Naked Shorting-Hedge Fund & Market Maker manipulation? Message Board

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Microcap & Penny Stocks : Naked Shorting-Hedge Fund & Market Maker manipulation?

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To: gregor who wrote (4423)	5/11/2009 4:19:18 PM
From: rrufff	2 Recommendations Read Replies (1) of 5034

Thanks gregor - although I have to disagree a bit. In law, there are concepts that just can't be ignored. One that would be applicable to our discussion here is "unconscionability." If something is unconscionable and the bargaining power of the parties is so unequal, then a court will not enforce the particular clause, at least as it is written. It could reform the contract or part of it to make it fair and equitable, and to reflect the reasonable expectations of the parties. Think of being a patient before surgery and the doctors put papers in front of your face. The documents "warn" you that the you could have very serious consequences and you agree that you have been "informed." Often the documents indicate that you understand the risks and that you agree to hold the institution and its employees harmless. It should not be a surprise that this type of setting does NOT protect the medical professional as written. In the case of our discussion, the poor investor puts his hard earned, often retirement, funds into something where there is a "disclosure" in fine print that the shares can be used to, in essence, hurt his investment. Someone seeking to attack this could either do it as a class action and/or try to seek equitable relief, where the inherent conflict of interest, would be very important. In other words, many courts will look very hard at something that is disclosed and really amounts to a fraud or a breach of fiduciary duty. It becomes a mixed question of fact and law and is very complicated. However, it's not clear that this type of thing would survive. Judges are not ignorant of what is happening in corporate setting and this is where the law is considered "living" and can change. It requires lots of money to pay for legal time and take a shot. I expect that we will be reading much more in this area. Best wishes.

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