I POSTED THIS ON THE RB BOARD...
The following is MY opinion on the OTC BB issues and short selling in general:
You cannot make short-selling illegal for the reasons everyone else here stated -- liquidity.
While I would agree with a short sale 'cap', especially for OTC BB stocks, you NEED short selling to take the other side of many, many trades.
What do you think happens when you buy stock from a market maker or even through an ECN on any NMS stock? My guess is at least 50% of the time the MM would be affecting a short sale (whether he has a customer order in-hand or not), even with the manning rule, he would SELL the stock first and then buy it at the same price from his customer. During even this brief period he would be short (so technically if it is illegal he could not do this). If he then has to BUY the stock first only to have the buyer CANCEL their order what then? The MM isn't their to go at risk on automatic pair-off orders.
Essentially what your group would like would be short-sale reporting and a short-sale 'cap' for MM's. While I am not sure what the 'powers-that-be' will do, I for one would agree with and have no problem seeing those two things come to fruition. However, if we are going to put the MM's under the microscope, the same MUST be done for these ruthless, fleabag companies whose only source of revenues is selling more stock. We must 'take out the trash' and keep a very close eye on the activity of such companies as well. Some of these ridiculous PR releases they tout as news (not naming names) should be illegal as well - among other activities.
My question is, why doesn't the MMM group also want some kind of COMPANY reporting reform? In my opinion, it appears that some of the 'mouthpieces' for this group have it in their best interests NOT to have any reform on that side of the fence (perhaps some of those who work for PR companies themselves and NEVER address company wrongdoing). Does anyone agree that some of these company's only source of revenues is selling more stock? Shouldn't such a ponzy scheme be forced off of the OTC BB so that they don't harm any more innocent investors? Of the 2000 or 3000 that were removed, STILL far too many fleabags are hanging around the OTC BB. And furthermore, how about educating the innocent investor about the DANGERS of investing in the OTC BB? How about that the majority of these stocks are on the OTC BB for a good reason, and simply are NOT suitable investments for the bulk of people who invest in them.
Just my thoughts folks... I think if the MMM group wants to do the right thing they need to look at BOTH sides of the coin and reform BOTH of these issues, right?
All the best,
-- Gene |
