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Microcap & Penny Stocks : VLVT (was CSMA) -- Ignore unavailable to you. Want to Upgrade?

To: KZAP who wrote (2843)	12/4/1997 6:23:00 PM
From: TraderGreg	Read Replies (4) \| Respond to of 11708

I E-mailed Juan Dominguez , referred by Thu, who is a broker and has a lot of knowledge on short situations. I gave him the following definitions that I had posted earlier: Covered shorting--Legal shorting against your own long position, also known as "shorting against the box". Wholesalers can do it with any type of stock; little folks can only if their stock is marginable. Naked shorting(Legal variety)-Only do-able by wholesalers whereby permission is granted by the long's broker to borrow street name shares. If the shareholder calls for their certs then the shorter has to cover. Naked shorting(illegal variety)-When the wholesaler doesn't ask for permission to borrow shares, but just shorts them as he sees them. Often times this level of shorting can result in short positions exceeding the level of the float. I then asked him for his comments: Yes, you have the correct definition for all three types of short selling. The only way that illegal naked shorting can be defeated is if a good majority of the shareholders of the official(legal) float call their stock certificates. By good majority I mean at least 95%. If the the official float is controlled by a small number of shareholders, it makes life easier., however, if the float is made up of hundreds of shareholders with an average holding of 10K shares or less, then it get pretty hard to get all these shareholders to call their CERTS. The SEC will not go after the company, they will go after the illegal shorters, but only if they get enough complaints that cert. delivery is slower that usual 4 weeks. There are many legit NASDAQ and BB stocks that have been hammered by naked shorters in the hopes that they can create a "terminal short" whereby they can short the stock down to 0 and never have to cover or pay taxes. Everybody chew on Juan's response and let's comment. Thanks to Juan for his advice and thanks Thu for the reference. TraderGreg