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Gold/Mining/Energy : Medinah Mining Inc. (MDHM)
MDMN 0.000001000-99.0%Jun 3 1:07 PM EST
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To: the Chief who wrote (6157)9/15/1998 8:27:00 PM
From: on parole  Read Replies (1) of 25548
 
Chief, on almost every board on SI you have discussion regarding illegal shorting of OTC BB companies and naked shorting by MMs which I can never seem to substantiate. No question MMs sell stock they don't have all the time. The internet brokers charge the customer only about enough to pay for the paperwork to open your account. The revenues are largely derived from MMs paying the brokers for paper flow. You can bet that if a MM responded they didn't have the inventory and couldn't execute the trade they would be gone and their future with E*Trade or whoever is history, so they sell the stock whether they have it or not. The theory seems to go on many of these boards that they simply never cover and continue to sell stock they don't have so you have more stock being sold than is issued or authorized. Since most of these companies go bankrupt anyway the MM comes out ahead and the accounting is not such that certificates are matched up in anyway with the trades. Then someone passes the word for everyone to call for their certificates so the MMs will have to cover and everyone will make a fortune on the "sure short squeeze to come." It never works and then the company reverse splits and you can't trade your stock since you are holding your certificates. None of this makes sense to me but it seems awfully hard to substantiate as well. I have been to the library tonight trying to research this subject. Does anyone know when a MM is required to cover, once a month, week, or never?

Realist
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