Replies to post #12292 on First American Scientific Corp. (fka FASC)

[TRCPA]

You know, it would really help if you read what was said.

Two posters there claimed that there was no way that Canadian brokerages could short US OTCBB stocks.

So I simply submitted two posts that stated exactly otherwise.

And here they are. Read for yourself. If you are scared away, that's fine with me. Somehow I think you'll stay here, though.

http://www.faulkingtruth.com/Articles/Investing101/1001.html

Canada: Co-Conspirators From The North

In order to sell short enough shares to truly cause the stock to tank in price, the broker often has to sell more shares than they can "borrow" from legitimate stockholders. This practice is known as naked short-selling (meaning the short sellers never intended to cover their position by borrowing real shares from legitimate stockholders). There is only one problem. Short selling is illegal in over-the-counter stocks (known as OTC, or penny stocks), and naked short selling any stock is illegal. That's where the Canadian connection comes in. While American brokers have to follow the National Association of Securities Dealers (NASD) rules, Canadian brokers don't. Canadian investors and brokers are allowed to sell short as many shares as they want, and never have to borrow the shares from legitimate stockholders, effectively flooding the market with counterfeit shares. In fact, they can legally sell more shares into the market than even exist in the entire float. So, to circumvent the rules, the American brokers funnel their short selling activities through their Canadian connections. If there are buyers for a million shares, they short sell three million into the market, and on and on, until the stock price eventually collapses under the weight of millions and millions (or billions and billions, if necessary) of fake shares flooding the market.

http://www.sec.gov/rules/proposed/s72303/jagmedia010504.htm

Although it cannot be directly addressed by Regulation SHO, the Commission should also give consideration to the effect that Canadian broker-dealers have on the naked short issue in the United States. It is our understanding that naked short positions can be lawfully maintained by Canadian broker-dealers and that as a result a flood of naked sales have been initiated in US markets through Canada. A close examination of potential regulatory reforms in this area should be undertaken by the Commission, including an examination of the role of The Canadian Depository for Securities in this matter