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Strategies & Market Trends : Dave Gore's Trades That Make Sense -- Ignore unavailable to you. Want to Upgrade?

To: Dave Gore who wrote (12392)	9/18/2002 12:54:30 AM
From: The Vet	Read Replies (2) \| Respond to of 16631

I am absolutely positive in regards to the OTCBB. The NASD and SEC know and are powerless (or unwilling) to do anything. With NASDAQ stocks the rules are tighter but I have been talking to people from NASD and they accept that it can happen on most markets and there is no way they can easily prove or disprove it. This is what I have been able to glean. Nobody is very forthcoming and some of the detail may be wrong because of the difficulty of getting answers. Auditing of MM firms is not done at a detailed level. A MM could for example short 1 million shares of a stock at $5. He has $5 million in his account as an asset shown against that stock. If the price rises to $5.10 he then must show a liability in his accounts of $5.1 million. However, he only reports the balance NOT THE BREAKUP. His report shows he is negative $100k on that stock, an amount the regulators wouldn't bat an eyelid at. Just normal trading variations as a result of "making an orderly market". In fact of course the $100k is only a paper loss. He has the $5 million in his account at at his disposal to use. He isn't like a retail short investor who needs to keep margin. It's all immediate cash for him. Now what I think happens is that when a MM decides to go short so do all the "professional shorts". If they all work together and at least one member of the group doesn't have to borrow stock or worry about covering it's an unbeatable bet. If all shorting selling was public information and immediately available none of this would be possible. As it is kept hidden and non-transparent there is always the suspicion that it is hidden for a reason; to protect the guilty.