People have a tough time with the concept of abusive naked short sellers never, never, never having to cover unless a breakthrough by the preyed upon corporation forces it. In our corrupt clearance and settlement system you need not deliver that which you sold in order to gain access to an investor’s money. This insanity forms one of the many pillars supporting this fraud. Most countries with the notable exceptions of the U.S. and Canada have a “withhold the mark” policy with “the mark” being the investor’s money. If you don’t deliver what you sold you don’t get access to the buyer’s money just like at the grocery store.

When you NSS into a buy order with the cash of the buyer metaphorically “stapled” to it, the target of this crime, you get “first dibs” on a portion of that cash if a downtick should occur even if you never deliver that which you sold. If that isn’t insane enough, the buyer of the never to be delivered shares gets a readily sellable “security entitlement”/IOU credited to his brokerage a/c. This is over and above the number of shares already outstanding. This adds to the “supply” of that which is readily sellable which automatically depresses the share price. Refusing to honor your contract to deliver that which you sold by T+3 therefore not only established a naked short position and thereby giving the crook access to “the mark” it also depresses the share price which gets this cash flowing into the wallet of the criminal all in one fell swoop. This money of the investor becomes “free money” to any party willing to break their contract and refuse to deliver that which they sold.

The question arises, why would you EVER cover this naked short position if you not only have already been given access to the targeted cash of the original investor but the very act of covering would drive the share price up which would then force you to aim a portion of the stolen cash to your clearing firm in order to meet your “marked to market” collateralization requirements. Would you not instead be highly financially incentivized to continue to naked short sell into yet more buy orders to induce yet more share price depression to induce yet more flow of the cash of the investors being defrauded both well in the past and more recently in the past? The question becomes do you want more “free money” or do you want to be forced to give up some of the money you stole in the past. IN FACT, A CRIMINAL WOULD BE CRAZY TO EVER COVER UNDER THESE CIRCUMSTANCES.

Abusive naked short selling is similar to a drug binge. Once you get started even if you wanted to stop you sometimes can’t. The very act of stopping your daily “fix” of naked short sale orders would release the potential energy encased in the coiled spring you’ve been compressing while forcing the share price down day after day. If you fail to bankrupt the targeted corporation you can quickly get to a point at which you can’t cover without risking serious financial calamity. When you get to this point you typically recruit Wall Street fraternity brothers to help you polish off this feisty corporation that you theoretically have on their death bed. Once the “recruits” realize that they got sand-bagged then all kinds of things can happen. This includes covering by the recruits with lesser naked short positions and then going net long to take advantage of the blood in the water coming out of the “recruiter”. In summary, all buy orders by Main Street investors have money attached to them but all sell orders by Wall Streeters do not have meaningful delivery obligations attached to them. This asymmetry serves as another pillar supporting these crimes. Since these criminals never have to cover until forced to the aggregate size of naked short positions is accretive by nature. They get larger and larger month after month.