Floorless Preferred Stock/Debenture Message Board

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Strategies & Market Trends : Floorless Preferred Stock/Debenture

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To: Dave K who wrote (107)	10/9/1998 9:51:00 AM
From: Zeev Hed	Read Replies (2) of 1438

Dave, in one case I know (CAFE) management and their family were the major culprit (they owned the floorless) and used to instrument to suck money from the public by continuously shorting (getting cash) and then delivering stock against the short position at lower and lower conversion prices. CAFE had a factor of close to 100 in the value of the public holders of the stock. As for the investment bankers, they know exactly what is going to happen and probably short the stock just ahead of signing the final paper (thus generating the cash to pay for the floorless), then wait until the spiral is complete before delivering the stock from conversion against their short position. It is just a "new form" of the old Reg S that the SEC managed to stem, this one is legal under the current system and the SEC is blind to its effects. Zeev

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