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Was the new shorting rule in April a Joke? I think I see more shorting now then I did before?
Posts: 973 | From: usa | Registered: Aug 2003
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I agree, I think the direction of stocks was more predictable pre-April than it is now. It is difficult to tell which stocks are tanking because of dilution and/or valid business concerns and which ones are being naked shorted. I would like to see the ability for off shore shorting dried up. I read one post where someone was trying to estimate how many shares of LBTT the various MM's are short and it was guesstimated at 2-3X the share count. I think I believe that. The company has made more progress now in every area including sales, networking and FDA allowance/approval for it's products. They have relationships with medical companies to exclusively sell their products. They have respected people in prominent sales positions and the stock is selling for less than when all they had were wishes and rumors. The people who wanted the quick profit left a long time ago at .03-.04 so who else is selling? Possibly some people who got tired of waiting or were scared off and panic sold after seeing the drop in price week after week. But there is a huge group of long shareholder with a large chunk of the float on good news the stock wasn't moving up and on small sells it was drifting down. Also some investors were complaining their large buy orders were not being filled. It will be interesting to watch this one unfold. The company says it is in almost no danger of folding so the shorts will have to cover eventually. I can't wait. DD-IMO-GLTA-Debi
Posts: 1188 | From: Clinton, MA 01510 | Registered: Jan 2004
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THIS IS FROM A RELIABLE SOURCE. A LOT OF US ASSUME OUR COMPANIES ARE TOSSING OUT MORE SHARES BUT I DON'T THINK THAT MAY BE THE CASE. THE ABUSE OF POWER CONTINUES!
The new rule may or may not be working as planned at this time.
This new rule (3370) was not initiated to create trade settlements and buy-ins but to only stop the additional (non-member) selling without Affirmative Determination. Unfortunately we are still seeing what appears to be abuse but we do not yet know if that is in fact what it is. In some cases there are real sellers who have bailed on their shares once April 1 came and no stock rise took place. From there the buyers were actually fighting real sellers.
One other venue to review is whether the shorts are taking place through Berlin exchange in an Arbitrage condition or through ECN's. I know that the NASD is looking into the Berlin issue. To find out whether brokers are ignoring the new rules requires the NASD to start investigating. With it only being 1 month old, they may be monitoring for future actions.
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