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Microcap & Penny Stocks : Naked Shorting-Hedge Fund & Market Maker manipulation? -- Ignore unavailable to you. Want to Upgrade?

To: peter michaelson who wrote (560)	12/5/2005 9:00:42 AM
From: rrufff	Respond to of 5034

Peter, Thank you for your post and I totally agree. I've often expressed my wish that message boards could be the great equalizer, levelling the playing field for us retail investors. I see on the other side managements, who have forgotten that legally they work for us, not the other way around, as well as the ever growing universe of manipulators, that I believe includes vulture financiers and their distribution networks. I have supported registration and effective regulation for hedge funds, as well as an evolution in the role of Market Makers, particularly as technology has evolved over the past decades to ensure fair and even markets. I believe that steps in this direction are difficult because there are moneyed interests that will fight each step of the way. However, rather than being a uniting force, the boards have more often become an ego or financial booster, sometimes dividing those who would normally be allies. I have been guilty of this at times although I believe I am more reactionary than a first attacker. When I bring up theories or articles that relate remotely to shorting, I am often met with very vague but vitriolic criticism along the lines that my time would be better spent going after scams on the long side, as if one type of scam "forgives" another for some strange moral reason. Others, who often crusade against scamming companies, seem to claim that there exists no scamming in the world of shorting, hedge funds or MM's. As you point out, many of terms that are used are semantic tools to take the discussion away from what should be the real issue and that is the elimination, or at least reduction, in scams. Let me make it clear that I am not against shorting. In fact, I am financially able to short and have done so. I would prefer to make shorting easier for retail investors, but with limitations, rules and regulations that are transparent, obvious and make the playing field even for all. There is no reason why only moneyed interests should be able to short, often by arbitrage transactions that hide what amounts to naked shorting. There is no reason for outstanding shorts to be higher than real float, as defined with regulations to be developed. Further the role of MM's and their extended shorting (or long holding) need to be more clearly defined and limited as to time, amount and variance when compared to total volume and pricing history. As you mention, the topic where there could be a start, a confluence of ideas, is the area where vulture financers, managements, and their distribution networks, basically have a sure thing deal that is designed solely to take money from retail investors. I believe that even before the current environment, the general anti-manipulation provisions of the securties acts and regulations thereunder, e.g., 10b-5, would cover this type of action. A sure thing trade, where the details are not disclosed in advance, creates a victim of manipulation by its mere existence. Further, these groups were not satisfied with getting a mere 20% or 30% off the top. They came up with the "floorless death spiral" and worked it to destroy any equity value. Viewer has argued that these deals need to continue because otherwise many companies would cease to exist. The real issue is whether companies should exist to further a published business plan or whether they should be vehicles to raise money for the greed of whoever can get the public's money first. There is always financing available. It's just a question of whether you disclose that the lenders wear dark shirts and white ties. These deals hide mega usurious rates. Instead, I would require financing to have real APR rates or disclosure of equity kickers and when those shares could be dumped in advance. Obviously, the stock would tank and new suckers would not buy in. This is not pleasant, but it eliminates the current environment where pumping PR's push a stock up, vulture, perhaps management and hedge funds, short into the deal and new suckers are encouraged to buy the dump. If a company has to borrow at 50% or 100%, then so be it. My bet is that there would still be penny stock buyers who would buy as a gamble after the disclosure and tanking. I have never posted that microcaps are free from scams or that all price declines are caused by shorts or even naked shorting. There are extreme views on either side so I welcome your post and a voice perhaps that can add to the common ground. Thanks again.