Prucent Joins Medizone To Battle Market Makers
By Jack Burney
06/09/2000 07:12 AM CST
(This is the first in a series of articles about secret market maker manipulation of OTCBB stock prices, and the need for a rule to require full disclosure of short positions in OTCBB stocks. Click on the following links to read the other articles: Article 2, Article 3, Article 4, Article 5 . If you know of such instances of MM suppression of stocks, please tell us the story at jburney@otcnn.com)
It?s an unusual reason to buy 100,000 shares of stock, but it made sense to M. Anthony Lester.
When Lester read about Ed Marshall?s charge of market maker manipulation to suppress the price of his company?s stock (OTCNN 06-02-00), it was d‚j… vu all over again.
Marshall?s firm, Medizone International Inc. (OTCBB: MZEI) had announced the infusion of $10 million and more if needed to conduct multi-site scientific testing of its possible cure for Hepatitis C and other viral diseases, and its stock price climbed sharply ? then inexplicably dropped.
Lester, president of Prucent Business Strategies Group had watched the same thing happen to its partner, American Healthcare Providers (OTCBB: AHEA), when it announced a $22 million contract with the New York Department of Mental Health for patient medications. The stock went up sharply, then down suddenly, for no known reason.
?After our announcement of this excellent news last week, AHEA stock responded much like the MZEI stock," said Lester. ?We are in total agreement with Chairman Marshall and support his efforts to do battle with the few market makers who have put their financial greed ahead of acknowledgment for the development of a science that will address a grave world need.
?Prucent and AHEA will do what we can to force market makers with extremely short positions to balance registered, restricted shares with actual stock buys."
Prucent will purchase 100,000 MZEI shares on the open market, and prohibit their use to maintain secret short positions, Lester said, as a gesture of support of Medizone to put pressure on the ?few greedy market makers who are holding extreme short positions in MZEI stock,? to force them to buy MZEI to balance those positions.
?This very serious problem,? Lester said, ?arises from fact that market makers do not have to report their short positions, as is required for NASDAQ and NYSE stocks, only their volume. They can secretly hold huge short positions, hoping that the company will fail and they will rake in all the money, since they won?t have to buy stock to balance the short position after all.
This presents OTCBB with another obstacle to overcome in its pursuit of new credibility and investor confidence, Lester said. Regulations forcing full disclosure of short positions by market makers would solve the problem instantly.
"Meanwhile, companies like Medizone and American Healthcare Providers," Lester said, ?as they continue their pattern of dramatic growth, will prove to be a catastrophe for a certain group of market makers with large short positions."
Monthly figures released this week by the OTCBB showed unspecified share volume in MZEI for the month of May. The top four market makers in that category were Knight Securities, Inc. with 4,553.068 shares, Schwab Capital Markets L.P. with 1,986,566, Wien Securities Corp. with 1,902,471, and Wilson Davis & Co. with 1,064,468.
But these figures represent total volume alone. How many shares of the stock sold? How many bought? Only the market maker knows. The bought-sold figures should balance within a reasonable range. Say 10%. MMs must maintain a small short position to make the market.
But, because that balance ? or the lack thereof ? is secret, MMs can do whatever they please with impunity. And that?s a situation Marshall, Lester and a growing number of OTCBB company executives are to do battle about.
Now, it appears that two more OTCBB company executives have stepped forward with their own stories. Watch this space for additional news about Market Maker Manipulation.
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