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To: Dale Kohler who wrote (64)	12/2/1998 5:13:00 PM
From: Tom Hua	Respond to of 475

Dale, what they did was cold-blooded robbery. Regards, Tom

To: Dale Kohler who wrote (64)	12/2/1998 11:12:00 PM
From: Tom Hua	Respond to of 475

Dale, apparently a lot of investors were taken advantage of on Monday. Read on. Regards, Tom Wednesday, December 02, 1998 Nasdaq market makers come under fire Questionable practices Ian Karleff National Post Bloomberg / NAVARRE CORP.: NAVR/NASDAQ INTRADAY: (See print copy for complete chart/graph). Monday's Internet stock carnage was a direct result of the Nasdaq Stock Market's illiquidity, investor greed, and some questionable trading practices by those who make the market, traders say. Investors complained bitterly that many Nasdaq orders to buy stock were being executed by market makers -- specialists responsible for matching buy and sell orders -- before the session opened on Monday at prices considerably higher than the previous session's close, while many sell orders, at or slightly below the asking price, were not immediately filled, contrary to the norm. Navarre Corp. (NAVR/NASDAQ), for example, closed on Friday at $12 (all figures in U.S dollars) and reopened Monday at about $27. Doran Ghatan, who manages about $40-million for offshore investment firm Unicorn Funds in Nassau, Bahamas, claimed that investors who wanted to buy the stock at the open paid up to twice Friday's closing price, but those who wanted to sell at, or just below the opening price level, did not have their orders filled within a reasonable time frame. Investors expressed their dissatisfaction over delayed sell executions on America Online's Shark Attack chat forum. And in Canada, Jeff Mulligan, a trader at Priority Brokerage Inc., said he "had two or three sells where confirmations came back way too late." Bobby Weiss, an independent New York trader who manages more than $50-million for high-income investors, said the problem stemmed from a handful of Internet firms being traded directly between brokerages and market makers -- outside the Nasdaq's automated trading system. "Basically, [market makers] work in collusion," Mr. Weiss said. "They know they have buy orders, open a stock as high as they can and then just let the price drop," before filling sell orders, he said. Mr. Weiss said the market makers fill the buy orders at the highest possible price, often with stock they borrow, knowing they can buy it back later at lower prices. Scott Peterson, a Nasdaq spokesman, confirmed there had been problems with the exchange's trading system Monday, but said there were "no trades pulled from automatic trading." He said about 12 Nasdaq firms were affected. "We have a team working on it now and are hoping to have a solution shortly," said Mr. Peterson. Mr. Weiss said many investors who placed orders online to buy stock "at market" found that because buy orders were being executed at prices up to twice Friday's close, it often triggered higher margin calls from their brokers. Brokerage houses are becoming more reluctant to fund Internet stock punts. Over the past two weeks, a number have raised margin requirements -- the amount of cash an investor must have on deposit in order to buy or sell stocks using borrowed money -- on the most volatile of Internet issues. Ameritrade Holding has increased its maintenance margin percentage of a stock's value to 50%, from 30%, for about 25 Internet stocks. Toronto-Dominion Bank's discount brokerage Waterhouse Securities Inc. also has raised margin requirements on 12 volatile Internet stocks, including Earthweb Inc., K-Tel International Inc. and theglobe.com, while Bank of Montreal's Investorline said that Internet stocks not included in the S&P 500 were subject to a 50% cash requirement, rather than the usual 30%. Etrade Inc. and SureTrade Inc. also have lowered the amount they will lend for certain Internet investments.