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Microcap & Penny Stocks : Naked Shorting-Hedge Fund & Market Maker manipulation?
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To: makeuwonder who wrote (3722)8/22/2008 11:31:51 PM
From: shag007   of 5034
 
If the broker did that their would be a "fail to deliver" shares from your transaction when the settlement time expires. No proper clearing in your account in which case you would be naked long and the Broker would be naked short on a transaction on their side that doesn't even have a paper trail much less a "fail to deliver".

Why would they do that just to avoid paper(computer) work when they accomplish the same thing by:

If they wanted to go short a stock that they could not already borrow themselves then why not let you buy the shares at the NBBO (a legitimate and cleared transaction) and then borrow your shares to go short (another legitimate and cleared transaction) with the same results as above.

A broker/market maker would go naked short when they have exhausted all the shares they can borrow and they want to be more aggressive by breaking the rules. No need to do that when they have someone that has made the decision to go long. Also, they may let a customer of theirs naked short a stock that is not available to borrow ei. hedge funds(for transaction fees). Once the settlement date on a transaction expires and their has been a failure to deliver it can no longer be reversed.
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