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Strategies & Market Trends : From the Trading Desk -- Ignore unavailable to you. Want to Upgrade?

To: steve goldman who wrote (3308)	6/21/1998 8:22:00 AM
From: Baudwalker	Read Replies (1) \| Respond to of 4969

Steve, Thanks for your response. I will research the sec,nasd,and nasdr reference sources you cite. The rules @ shorts of interest in this case center around "undeclared short sales" as described in the following excerpt from messages.yahoo.com. "Undeclared short sellers don't borrow stock. They don't margin the sale of their short position. Because they are market insiders (makers) they can use various techniques to sell stock short that doesn't exist. Is there money to be made by undeclared short sellers? Estimates are that undeclared short sellers make multi-millions of dollars annually. Complaints to regulatory agencies haven't stopped the practice of undeclared short selling. However, one way companies can protect themselves is to recommend to shareholders that they take physical delivery of their stock certificates. When physical delivery of stock certificates is demanded by a significant number of shareholders,the creators of non-existent stock can be squeezed. The short sellers won't have stock certificates to deliver and thus they will be forced to go into the open market to buy the stock. This will cause losses for them and will cause them to move their undeclared short activities elsewhere." Steve, is this a prevalent phenomenon? Again I cite recent KTEL trading as a candidate case in point. It seems to be such a preposterous violation of the fundamentals of supply/demand market economics, not to mention professional ethics. I am not on a personal crusade against the forces of evil, but rather am trying to learn the as-practiced rules of the game. My primary interest here is to gain a better understanding of the conditions under which a trader is forced, by mechanisms outside of his control, to prematurely cover a short position; and how the relative risk of such occurrences might vary across brokerage firms and markets. Any further opinions or information would be appreciated. Thanks for your time.