Replies to post #42083 on Medinah Minerals (MDMN)

[Goldstrike]

Outfits like this typically sell their “naked short” information on a particular company for a hefty sum. How accurate these reports are is subject to question, since the ability to count the “phony” shares is severely hindered by the way government oversight is set up. Transfer agents should know, but really have no idea of the number of shares of shares that are nakedly shorted in a company. They can only see the names and addresses of the "shareholders of record". The Transfer Agent can only see the number of shares any particular MM has in their NSCC shares account. He is not allowed to see how many shares that MM is holding long. In fact, no one really knows enough to get an accurate estimate. About the only way to get an estimate of naked short position is to take a census of shareholdings, made possible by adding up shareholders monthly brokerage statements. These statements show legitimate shares along with the nonexistent and never to be delivered shares produced by the MM’s. If a company has a float of say, 720 million shares and a count of say, 2 billion shares is made in this manner, we can safely say that almost 1.3 billion shares are being nakedly shorted.

[Toxic Avenger]

"Speculative stocks, such as microcap stocks, often have a high probability of declining in value and a low probability of experiencing above average gains.27 For example, investors should take extra care to thoroughly research any company quoted exclusively in the Pink Sheets.28 With the exception of a few foreign issuers, the companies quoted in the Pink Sheets tend to be closely held, extremely small or thinly traded. Most do not meet the minimum listing requirements for trading on a national securities exchange, such as the New York Stock Exchange or the Nasdaq Stock Market. Many of these companies do not file periodic reports or audited financial statements with the SEC, making it very difficult for investors to find reliable, unbiased information about those companies.

There also may be instances where a company insider or paid promoter provides false and misleading excuses for why a company's stock price has recently decreased. For instance, these individuals may claim that the price decrease is a temporary condition resulting from the activities of naked short sellers. The insiders or promoters may hope to use this misinformation to move the price back up so they can dump their own stock at higher prices. Often, the price decrease is a result of the company's poor financial situation rather than the reasons provided by the insiders or promoters."

http://www.sec.gov/spotlight/keyregshoissues.htm