Given naked shorting is pretty much prohibited, those doing it aren't out there advertising they are doing it. That's why you so many hedge fund defenders claiming that there is no such thing. It's kind of like asking whether a bank robber ever really has to return the money.
Here's my opinion and it's opinion only and this is a very complex issue.
To the extent that MM's are abusing the exception which allows them to naked short to make an orderly and efficient market, it's a question of what can they get away with. As a stock shows good performance and the price goes against them, there is obvious pressure for them to cover. MM's are able to move a stock playing the games that we all have seen, particularly in stocks that are not liquid. The more positive information there is on a stock, the more buying that comes in, the more pressure on MM's to cover.
With respect to foreign shorts, hedge funds, and others, many of them are able to do this because they are wealthy and have excellent credit with their respective brokers. The pressure to cover becomes a function of how their account in total looks. If this happens with AGEN, AGEN might be a tiny portion of a very wealthy individual's account or a hedge funds' play.
Think of it more like a bookie who extends you credit. If you are constantly making good plays and coming up with cash, the bookie lets you continue even if you lose on a couple of bets. If things go drastically against you, you either bring in cash, they close your account (and cover), you cover, or they break your legs. <gggg> |
