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To: Graystone who wrote (24202)	10/26/1999 1:40:00 AM
From: Jeffrey S. Mitchell	Read Replies (3) \| Respond to of 26163

OK, just for you, here's an interesting passage about why naked shorting more shares than are actually in existence is not all that bad: The plaintiffs analogize Scattered's plan to the scam in the movie The Producers. The "defendants" in that movie sold shares in a play to investors. They sold more than 100 percent of the shares, confident that the play--"Springtime for Hitler"--would be a flop, so that the investors would not ask for their share of the profits (there would be no profits). The play was a success, so the scam was exposed and they were sent to jail. Where the analogy fails is that while investors reasonably believe that the promoter will not sell more shares than exist, since he would then be defrauding the investors, a buyer of stock does not have a basis for equal confidence that the number of shares of a stock that is being sold short does not exceed the total number of shares in existence, since the seller is not trying to raise money for a venture. If even one share of a stock is sold short, there will be more shares actually or potentially for sale than there are shares in existence--since by definition the short seller does not own the share or shares that he is selling short--unless the short seller has borrowed stock in order to be able to make delivery if the buyer wants delivery. - Jeff