Go to: www.investigatethesec.com

and cast your vote against Naked Shorting Abuses. It is time to take back our investments and Congress needs to see that we are many. EVERY Signature counts so spread the word.

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Originally posted by FiftyCent:
I agree, maybe it has to do with the dollar dropping. And the MM's are taking it out on the less regulated and enforced penny stock market

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Below is an excerpt from a case taking place up in Canada where prosecution has outlined US Organized Crime setting up Offshore accounts to Launder Money. Read what the PROSECUTION is saying:

The last major focus of alleged abuses was in the field of short selling. "Many of P.I.'s U.S. clients were heavily involved in short sales. Staff reviewed ten particularized accounts for short sales. The total dollar amount of the month-end short positions in these accounts was approximately $72-million. In the month of June, 1999, alone there were 669 short sale trades totaling over $23-million," Mr. Angus told the hearing.

"The evidence will show that the short sales done in U.S. markets from the P.I. accounts were naked shorts. That is, they were not covered in any way at the time the short sale was entered into. The evidence will also show that short selling of that nature is illegal in the U.S. and was a major reason why many of P.I.'s clients were trading at P.I. They were there, to the knowledge of P.I., to trade into the U.S. in defiance of American trading rules. They assisted knowingly in a breach of American trading rules. P.I. condoned that and grew fat on it."
http://www.rgm.com/articles/cornucopiaofcrooks.html

From the SEC proposed Rule SHO open for comment:

Naked Short Selling
A. Background
Many issuers and investors have complained about alleged "naked short selling," especially in thinly-capitalized securities trading over-the-counter.27 Naked short selling is selling short without borrowing the necessary securities to make delivery, thus potentially resulting in a "fail to deliver" securities to the buyer.

Naked short selling can have a number of negative effects on the market, particularly when the fails to deliver persist for an extended period of time and result in a significantly large unfulfilled delivery obligation at the clearing agency where trades are settled.28 At times, the amount of fails to deliver may be greater than the total public float. In effect the naked short seller unilaterally converts a securities contract (which should settle in three days after the trade date) into an undated futures-type contract, which the buyer might not have agreed to or that would have been priced differently. The seller's failure to deliver securities may also adversely affect certain rights of the buyer, such as the right to vote. More significantly, naked short sellers enjoy greater leverage than if they were required to borrow securities and deliver within a reasonable time period, and they may use this additional leverage to engage in trading activities that deliberately depress the price of a security.

The Commission recently brought an enforcement action against certain parties, alleging manipulative naked short selling, in a scheme sometimes termed as a "death spiral." These schemes generally involve parties arranging financings in public companies that are unable to obtain more conventional financing in the capital markets due to their precarious financial condition. The party providing financing receives from a public company debentures that are later convertible into the stock of the issuer. The terms typically provide that the conversion ratio will be tied to a fixed value of the aggregate underlying shares (typically a discount from the market price of the security at the time of the conversion rather than a conversion price per share). In some cases the parties providing financing have engaged in extensive naked short selling designed to lower the price of the issuer's stock, thus realizing profits when the debentures are converted to cover the short sales.31

Naked short selling has sparked defensive actions by some issuers designed to combat the potentially negative effects on shareholders, broker-dealers, and the clearance and settlement system.32 Some issuers have taken actions to attempt to make transfer of their securities "custody only," thus preventing transfer of their stock to or from securities intermediaries such as the Depository Trust Company (DTC) or broker-dealers. A number of issuers have attempted to withdraw their issued securities on deposit at DTC, which makes the securities ineligible for book-entry transfer at a securities depository.33 Withdrawing securities from DTC or requiring custody-only transfers undermine the goal of a national clearance and settlement system, designed to reduce the physical movement of certificates in the trading markets.34

WASHINGTON (Dow Jones)--Federal prosecutors charged two brothers with
manipulative short-selling of Sedona Corp. (SDNA, news) stock, bringing
criminal proceedings in a matter that securities regulators settled earlier
this year.

Andreas Badian, an employee of Rhino Advisors, Inc., a New York money
management firm, was arrested Tuesday and released on $2 million bail after
pleading not guilty to securities fraud, officials said.

An arrest warrant was issued for Thomas Badian, president of Rhino
Advisors, and Andreas Badian's older brother, but he did not appear in
court and his attorney, Victor Rocco, declined to comment on his

whereabouts. Prosecutors wouldn't comment on reports Thomas Badian had left
the country.

Rhino and its president paid $1 million in February to settle Securities
and Exchange Commission allegations they manipulated Sedona stock to
benefit an offshore client who held $2.5 million of convertible debt in the
company. They didn't admit to or deny the SEC's claims. The SEC didn't
charge the client, Amro International, a Panama corporation based in
Switzerland, or Andreas Badian.

Sedona, a King of Prussia, Pa., technology firm, was delisted from the
Nasdaq Small Cap Stock Market early this year and now is quoted on the OTC
bulletin board.

The criminal complaint filed in federal court in Manhattan charges the
Badians ordered aggressive short sales of Sedona stock through a New York
broker.

Andreas Badian told the broker to sell Sedona shares short with "unbridled
levels of aggression," and be "merciless" with it, prosecutors charge. He

later congratulated the broker on a "good job" because the stock price had
"collapsed, " according to tape recordings of telephone calls to the
broker, prosecutors said.

Short selling is legal, but in this case it violated Amro's financing
agreement with Sedona. Prosecutors described the financing as a "toxic"
convertible deal that guaranteed Amro more Sedona shares if the stock price
fell. The deal specifically barred Amro from short sales of Sedona stock.
Short sellers profit by selling borrowed shares and replacing them later
when the stock price has fallen.

Prosecutors claim Andreas Badian directed short selling in Sedona shares in
March, 2001, just before the conversion date. According to the complaint,
"it appears that these short sales were designed to drive down the price of
Sedona common stock," giving Amro a bigger block of stock upon conversion.

Moreover, prosecutors raised the prospect of "naked" short selling abuses

in the matter, noting Amro never tendered shares to the broker within three
days after the short sale, as required. As a result, the broker "failed to
delivery approximately 700,000 shares of Sedona common stock that it had
sold on behalf" of Amro, according to the complaint.

"Naked" short selling occurs when short sellers fail to borrow stock before
engaging in short sales. The SEC proposed changes this fall to curb
manipulative, naked short sales, but it has yet to act on the measure, to
the dismay of companies and investors that claim to have been victimized by
the practice.

Sedona, for its part, balked at the conversion and filed a counterclaim
after Amro filed a civil lawsuit. Andreas Badian was less upbeat in an
e-mail to his brother in Oct., 2001, saying "we set up all these elaborate
structures with seperatye (sic) entities, etc., for protection, now it
seems like it was all for nothing," and affords no protection.

"There is no way we can have this go into court," the e-mail continued.
"Not with the records and the endless trader testimony."

Adam Hoffinger, a Washington, D.C., attorney who represents Andreas Badian,
said "the criminal complaint contains virtually identical allegations to
what was covered by a civil settlement with the SEC." He declined further
comment.

SEC officials declined to comment.

-By Judith Burns; Dow Jones Newswires; 202-862-6692;
Judith.Burns@dowjones.com