Naked Shorting-Hedge Fund & Market Maker manipulation? Message Board

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Microcap & Penny Stocks : Naked Shorting-Hedge Fund & Market Maker manipulation?

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To: Geoff Altman who wrote (405)	10/27/2005 12:55:00 PM
From: rrufff	of 5034

I don't profess to be an expert but my understanding was that Reg Sho basically said, and I'm simplifying, that trades have to settle, other than exceptions which were defined, including the MM "make an orderly market" exception. That doesn't really change anything of substance. It added a reporting mechanism for stocks above the threshold percentage or amount and procedures once the company was on the threshold list for 13 days. Again, that doesn't make anything legal or illegal and it doesn't eliminate manipulation or define it or forgive it. IMO, hedgies have flaunted the rules for years, first Canada and then other overseas "bookie" type arrangements, MM connections, and now the light is starting to shine on this scam. I don't believe there is a rule that says a hedge fund can hold a naked short for 2 weeks. In essence, they do it because they can get away with it and it doesn't even show up on the Reg Sho list until that point. Even after that, there are enough loopholes and tricks to keep the naked short, but, IMO, this constitutes manipulation as has been traditionally interpreted under 10(b)-5 and other regs.

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