Mr. Travis, Excellent post! Bravo! I enjoyed EVERY word of it!
For some of you who don't understand the term......A "buy in notice" is sent out when a firm is unable to cover its short position (as is believed to be the case with Fannystock) with real stock certificates or to provide borrowed certificates. You see, you only have a certain period (a few days) in which to borrow the certificates or cover the short position (buy it back). If you can't, which is believed to be the case with the major short (IMO, Auric's brothers in this caper at Fannystock), a "buy in notice" is issued. The short has a few days to cover (buy back the stock) or his firm will be subject to the regulators approaching other market makers and asking for block bids for the shares that the notice was sent for. For example: if Fannystock has a buy in notice for 50,000 shares, the regulators will go to X, Y, & Z market makers and ask what they are willing to sell 50,000 shares of AENG for (and guarantee delivery of the stock certificates). The regulators will accept the minimum bid for the shares (say $30/share) and bill Fannystock for the order (in this example, $30 x 50,000 shares = $1.5 million dollars). If Fannystock shorted those 50,000 shares at $13 they will LOSE the difference between the $30 - $13 = $17 times the number of shares 50,000 = $850,000.
In other words, it appears that Auric and (IMO) his brothers at Fannystock are about to pay the price for their stupidity. Please remember, Fannystock has been shorting AENG for weeks. Usually, a "buy in notice" is sent out for the first day that the shorting occurred in which the short was unable to cover or provide borrowed shares within the specified period given by the regulators. The next business day, they receive another "buy in notice" for the next day they couldn't provide certificates within the specified period determined by the regulators and on and on and on.................
Fannystock may be looking at multiple days in which they'll lose large sums of money. It makes me wonder if Fannystock is a firm run by good business practices or by a few rogue traders. IMO, they're caught up in this thing and they'd love to have an exit.......... Their only exit at this time appears to be............a FAT checkbook!
Best of Luck, Greg |
