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.

Microcap & Penny Stocks : Corporate Vision (CVIA) -- Ignore unavailable to you. Want to Upgrade?

To: dexx who wrote (1879)	2/12/1998 4:10:00 PM
From: Milk	Read Replies (1) \| Respond to of 6654

Shorting Reg. S shares (I don't know if it's taking place): "The drop in price is generally the result of short selling. Taking short positions in the public float to offset a Regulation 'S' transaction is illegal under US securities laws. However, by definition, Regulation 'S' buyers are outside the US and many are unconcerned with the enforceability of US laws. As such, if the discount is sufficient, they can lock in a profit by shorting the stock and delivering against the short position after 40 days. As long as the short position is sufficiently greater than the purchase price and carrying costs, then the buyer is still richly rewarded and the stock drops considerably in the face of the extra selling pressure due to the short. While it is illegal for the buyer (or a party related to the buyer) to take short positions in the stock, it is not illegal for other parties who learn of a planned Regulation 'S' transaction to do so (although it is illegal when a new issue is in registration we have submitted written recommendations to the SEC to adopt a similar rule for Regulation 'S'), thus when a company gathers information on Regulation 'S' or interviews two or more distributors (and especially tries to play them off against each other for lower discounts, commissions etc.) it is sowing the seeds for others to take a short position with assurance that cheaper stock might soon be available to cover the short position later on." offshoreinvestment.com

To: dexx who wrote (1879)	2/12/1998 6:56:00 PM
From: Brad	Read Replies (1) \| Respond to of 6654

Dexx, Milk's information (post #1880) is terrific. I can also see a situation where MMs hear about a Reg S and they can calculate an estimated amount of shares that are likely to come into the float at a designated time. From that information, they can feel pretty confident in selling short more than they ordinarily might. However, IF CVIA was to get the Reg S interest bought out, it could catch the MMs by surprise because that is a rare event. If it happened, I think we could see a sharp increase in regular buying and consequently, the MMs would try to cover quickly and the price would rise sharply. I don't know if CVIA can get the Reg S interest bought out, but I would sure love it if they did. I would assume odds are slim but not impossible. Best wishes, Brad

To: dexx who wrote (1879)	2/12/1998 7:47:00 PM
From: Art C.	Respond to of 6654

It has been my experience that reg-s is a death knell for any enterprise: Regulation S is a section of the federal law that permits publicly-traded companies to sell unregistered securities to overseas investors. These "overseas" investors, in some cases, are actually U.S. investors operating through offshore shell companies, often hedging their investments by using options or short sales. That's particularly true when the issuers are risky small-cap companies, which sometimes turn to Reg S offerings out to sheer desperation for cash. In the past, these Reg S securities could be issued to the "overseas" investors and then sold back into the US market before the existing shareholders even found out it. But the SEC realized that this was a problem and recently changed the rules. A company that issues Reg S securities now must file a Form 8-K within 15 days of its occurrence. Because Reg S securities are currently restricted for 40-days after they are issued, existing shareholders will be warned about Reg S deals before the shares can be sold. However, purchasers of Reg S securities can still short the stock before the 40 days are up, and later use the Reg S shares to cover their short position. Therefore, existing shareholders can get hurt by Reg S offerings even under the new rules. The most dangerous kind of Reg S offerings for existing shareholders are convertible securities which can be converted into common stock at a fraction of the stock price at the time of conversion. For example, the securities might convert into common stock at 75% of the average bid price over the previous five trading days. No matter how low the stock price falls, the Reg S investors can still convert into common stock at a price lower than the current stock price. And the lower the stock price falls, the more shares they get. Therefore, they benefit from the stock price dropping and will often even short the stock to help it fall further (and lock in higher sale prices of the stock as well.), and then cover their short position with the shares they get from conversion. They almost can't lose! It's the existing shareholders who are the losers. This type of Reg S offering will frequently cause a massive increase in shares outstanding, which means that existing shareholders now own a smaller piece of the company and hold shares that are worth much less than they were before. Watch out for all Reg S offerings, but especially watch out for this type of Reg S! The above is from stockdetective.com Art