SEC Shorting Rule Changes coming for OTCBB???
Don't forget to go to:
otcbbreform.org and click on the "What can I do" link there inside the upper right side panel, in order to do your part.
MAJOR SEC rule changes coming to the OTCBB, if true:
Cool if this is true! No matter what though, Let's keep the heat on ... Do YOUR part RIGHT now ... if you have not done so already ... write YOUR letter today, in support of this by going to:
otcbbreform.org or stopmmmanipulation.com where there are form letters available there ( stopmmmanipulation.com ), or you can write your own. Also spread the word on this, far and wide, on every penny stock and chat board you can think of!
Check it out ... from the RB boards:
OT-FWIW-I found this of intrest-FWIW??
ragingbull.lycos.com
By: edde $$$
Reply To: None
Tuesday, 22 May 2001 at 9:32 PM EDT
Post # of 149762
Reply To: None Saturday, 19 May 2001 at 4:25 PM EDT Post # of
34742 Bottom of Form 1
Per the SEC, changes are coming for the penny market. The following information, if you
invest in penny stocks, you will find to be a breathe of fresh air. It's about time.:) Around
the first week of May, 2001, I read a post from someone who got an email back from a
guy at the SEC. I called the guy for questions. It turned out that naked
shorting/manipulation wasn't up his ally. However, we talked for 10-15 minutes about
nakedshorting/manipulation. He had to ask me exactly what naked shorting meant. I
explained the entire situation with information on the companies that are fighting the
"short", he was intrigued. He even said "wow, how do they do that" (sell virtual shares). I
said I could email you some "stuff". I did. A couple days later I emailed him to ask if he
could give me a name and a number of someone closer to the action. He did a little
better. I received a call from an SEC official on 5-15, that seemed to me, said maybe
more than she should have? I spoke to the same official on 5-18. Here is what she said. I
would like to mention the demeanor of this person I talked to - imo, gitty and excited to be
in the middle of this.:):) First, she said she has received 4,000 complaints from investors
about shorting/manip in the penny arena. Those 4,000, I'm not sure if that was the total or
just what she has seen. Obviousley, tons came from pcbm but the complaints were in
general. I did not inquire specifically about pcbm, but as I talked about all the companies
that are asking for cert pulls, companies doing dividends etc, I passed the name on of a
few companies. She is aware of all of them. Here is the current situation. She told me to
watch the SEC website for proposed rule changes for the penny market. She said she
wished they could have gotten them out already, but they should be out this summer. She
said they want feedback, ( I think that last 90 days) both positive and negative feedback. I
asked a few point blank questions, and to my surprise, they were answered - in flying
colors I might add.lol I asked if she thought that naked short selling is happening to the
point of manipulation. The answer was yes. She said "We are completely aware of what's
going on out there". I asked her to what extent are some issues being shorted. She said
"We are seeing indications where the short has gone beyond the entire O/S." Now, if she
would have laughed and said "No, there is no way the manipulation goes to that extent."
Mine, and all of our hearts would have sank. What this means is that, were not nuts to
have thought the mm's have been doing this to the extent we thought. We were right all
along. So we started talking about rules. First, for the otcbb market, rule 15c211 really
doesn't seem to be effective or enforced. There is a problem with it. MM's are not closing
out and going even monthly like they are suppose to. This is about when, w/o me asking,
she was giddy and told me she would love to tell me the changes in the proposal are but
she can't. In regards to pink sheets, worse yet. She said that the SEC doesn't govern the
buyback/go even stuff with the pinks but she said to the best of her knowledge there are
no rules pertaining to that with pink sheeters. She is aware that there is a "movement"
from us investors trying to nab the shorts. I asked her if she thought the mm's are aware
that "we" are onto them. She laughed and said "I don't know, I would think so." Asking
about the actual process of busting the shorts and creating a buy in, that was not up her
ally. But as we know, pcbm is right on the doorstep along with numerous other
companies. She told me I could call anytime, I will see if I could possibly get a name and
number of someone at the SEC who can talk about the mechanics of a buy in. She
brought up another rule that isn't being followed. Rule 153c-3. Yes, someone else is
being naughty too,lol your broker. They are required to have you sign a release in order to
allow the broker to lend your shares out with your margin accounts. Have you ever signed
one of those? She laughed and said "That particular rule isn't being followed." Now,
regarding the proposed changes, I asked how long it can take to make actual changes.
She said they are in a tough spot right now because they have no chairman at the SEC at
this point. So, who know's. The situation is, those changes when they do happen, won't
effect companies that are now battling a short position. Again, many companies are
doing what they can legally to get it busted. Along with pcbm, I understand there are
others knocking on the door. The situation as I see it is two fold. One, and should be
foremost, is that change is coming to the penny world that should make this game
somewhat fair. THAT is huge. Secondly, as I mentioned, with tons and tons of
circumstantial evidence, and now what the SEC confirms, it shows we were on the right
track all this time. Here's a couple of thought I have. One is, the mm's have been playing
this game a long time. Guess why it's coming to an end? Answer, the net. The forum,
unity, gumption lol, brains, have all come together. The rule changes have come too late
to save the mm's from themselves. I believe we will go into the next era of investing which
we can dub "The big bang theory.":):) So the mm's know were onto them. With this issue
and others, here's a thought I have as far as there game plan. Are they manipulating
these prices so low (in pcbms situation the price is now at 4 ecnts) that when there is a
run to 6 cents, 8, 10, 12 cents, won't there be a ton of sellers? Do you think they think they
damn near have a cap on 20 cents? 500% return, damn nice right? Well, there will be
sellers, the problem is we own the float as much as 10 times over. We will decide what
they should pay us. Note to bashers: Wake up and die right. The writing is on the wall. No
one needs you people, your completely worthless failures. Information good or bad will be
discussed by the longs, sure as #### don't need you stick your lousy attitude into it.
Perhaps you should drive truck.lol I suggest you think about finding a stock that has a
huge short and invest. Quit batteling against change in the penny market. In regards to
paid bashers: There is a plan for you guys too. If any investors out there beleive that a
particular basher is paid who hits it really really hard. Email the board name and one post
# to jmcjmc99@yahoo.com. (The pcbm board needs not to do this, you all know I know
everyone here).:):) Feel free to post this on any board where there is beleived to be heavy
shorting and manipulation. Good luck all.:):)
Also, Check out this letter:
ragingbull.lycos.com
By: benyahmeen
Reply To: None Wednesday, 23 May 2001 at 4:52 AM EDT
Post # of 377764
Virtual Shares proliferate the Pinks!!.......many complain that the market makers create naked (virtual) shares to dilute and manipulate small cap stocks....Yes just like MVEE...be informed!!! market makers can immediately create short positions to give the market liquidity....but many times it is to manipulate the market!!!!....especially the "PINKS" and the otcbb!!!.....the fear the market makers project to the shareholders causes the weak to sell so the market makers can cover their virtual shares...please read below what a company has sent to the SEC for investigation!!!
Securities & Exchange Commision Letter
Mr. Jonathan G. Katz
Secretary
Securities and Exchange Commission
450 Fifth Street
Washington, D.C. 20549
Re: Release No. 34 42037 (File No. S72499), Short Sale Regulation
Dear Mr. Katz:
I am the CEO and Chairman of Medizone International, Inc. ("MZEI" on the OTCBB). The experience of my company over the past year suggests that rather than eliminate Rule 10a-1 or loosen the restrictions on short selling, the Commission should focus on more effectively enforcing the current short sale rules and should extend those rules to non-exchange listed securities. In our experience, the unchecked abuse of the current short sale rules deprive individual investors of essential investor protections and make it more expensive for companies to raise capital. In addition, exempting market makers and not extending the rules to non-exchange listed securities and the over-the-counter market deprive thousands of issuers and tens of thousands of investors from the protection of the rule that was adopted to curb a recognized abusive practice that has increased in recent years in these markets with the lack of regulation and the increased availability of enhanced communication and information technology such as the Internet.
Because my company is an OTCBB issuer, I will focus my comments on the question of whether the short sale regulations should be extended to that market and other non-exchange listed securities markets. For the reasons stated in this letter we believe they should.
A recent experience of our company illustrates this problem dramatically. This company has had a difficult past several years. Only in the last six months has the company been able to overcome serious difficulties created in large part by unscrupulous prior management. The current management, including an investment group led by myself, has secured funding and furthered research in the company since mid-1997 and it has only been in the last three months that the company has had its first positive developments in the past five years.
On May 23, 2000 we were able to announce a long-awaited understanding for significant funding and scientific development in the company, that included an agreement for short and long term financing at prices significantly above the current market price of the company's common shares, a recently granted patent of the company's along with the filing of an additional patent application, and anticipated news of new human tests of our technology for treatment of certain viral diseases. These developments mark significant strides for a small research and development company and we expected that the news would be very favorably received by the market and our shareholders.
Initially we were not disappointed and our expectations were confirmed. Response of shareholders and interested parties in Internet chat boards and contact with the company were most enthusiastic. In the first few hours of trading following the release, which was sent out with maximum distribution on PR Business Wire, the price of our shares rose nearly 70% on high buying volume. Suddenly, however, the price of the shares was obviously capped. By our estimation, the short position in our company's securities increased an estimated 2,500,000 shares that day alone. Certain of our market makers have informed us that they think the short position in the aggregate may have increased by nearly 25,000,000 shares (approximately 20% of our total issued and outstanding stock) since January 1, 2000. We do not see how a market maker or other short seller can make a legitimate market when they have put themselves in a naked position in which they cannot cover in the face of unexpected good news and positive developments except at significantly higher prices. Their economic interests are so adverse to the majority of the other shareholders, that they must control the price in order to protect their position.
We believe that our experience is not unique and our position not isolated among our peer companies on the OTCBB or in the pink sheets. Based on information we have gathered in the past several months and based on the market activity of our shares as disclosed by that information, we believe that short selling in our company's securities has (a) artificially inflated the number of shares available in the market, perhaps even creating a short interest that exceeds 50% of the public float, and (b) artificially depressed the price of the shares in the face of the first positive corporate developments in many years. We have observed short-selling, price capping, buy-high-sell-low strategies, "painting the tape" trading and other actions that have served to limit our access to capital, diminished or suppressed the value of our shares and resulted in a volatile stock price for our securities on an almost daily basis.
This short selling has proven extremely detrimental to our company and our shareholders. We firmly believe that the Commission can and should take steps to curb these abuses, beginning with the extension of short selling regulations to non-exchange listed securities and the markets in which they are traded.
Specifically, we recommend that the Commission:
1. Extend regulation of short sales to all currently unregulated markets for non-exchange listed securities.
2. Permit regulated short selling, subject to the monitoring, reporting and volume limitations discussed below. We believe there is a place for legitimate short selling, provided it is not manipulative. We believe that imposing the limitations now used in the Nasdaq National Market and in the national exchanges would be a very strong step forward to curbing abuse in the OTC markets.
3. Require reporting and increased monitoring of short selling in the OTC markets. This would include imposing a requirement that all short sales be instantly reported in such a way that the net long position of each account participating in a short sale and flags naked shorting, down tick shorting and other "bear raid shorting."
4. Limit market maker short selling and permit short selling only to meet legitimate temporary intra-day needs to maintain an orderly market.
5. Implement velocity and volume limits on short sales. Prohibit the immediate re-lending of shares for further short sales that have been loaned to permit a short trade. Establish volume limits for aggregate short sales that include time limits for open short positions, volume limits on related accounts, and allocation of the volume limits among short selling participants.
We urge the Commission to extend short selling regulations to non-exchange listed securities. I would be happy to discuss these issues with the Staff and can be reached at (415) 868-0300.
Respectfully submitted,
Medizone International, Inc.
Edwin G. Marshall,
Chief Executive Officer |
