shares would have been permitted was where, prior to the sale, the broker or dealer knew that the seller owned the securities and the seller had represented that he or she would deliver them to the broker in time for settlement. Although we believe it was implicit in the proposed rule text (and in current Rule 10a-2), we are including in the rule text the predicate that the seller fails to make such delivery after advising the broker-dealer that he or she would deliver the securities in time for settlement.

As adopted, Rule 203(a) requires that if a broker-dealer knows or should know that a sale of an equity security is marked long, the broker-dealer must make delivery when due and cannot use borrowed securities to do so. This delivery obligation does not apply in three circumstances: (1) the loan of a security through the medium of a loan to another broker or dealer; (2) where the broker or dealer knows or has been reasonably informed by the seller that the seller owns the security and will deliver it to the broker or dealer prior to the scheduled settlement of the transaction and the seller fails to make such delivery;111 or (3) where an exchange or securities association finds, prior to the loan or arrangement to loan any security for delivery, or failure to deliver, that the sale resulted from a good-faith mistake, the broker-dealer exercised due diligence, and either that requiring a buy-in would result in undue hardship or that the sale had been effected at a permissible price.

[johnsyn]

Unless they're caught lying, they have exemptions out the bun-hole and don't have to settle shares.