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[QUOTE]Originally posted by Swab Jockey: [QB] Deut... here is another link that does a pretty good job of explaining it. I pulled the more pertinent information from the article and pasted below,but recommend you read the whole article. The long and short of it IMO is yes it does indicate manipulation. Manipulation can go either way: (1) manipulate stock to appear more valuable than it really is to encourage buyers jump on the bandwagon to buy higher than they should, and then watch the stock plummet. (2)Manipulate it to make itlook less valuable than it is to encourage panic selling only to watch it climb after you've sold. I've learned both lessons on this stock the hard way in a relatively short period. Best strategy for me is to decide as soon as I buy in what my exit point is and stick to it. Get too greedy and a great profit today can be an equally large loss tomorrow when it sinks. Also I decide in advance what I want to pay and I don't chase it up (anymore anyway). If I miss it I miss it and still have my cash to invest in something else tomorrow. Otherwise I might as well drive down the street and throw money out the window. That's just what works for me, I'm a relative newbie so I advise ya not to make decisions on my model. If you do and make a killing at though, you can PM me if really feel the need to send something my way. LOL Bottom Lilne this all my opinion, and remember opinions are like a**holes, eveyone has one and they all stink. http://www.fool.com/news/commentary/2005/commentary05032407.htm?source=mppromo Excerpt While Reg SHO stipulates that a broker is supposed to locate shares prior to executing a short sale, there are certain exceptions to this rule. One is that if a stock appears on an "Easy to Borrow" list, this is considered "reasonable grounds" to assume the stock can be located for settlement, and the short sale may proceed without the broker contacting the source of the shares or specifically locating them. (A footnote in the SEC's discussion of the final rule [release number 34-50103] adds: "Of course, securities that are 'threshold securities' pursuant to Rule 203(c) should generally not be included on 'Easy to Borrow' lists." Geez, really? But sometimes it's OK for heavily manipulated stocks to be shorted further without locating shares?) Another exemption is for "Bona-fide market making." Is it just me, or does the specification that bona fide market making is exempt -- versus sorta market making? --point to some possible wiggle room in interpretation? The SEC is quick to explain that, among other qualifications, "Bona-fide market making does not include transactions whereby a market maker enters into an arrangement with another broker-dealer or customer in an attempt to use the market maker's exception for the purpose of avoiding compliance with Rule 203(b)(1) by the other broker-dealer or customer." Thank goodness deliberately circumventing the rules is forbidden by the rules! That's kind of a tiny echo of Reg SHO itself, which is a set of rules about not breaking 71-year-old laws. I think history has shown us that the rules aren't terribly effective without enforcement. Opportunity in slop But in fairness, there is a reason why securities regulations around short selling have been, and continue to be, rather lax and loosely enforced. Remember that the stock market is an old and still largely paper-based system. While naked shorting has been technically illegal for a long time, that doesn't mean that brokers have always been expected to have borrowed shares in hand before executing a short sale. The Securities and Exchange Act of 1934 stipulates a settlement period up to three business days -- meaning in essence that any short can be a naked short for up to three days without a broker being expected to do anything about it. Getting high volumes of transactions completed has always meant acting first and settling later, and a certain amount of slop in the process has always been tolerated. And where there is slop, there is opportunity. Brokers make money lending out shares, and any stock you own is subject to being lent unless it is held in an IRA or cash account. In fact, the commission brokers make on loaning out shares changes depending on how high the demand is for a certain stock. So when a stock goes into naked short territory, where there is potentially more demand than there are shares in existence, brokers stand to make a lot of money by executing short sales… even if they can't get their hands on the borrowed shares right away. It's one of those gray areas that doesn't necessarily indicate intentional wrongdoing on the part of brokers (at least on a small scale), but that arguably has come to be viewed with an increasing nudge and wink over the years. End excerpt [/QB][/QUOTE]
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