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Message: RE: Lights On Illegal Naked Short Selling-get EDIG on the list

RE: Lights On Illegal Naked Short Selling-get EDIG on the list

posted on Jan 10, 2005 07:42AM
``When the supply of shares of a stock is zero, the supply is zero. It doesn`t matter how you get there, be it by a naked short position or by the float being absorbed. This is where it all starts as a short squeeze will now be formed and grows as demand to purchase shares increase. This is where the misperception exists with Regulation Sho. People think that a new naked short position has to be created for a stock to be eligible for protection and rectification under Regulation Sho. This is not true. It`s even better. All naked short positions of the past will not go away and must be dealt with. The clock begins ticking for covering, and means that any stock that has been naked shorted will automatically start out in a forced short squeeze mode that will only escalate the longer the MMs wait to cover.

``Any buying pressure will cause the increase of the naked shorted position to grow to begin approaching the 5 day consecutive window of not getting covered by the MMs. After the 5 days transpire where the MMs have failed to deliver and close the open naked shorted position, that stock in which they failed to deliver will be placed on a Threshold Security List for the public to view. This is where it starts to get awesome,`` said the post.

``With no buying pressure, they won`t have to cover as soon as one might have hoped as shares are sold exceeding the amount of shares being bought for stock ABCD. Still, if they don`t cover the `entire` naked short position for 5 consecutive days, stock ABCD will show up on the Threshold Security List for the public to view on 10 January.

``After such, the MMs have 13 days to close out the `entire` naked shorted position or face being suspended and/or shut down from that security and other penalties to possibly put that MM out of business. The end result will still be the supply being zero and the stock would be forced to be traded correctly based on supply and demand with an already dried up supply

The poster said that the market makers will need to get the naked shorted shares out of circulation by increasing the bid to entice shareholders to sell. ``The problem comes when they allow for the buying to outweigh the selling due to increased demand for the stock. As orders are placed to buy shares, they must be filled by the MMs. This will worsen their problem when nobody is selling. As the MMs make the mistake and allow for any stock to be placed on the Threshold Security List, it will publicly reveal where the MMs are already having a problem in covering. Us as shareholders will see this list and contribute with forcing the short squeezes for every stock on the list.``

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