#reply-8315836
Ok here goes , Ill try to answer this as I know it.
1.) NASDAQ market makers , specilaists and Financial Institutions can short almost
anything at any time , its part of the "argument that it's necessary " in orderto maintain a fair
and orderly market..
2.) The entitiea and individuals with the biggest short trading positions are the Mega-Firms
and Corporate Insiders, they very commonly sell stock offshore in Canada,, europe ( is hot
these days ), and in other foreign countries as part of thier business to raise capital these
sale are usually restricted for a time and so the buyer usauuly starts shorting stock in
anticipation of the stocks registration , since these transactioons are usually at a ubstantial
discount to market they try to lock in a profit by shorting at current makret levels, many
time sthis is done with the cooperation of these firms and or market-makers..who have a
predetermined arrangements. These sales are usaully frowned upon by the public as it is all
done in secret.
3.) The next group of short positions are those held by insiders who open accounts offshore
, in countries that arent under the jurisdiction of the SEc and or the NASD, ie, the
Caymans, some tax-havens and in Europe,, some is being done through Central
America..They open these accounts and deposit cash and use this cash as collateral for the
short sales..thes insiders are liquidating restricted stock that they own but they are
prevented from selling by SEC rules,, and then as soon as the stock becomes free trading
they transfer the stock to these accounts or in some way cover the shorts that they have
been maintaing offshore sometimes they will have a short position for 1 or two years..
4.) then there are NASD firms that also have arrangemnts with offshore businesses to
initiate short positions as a hedge against a promotional agreemnet with a aprticular
company( also the same thing is done by Un-licensed promoters and hypesters) They may
be long here in the US but are actually net short offshore ( Europe is the place of Choice )
ie Holland, Germany and England and British Island..
5.) In addition it should be noted that by and large it is the US Firms and corpoarate
insiders of US companies that maintain the laregest shorts in the stocks they are connected
with..
6.) Finally there are companies that are loacted in these countries that allow individuals to
open accounts and trade according to the rules of that particular country..these accounts
are rare and are not easily opened as most Corporate insiders , covet their ability to sell un
registerd stock well in advance of the restrictions being lifted and as such the se Firms
protect them selves from Scrutiny ..and while it is completely legal for them to effect such
transactions ,,they do require significant waivers from these insiders and US Firms from any
liability..Its like " dont ask...dont tell"
7.) In addition NASD memeber firms that are owned by many un-licensed partnmers are
exempt from the borrow rules we have in the US..so it is also through this method that
individuals who have these " connections " can short stocks ..that are BB or IPO's or other
hard to borrow stocks ..
8.) It is my conclusion that the biggest shorts in the US are the longs and the promoters and
the financial backers of these companies,as well as the insiders..That is why..I am outraged
when I see these companies point their fingers at ..honest traders who have taken a position
that is crtical of a company or a companies market valuation.
9.) In addition the NASD should and could abolish the artificial rules they have instituted to
prop up US Stock prices.. It would create a much more fairly valued market and would
reward companies that actually peform and meet their finacial goals |
