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Microcap & Penny Stocks : BASHERS POST THEM HERE!!!!!
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To: Dave Gore who wrote (46)6/29/1998 8:28:00 PM
From: Henry Volquardsen  Read Replies (2) of 390
 
WHY DO 95% OF THE BROKERAGE HOUSES OUTLAW SHORTING ON BB STOCKS? Could it be because the NASD and SEC feels that stocks are too easy to manipulate on the downside and small investors can get hurt?

As a matter of fact, no. That is not why most brokerage firms do not allow shorting of bulletin board stocks. They don't allow it because they are thinly traded equities which are generally not eligible for margin. As such they are not easy to borrow and the shares and would be subject to vicious short squeezes in the securities lending market. The brokerage firm is the one on the hook for this and gets very little income in exchange for the risk they are taking. They find it is much easier not to expose themselves to this and just put a blanket prohibition on shorting these stocks. Has nothing to do with wether they can be manipulated.

Btw it is much easier to manipulate bb stocks to the upside and a hell of a lot more small investors get hurt in those manipulations.
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