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Microcap & Penny Stocks : BANY: Core business growth, exciting affiliations!
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To: buckshot who wrote (1197)3/19/1998 11:53:00 PM
From: brad greene  Read Replies (1) of 5847
 
Buckshot,

You lurker, you. I will put you on the list of shareholders. If you do choose to call for your certs, then you need to let Russel know.

OK...David Hayes knows alot more about this than I do...but.

There are two kinds of shorting. Regular and Naked.

Regular shorting is done by borrowing stock from some brokerage where people have accounts that have BANY stock in them. They borrow the share and sell the shares on the open market in hopes of replacing it later....buy buying it back later at a lower price.

This would be known as the "short" position of the stock.

Market Makers who have inventories of BANY stock are long....Market Makers who have borrowed stock to sell are short. Market makers can go short on their own accounts or for clients.....who must be working from foreign soil, because you cant short BANY if you are an American.

Anyhow......Let's say that all of the brokerages all over the country have loaned out all of the BANY shares to a Market Maker who is working with a client who is selling and selling and selling......500,000 shares of BANY to.......Me, David, and David....over the last four months. The stock goes down! The client loves it.......Me, David and David don't understand it.

Now...David, David, and I want to have the certificates. So.....my broker must now get my shares back from the Market Maker who has borrowed them.....because I want them. (if I go to the bank and ask for my money...they can no longer loan it out to someone else)

If the Market Maker who has sold the stock for a client gets a call-back for the stock...he has 3 days to deliver it. If a whole bunch of brokerages call shares back... and the short client and Market Maker must obtain a large number of shares really fast.......they could be in trouble. They can try to borrow more stock from brokers who happen to have some.....but that might not work, because they have already borrowed all of the stock...and it is not in supply anymore...it is being called back.

They can call up the company and ask that they sell treasury stock to the Market Maker....to fix the problem. Most companies will respond by declining or saying "go fix yourself".

They can then call individual shareholders....asking to purchase their shares (at a slightly higher price) to fix the problem. Individual shareholders often say..."go fix yourself"

They can see if other Market Makers happen to have stock in their inventory that they may be willing to sell....at a much higher price. and a long Market Maker may even say "go fix yourself"

The other way to get BANY stock is to buy it on the open market like all of us did. They must buy 200,000 shares.....the other market makers don't have the shares to sell.......The price of the stock just keeps rising until you, me or any other BANY shareholder crys uncle...and sells.

That is shorting in/by a nutshell......If the Investor holds the certificates.....then the broker can't loan them to a Market Maker. If they are ALREADY out on loan...then they WILL be called back when the investor calls for the certificates.

Cash account...Margin account...Why call for certificates?

Naked shorting is illegal. Naked shorting is shorting shares that don't even exist......the shares have not even been borrowed. They have been created out of thin air.

What happens if the Transfer Agent gets certificate requests for 3 million legally bought shares......and it so happens that only 2 million have even been issued?

The only way to expose naked shorting.....is to call the float. I think.

Anyone jump in here.

bg
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