Replies to post #50015 on Intellicell Biosciences Inc (fka SVFC)

[Ionthefuture]

A stock is placed on the Regulation SHO Threshold Securities list if:

1) There are aggregate fails to deliver at a registered clearing agency of 10,000 shares or more per security;

2) The level of fails is equal to at least one-half of one percent of the issuer’s total shares outstanding; and

3) The security is included on a list published by a self-regulatory organization (SRO).

Fails-to-deliver occur most often in short positions, but are often symptomatic of Naked Short Selling (NSS), where the individual or agency naked shorting the stock neither owns, nor borrows, nor verifies that the security can even be borrowed before shorting. This practice is illegal because it effectively disrupts the supply/demand dynamic: it allows them to turn supply into a liquid element completely under their control. It also deprives buyers of their right to have available shares for purchase.

Once a security is placed on the Regulation SHO Threshold Securities List (via regsho.com):

Regulation SHO requires broker-dealers to close-out all failures to deliver that exist in threshold securities for thirteen consecutive settlement days by purchasing securities of like kind and quantity ("close-out").20

Until the position is closed out, the broker or dealer and any broker or dealer for which it clears transactions (for example, an introducing broker),21 may not effect further short sales in that threshold security without borrowing or entering into a bona fide agreement to borrow the security (known as a "pre-borrowing" requirement).

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This often creates a short-squeeze, the strength of which is ironically determined by exactly how many "phantom shares" exist and failed-to-deliver, + whatever buying pressure exists at that moment.

some of the MMs are likely the very culprits of the NSS, so they're going to want to knock the stock down to cause fear-based selling to free up shares with which they can close out their phantom positions, because remember: the reg SHO clock is ticking. They'll do everything they can to close out at the lowest price they can, but now they have to let go. And when they do....