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Technology Stocks : AremisSoft Corporation (AREM) -- Ignore unavailable to you. Want to Upgrade?

To: Kevin Podsiadlik who wrote (520)	7/8/2001 11:25:47 PM
From: cgw1948	Read Replies (2) \| Respond to of 683

The other purpose is to give the Company additional flexibility in future financings. Can't you read the frickin proxy statement for yourself? You are correct. The SEC has no power to reject the proxy statement even if it believes the recap plan is a "bad" idea or has no "legitimate" corporate purpose. Its role is primarily procedural in nature and designed to ensure that the Company has complied with applicable disclosure rules. Any attacks on the merits of the recap plan will have to made in a Delaware court. Numerous complaints have been filed with the SEC, but it has taken no action. Looks like we AREM shareholders will have to take matters into our own hands. That's what the recap plan is all about! Regarding the "failed to deliver" problem, you should see letter no. 19 to AremisSoft Shareholders at www.irwin ljacobs.com and letter of Mr. James J. Godfrey, VP of AG Edwards, stating what Godfrey was told by Mr. Jeff Brockenborough, Director of Market Risk, NSCC (212)- 855-5765. What that means, Kevin, is that transactions involving over 1,000,000 shares of AREM stock (over 5% of the float) have failed to settle because the brokers for the sellers have not delivered the stock. I wonder why that could possibly be? The NASD seems to be taking the position that the mandatory buy-in requirments of 11830 does not apply to short sales made before AREM was placed on the restricted list. This is ludicrous inasmuch as 11830 was intended to prevent and deal with the very sort of persistent "failed to deliver" problem the market now confronts regarding supply of AREM stock. In the eyes of the NASD, it would seem that "naked" short sales could stay open, i.e., unsettled, INDEFINITELY without creating a regulatory problem. Anything else we can help you with Kevin?

To: Kevin Podsiadlik who wrote (520)	7/13/2001 12:21:06 AM
From: Richard James	Read Replies (1) \| Respond to of 683

Kevin, A. I disagree with your statement, which is based on the false premises that the recapitalization has been presented with no apparent purpose other than to force a covering of the short interest. Then kindly state the other "apparent" purpose. I kindly refer you to the press releases and especially the proxy which has now been filed. Better yet, a transcript of the call concerning the proxy has been filed with the SEC and it discusses the reasons. B. Furthermore, I do not believe that the SEC's action in a single unique circumstance is a reliable indicator of how it will treat all short positions in all stocks trading on all exchanges. Again, per Jacobs and the majority of the longs here (and this is practically unanimous on the other boards), there is no action for the SEC to take here, that their role is little more than a rubber stamp for whatever AREM wants to do with their stock. If that is correct, then this will in no way be a "single, unique" circumstance. The unique circumstance referenced is AREM's recapitalization. I won't even touch your suggestion that the SEC simply rubber stamps what a company wants to do with its stock. C. Here we have a stock that has been subjected to abusive short tactics Has a complaint been filed with the SEC? I am sorry, but on what planet have you been the past month. Yes, as well as the NASDR, the agency in front with which such complaints are normally lodged. Congress is now reportedly getting involved, as well. D. The NSCC has documented a failure to deliver more than a million shares I must confess to not being clear on the significance out of this. Does this mean buy-ins occurred? Were even buy-ins unsuccessful in retrieving shares? Does this mean that less than 1 million out of the 11 million short interest are "legitimate"? I couldn't find an obvious reference to the documentation on the NSCC website, do you have a link to it perchance? This means that buy-ins have not been occuring at a rate sufficient to reduce the ludicrous size of the failure to deliver. (Since that date it appears that brokers have begun buy-ing in failures to deliver. Apparently, as discused on Yanoo, Congress is getting nosy and the brokers are covering themselves.) It also means that the shorts sold a million more shares than they have been able to locate for a borrow and they were unsuccesful in locating them by the settlement date. A large persistent failure to deliver is one of the problems UPC 11810 and UPC 11830 were designed to prevent, as the bear raids that create them can be manipulative and deceptive. See Notices to Members: 93-53: "As mentioned in the Pollack study, the fail-to-deliver/fail-to-receive problem could cause serious difficulties in a lengthy bear market. Large unsettled trades can disrupt market mechanisms. Public customers’ reasonable expectations that their securities have been delivered should be met. Additionally, naked short selling can present substantial manipulative concerns. While naked short sellers must deposit margin with either their broker/dealer or with a clearing corporation, they enjoy greater leverage than if they had to close out their short positions within a reasonable time frame. The ability of naked short sellers to employ this leverage to effect “bear raids” supports the decision to impose additional discipline on naked short selling via a close-out requirement. Thus, the rule change will assist in preventing manipulation of Nasdaq securities through excessive naked short selling. As originally recommended in the Pollack study, a buy-in or close-out requirement will add to the stability of the marketplace by assuring that securities are available to cover short positions, especially in times of volatility. Such a requirement also will help enhance the integrity of The Nasdaq Stock Market. In addition, the close-out rule may help to prevent short-selling abuses that could harm investors and the public interest." E. the NASDAQ, is refusing to enforce UPC 11830 while its owners, the brokers, are profiting from those very abuses. Or so it is claimed, anyway, though from what I know of the NASD I could believe that much. I have spoken with counsel for the SEC and the NASDR and that is, IMO, just what is going on. Specifically, the mandatory close out code, UPC 11830, requires all contracts to be closed by the delivery of shares or buy-ins no later than 10 days after a stock is added to the restricted list. That is how the code, as submitted to and approved by the SEC reads, but the NASDR has chosen to interpret it as only applying to contracts opened after AREM was added to the restricted list (reluctantly added after Irwin L Jacobs climbed all over it). I am more than confident as to what is going on, but it will probably be a few months until it is documented for the public either by Congressional hearings or otherwise. I think you will find the cause for the million share failing to be delivered is the failure of the NASDR to enforce the mandatory close-out provisions of 11830, as well as turning a blind eye to the failure of brokers to locate shares prior to executing short sales of restricted stocks.