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Technology Stocks : JMAR Technologies(JMAR)
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To: MRothaus1 who wrote (7860)4/27/1999 6:48:00 PM
From: real_time99  Read Replies (2) of 9695
 
The latest short interest report came out today. It shows a very small increase in the short interest from 686,235 to 688,774. (See The Nasdaq Page at www.nasdaq.com, type JMAR and go to the Fundamentals page. There should be a button that says "Short interest")

I understand from a securities lawyer friend(?!) of mine that SEC rules prohibit covering a short position with shares which were originally issued as restricted shares, even if they later become freely tradable (either because they were later registered, as was the case here, or because the Rule 144 holding period has run). The SEC apparently takes the position that the shares must have been freely tradable at the time of the original short, not just at the time the short is covered. I'm not sure I understand the rationale for this, but it may be that the SEC goes back to the date of the original short sale and takes the position that what you sold (even if in fact you have "borrowed" other shares at that time) represents the sale of the shares ultimately used to cover and that they must have been freely tradable at the time of the short sale. In any event, my buddy says the SEC rulings are clear on this point. The question I have is whether someone can effectively (and legally?) cover their short position with the formerly restricted shares in a way which does not involve using the restricted shares directly? Is there some kind of "crossing" in the market that can occur? It obviously makes a difference whether the Swiss can cover using shares they already have or whether they have to arrange to purchase other shares in the market to do so and then separately sell their original shares. Any thoughts on what the different scenarios are in how the short position gets eliminated?
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