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Microcap & Penny Stocks : Naked Shorting-Hedge Fund & Market Maker manipulation?
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To: Savant who wrote (4962)10/22/2013 12:03:57 AM
From: Elroy  Read Replies (1) of 5034
 
Normal, shorted shares have been borrowed, hence the number of shares issued and outstanding doesn't change.

Well, take a simple example, say we have 10 shares in a company, each held by different owners, and one share is borrowed and sold short to an 11th owner. When the company issues warrants, it only issues 10 warrants (the number of actual shares outstanding), but there are 11 long owners. Where does the magical 11th warrant come from? Is it automatically borrowed from the the same guy who loaned out his share?

If these warrants all eventually get exercised (they're in the money), isn't one of those eleven owners going to have a problem because there are only 10 warrants in reality?
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