Ruff, I don't think we're all that far apart. I understand and can appreciate why a fund/institution would want to hedge their downside exposure, especially with companies that are using them as the lender of last resort. I'd bet that the vast majority of stocks that use toxic converts are circling the drain anyway.....
Retail shareholders will ALWAYS be the last to know of important events. The internet has leveled the playing field somewhat, but insiders and large investors will control the market in very thinly traded securities.
Deals of the sort you mention, private placements and convertibles, ARE fully disclosed in SEC filings. What is illegal is the front-running that had been taken place before the filing of the agreement. Of course, I'm firmly against any illegal forms of shorting based upon inside info (and the reverse is true also, i.e insider buying before a buyout)
Don't rely on company PRs. They have their own agenda....so its always wise to check the SEC filings.
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