Market Makers - What They Do and How They Do It Message Board

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Non-Tech : Market Makers - What They Do and How They Do It

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To: eims2000 who wrote (199)	3/15/1999 12:24:00 AM
From: Richard L. Williams	Read Replies (1) of 429

eims-- Thanks for the quick reply...so what I think you are saying is this: MM sells stock he or she doesn't really have in inventory, expecting to cover when somebody else sells. This creates a short situation. Nobody sells, or buying outweighs the selling. MM continues selling short, still expecting to cover. After two months, MM's for the stock are looking at a serious short position, and selling is in dribs and drabs, with buying still steady. So, now there are X number of shares in people's accounts that really should not exist. The float of the stock has been expanded by X, even if those phantom shares really could not be honored by the transfer agent in a certificate call. This seems vaguely illegal...am I following the money correctly? How long will MM's usually tolerate being short like this? Cheers! Rick

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