Pages 62-64 pretty much puts the nail in the coffin for any hopes AZNT has of getting the court to order the return of the 4M shares. Here's the proof, in black and white:
4 MR. MACLEAN: Your Honor, let's suppose that DTC were
5 to deposit the certificate for 4,000,000 shares with the court
6 for further disposition.
7 THE COURT: Okay.
8 MR. MACLEAN: At that point, DTC would then be short
9 4,000,000 shares on its books. It would pass that short on to
10 brokerage houses. Because there's only 3.7 million shares in
11 the account of First Concorde at Canaccord and J.B. Oxford,
12 somebody would be short 300,000 shares.
13 Now, in a situation where you've removed 4,000,000 shares
14 from an apparent float of 5.7 million shares, then you've got
15 to go out and buy 300,000 shares. We're looking at $100 stock.
16 And somebody's going to be severely under the gun in that
17 circumstance.
18 THE COURT: I'll not sure I understand what you're
19 telling me.
20 MR. MACLEAN: Okay. Well, what would happen,
21 your Honor, right now, apparently, DTC shows 5.7 million shares
22 of Amazon on its books. Of that stock, 3.7 million shares are
23 credited to Canaccord and J.B. Oxford to the account of First
24 Concorde, and that means 2,000,000 shares are credited
25 elsewhere.
ASSOCIATED REPORTERS OF NEVADA (702) 382-8778
63
SYLVER - DIRECT
1 If DTC surrenders a certificate for 4,000,000 shares, it
2 will now show that it only is in possession of 1.7 million
3 shares. So the --
4 THE COURT: There's 300,000.
5 MR. MACLEAN: It will then short the positions of
6 brokerage-house clients with it by 4,000,000 shares. That
7 means 3.7 million are absorbed in First Concorde's account to
8 Canaccord and J.B. Oxford, but there's another 300,000 shares
9 unaccounted for. Someone will have to get 300,000 shares and
10 deliver them to DTC to cover off that position.
11 The way they'll have to get those is they'll have to buy
12 them on the market. We'll have a market that is -- where the
13 market is short, the shares --
14 THE COURT: The price goes up.
15 MR. MACLEAN: -- and the price is going to shoot
16 through the roof. Your Honor, I've seen circumstances where
17 stock has leaped from $2 to $50 on similar positions. I've
18 seen circumstances where brokerage houses have been bankrupted
19 by that.
20 THE COURT: Well, what about if they deposit 3.7
21 million shares of stock?
22 MR. MACLEAN: Well, that could work. But the problem
23 is they have a certificate for 4,000,000. So they'd have to
24 give it to the transfer agent and have it broken down into 2
25 and get change back, so to speak.
ASSOCIATED REPORTERS OF NEVADA (702) 382-8778
64
SYLVER - DIRECT
1 Your Honor, I really think the common-sense approach at
2 this stage of the proceedings where there's a number of
3 contested issues of fact and law is that the status quo gets
4 frozen by preventing any disposition of the shares held through
5 Canaccord and J.B. Oxford.
6 But there must be the additional condition, your Honor,
7 that Amazon not do anything to cause a short position in the
8 depository. Otherwise, the unintended affect of your Honor's
9 order is going to be that the free flow of the market is
10 disrupted. The stock is going to go through the roof. And
11 there's going to be blood on the streets, and someone's going
12 to have to pay for it.
13 THE COURT: Well, and I have to tell you that, again,
14 if I understand what's happening, the reason that we have this
15 circumstance with or without Mr. Judd's client being a good guy
16 or a bad guy, you've created that circumstance. And I don't
17 know why the Court should issue an order that may have a
18 profound impact upon outsiders who didn't participate in the
19 alleged fraud.
20 You're the ones that created this circumstance so that the
21 stock went out. And you're the one that chose to deal with
22 Mr. Judd's client.
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