Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Ask Vendit Off-Topic Questions -- Ignore unavailable to you. Want to Upgrade?

To: Walkingshadow who wrote (3354)	1/2/2005 8:56:09 AM
From: Vendit™	Read Replies (2) \| Respond to of 8752

Terry, I thought I would post this bit of research for reference because I have read much argument over this issue of shorting OTCBB stocks: Special report Dirty tricks in us otcbb stocks Continued…... Most individual investors cannot -legally- short bulletin board stocks in the US. There are several reasons why, but for this discussion I think it is enough to say it really is not done. If anyone doesn't know why, ask your broker or drop me a line and I will explain it further. Although individual investors cannot short these stocks, market makers can. Market makers can go short on any stock as long as it is related to ""bona fide market making activity" (Rule 3350). Naturally, the key is the term "bona fide". The NASD manual clearly states that market makers should not go short a security simply for speculative purposes. However, there are several market makers widely known to do almost nothing but short stocks for their own account. NASD rules make it extremely easy for a market maker to begin making a market in any stock very quickly, so these particular MM's often show up suddenly in many hot, high-flying OTC stocks. When they do, it is a pretty good indication that they stock price will soon be under pressure and it is a good time to take a hike. Besides the fact that market makers are professionals and some do a efficient job identifying overpriced stocks, they also have very deep pockets. Considering the average OTCBB stock has a tiny market capitalization, it doesn't take much to help nudge a stock one way or the other. taylorstock.com