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Strategies & Market Trends : Anthony @ Equity Investigations, Dear Anthony, -- Ignore unavailable to you. Want to Upgrade?

To: Jeffrey S. Mitchell who wrote (95785)	10/5/2006 8:48:00 AM
From: Patchie	Read Replies (1) \| Respond to of 122087

Actually they are very related. Abusive PIPE's, in which shorts take place where a fail is guaranteed due to the use of unregistered shares as the "locate", can only be stopped if the process of settlement failures is tightened and enforced. The settlement failure was the vehicle to the illegal trade. Without an industry acceptance of the fail there never would have been an illegal trade. Now the PIPE investor is not the only short selling investor who has figured this out. The same Hedge Funds that enter into PIPE's also enter into natural short sales where they are afforded the opportunity to sell into a settlement failure. Negative news comes out, every short seller wants to jump on the same bandwagon, and soon there is massive fails in the system. To the industry the fail is "accepted" because they have become a natural and normal part of the market. When REFCO collapsed the fails jumped from <10,000 to well over a million in 3 trade days. This on a collapsing stock where no market maker could use the bona-fide exemption. So who was allowed to fail and who profited from it? Illegal sellers of shares they could not deliver. was it a PIPE? No but it might just as well of been a toxic PIPE as the illegal sales put sell side panic into the market and collapsed the stock 90% in 3 days. This isn't theory here it is law. A loophole has been identified that is being exploited in many ways. Trade settlement is an integral part of Wall Street and the settlement loophole needs to be firmed up - plain and simple. The investors deserve that protection.