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Strategies & Market Trends : Shorting stocks: Broken stocks - Analysis
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To: Q. who wrote ()5/25/2000 9:14:00 PM
From: Daniel Chisholm  Read Replies (2) of 2506
 
Corel does a toxic placement with Cannacord.

Amount is $C15M, with an options for $C7.5M more (at Cannacord's sole discretion), and $C7.5M more at Cannacord's and Corel's joint discretion.

Pricing is 90% of the average closing bid over the next four days.

The novel thing about this one is that it is a Canadian company, listed both on the TSE and NASDAQ. This seems to raise an interesting "jurisdictional arbitrage" opportunity w.r.t. whether the shares need to be registered with the SEC.

It seems to me that they (Cannacord) can do their shorting (hedging) with almost wilful abandon over the next four days. In fact, there is probably a temptation to manipulate the closing price downwards.

To close out their short, could they transfer their short position to the Canadian side of their account, and then deliver shares that are not registered for trading in the US? Seems like a quick-and-easy way to get the risk laid off.

Does this suggest behaviour over the next four trading days that we can perhaps successfully game? I.e., strong selling pressure ("no price too low, provided you can give me a damn uptick!" ;-), and posisble extra-heavy pressure on the closing price?

I posted this to the Corel thread:
Message 13780197

- Daniel
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