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Technology Stocks : The New QLogic (ANCR) -- Ignore unavailable to you. Want to Upgrade?

To: George Dawson who wrote (18343)	10/1/1998 5:38:00 PM
From: Eleder2020	Read Replies (2) \| Respond to of 29386

>>>Are there brokers that would actually reloan the shares from the conversion - knowing that the holders were guaranteed a low conversion price for more shares to cover with? It seems like an unacceptable risk to the broker. <<< George- I think this is how it works for these Reg D guys Step 1-> Convert your note into shares.$1 $2 $3 it doesn't matter because they get the value in the number of shares not in the stock price when they convert.They now have their shares on the market that can be borrowed for shorting.As Patrick points out the company issues them new shares that they probably have first crack at shorting. Step 2->Short your shares and POCKET THAT MONEY(I believe the key to why this happens) from the shares you just sold as a short. Now that you have your equity you have a short and a long that are balanced out against each other. Step 3-> Cover your short on your deathbed and buy them back with the shares you sell that you've been long for 20 years. The reason one might never want to cover until one dies is that there used to be tax benefits to doing all this but I'm not sure if that is true or not anymore. So why not just sell shares as opposed to shorting them and grabbing the money. Shorting is Riskless and selling on the open market isn't? You don't even have to understand the fundamnetal of the company or even care what they are. Less Homework to do for a decent profit. This is just an opinion. So I don't think there is really any risk to the Reg D holders or the brokers. Any corrections in the mechanics? This is my guess on how it works.