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occhio a quelle che hanno spike tremendi e tornano spesso a 0.0001.
Interessante articolo a riguardo, buona lettura
“CELLAR BOXING”
There’s a form of the securities fraud known as naked short selling
that is becoming very popular and lucrative to the market makers that
practice it. It is known as “Cellar boxing” and it has to do with the
fact that the NASD and the SEC had to arbitrarily set a minimum level
at which a stock can trade. This level was set at $.0001 or one-one
hundredth of a penny. This level is appropriately referred to as “the
cellar”. This $.0001 level can be used as a "backstop" for all kinds
of market maker and naked short selling manipulations.
“Cellar boxing” has been one of the security frauds du jour since 1999
when the market went to a “decimalization” basis. In the pre-
decimalization days the minimum market spread for most stocks was set
at 1/8th of a dollar and the market makers were guaranteed a healthy
“spread”. Since decimalization came into effect, those one-eighth of a
dollar spreads now are often only a penny as you can see in
Microsoft’s quote throughout the day. Where did the unscrupulous MMs
go to make up for all of this lost income? They headed "south" to the
OTCBB and Pink Sheets where the protective effects from naked short
selling like Rule 10-a, and NASD Rules 3350, 3360, and 3370 are
nonexistent.
The unique aspect of needing an arbitrary “cellar” level is that the
lowest possible incremental gain above this cellar level represents a
100% spread available to MMs making a market in these securities. When
compared to the typical spread in Microsoft of perhaps four-tenths of
1%, this is pretty tempting territory. In fact, when the market is no
bid to $.0001 offer there is theoretically an infinite spread.
In order to participate in “cellar boxing”, the MMs first need to
pummel the price per share down to these levels. The lower they can
force the share price, the larger are the percentage spreads to feed
off of. This is easily done via garden variety naked short selling. In
fact if the MM is large enough and has enough visibility of buy and
sell orders as well as order flow, he can simultaneously be acting as
the conduit for the sale of nonexistent shares through Canadian co-
conspiring broker/dealers and their associates with his right hand at
the same time that his left hand is naked short selling into every buy
order that appears through its own proprietary accounts. The key here
is to be a dominant enough of a MM to have visibility of these buy
orders. This is referred to as "broker/dealer internalization" or
naked short selling via "desking" which refers to the market makers
trading desk. While the right hand is busy flooding the victim
company's market with "counterfeit" shares that can be sold at any
instant in time the left hand is nullifying any upward pressure in
share price by neutralizing the demand for the securities. The net
effect becomes no demonstrable demand for shares and a huge oversupply
of shares which induces a downward spiral in share price.
In fact, until the "beefed up" version of Rule 3370 (Affirmative
determination in writing of "borrowability" by settlement date)
becomes effective, U.S. MMs have been "legally" processing naked short
sale orders out of Canada and other offshore locations even though
they and the clearing firms involved knew by history that these shares
were in no way going to be delivered. The question that then begs to
be asked is how "the system" can allow these obviously bogus sell
orders to clear and settle. To find the answer to this one need look
no further than to Addendum "C" to the Rules and Regulations of the
NSCC subdivision of the DTCC. This gaping loophole allows the DTCC,
which is basically the 11,000 b/ds and banks that we refer to as "Wall
Street”, to borrow shares from those investors naive enough to hold
these shares in "street name" at their brokerage firm. This amounts to
about 95% of us. Theoretically, this “borrow” was designed to allow
trades to clear and settle that involved LEGITIMATE 1 OR 2 DAY delays
in delivery. This "borrow" is done unbeknownst to the investor that
purchased the shares in question and amounts to probably the largest
"conflict of interest" known to mankind. The question becomes would
these investors knowingly loan, without compensation, their shares to
those whose intent is to bankrupt their investment if they knew that
the loan process was the key mechanism needed for the naked short
sellers to effect their goal? Another question that arises is should
the investor's b/d who just earned a commission and therefore owes its
client a fiduciary duty of care, be acting as the intermediary in this
loan process keeping in mind that this b/d is being paid the cash
value of the shares being loaned as a means of collateralizing the
loan, all unbeknownst to his client the purchaser.
An interesting phenomenon occurs at these "cellar" levels. Since NASD
Rule 3370 allows MMs to legally naked short sell into markets
characterized by a plethora of buy orders at a time when few sell
orders are in existence, a MM can theoretically "legally" sit at the $.
0001 level and sell nonexistent shares all day long because at no bid
and $.0001 ask there is obviously a huge disparity between buy orders
and sell orders. What tends to happen is that every time the share
price tries to get off of the cellar floor and onto the first step of
the stairway at $.0001 there is somebody there to step on the hands of
the victim corporation's market.
Once a given micro cap corporation is “boxed in the cellar” it doesn’t
have a whole lot of options to climb its way out of the cellar. One
obvious option would be for it to reverse split its way out of the
cellar but history has shown that these are counter-productive as the
market capitalization typically gets hammered and the post split share
price level starts heading back to its original pre-split level.
Another option would be to organize a sustained buying effort and
muscle your way out of the cellar but typically there will, as if by
magic, be a naked short sell order there to meet each and every buy
order. Sometimes the shareholder base can muster up enough buying
pressure to put the market at $.0001 bid and $.0002 offer for a
limited amount of time. Later the market makers will typically pound
the $.0001 bids with a blitzkrieg of selling to wipe out all of the
bids and the market goes back to no bid and $.0001 offer. When the
weak-kneed shareholders see this a few times they usually make up
their mind to sell their shares the next time that a $.0001 bid
appears and to get the heck out of Dodge. This phenomenon is referred
to as “shaking the tree” for weak-kneed investors and it is very
effective.
At times the market will go to $.0001 bid and $.0003 offer. This sets
up a juicy 200% spread for the MMs and tends to dissuade any buyers
from reaching up to the "lofty" level of $.0003. If a $.0002 bid
should appear from a MM not "playing ball" with the unscrupulous MMs,
it will be hit so quickly that Level 2 will never reveal the existence
of the bid. The $.0001 bid at $.0003 offer market sets up a
"stalemate" wherein market makers can leisurely enjoy the huge spreads
while the victim company slowly dilutes itself to death by paying the
monthly bills with "real" shares sold at incredibly low levels. Since
all of these development-stage corporations have to pay their monthly
bills, time becomes on the side of the naked short sellers.
At times it almost seems that the unscrupulous market makers are not
actively trying to kill the victim corporation but instead want to
milk the situation for as long of a period of time as possible and let
the corporation die a slow death by dilution. The reality is that it
is extremely easy to strip away 99% of a victim company’s share price
or market cap and to keep the victim corporation “boxed“ in the
cellar, but it really is difficult to kill a corporation especially
after management and the shareholder base have figured out the game
that is being played at their expense.
As the weeks and months go by the market makers make a fortune with
these huge percentage spreads but the net aggregate naked short
positions become astronomical from all of this activity. This leads to
some apprehension amongst the co-conspiring MMs. The predicament they
find themselves in is that they can’t even stop naked short selling
into every buy order that appears because if they do the share price
will gap and this will put tremendous pressures on net capital
reserves for the MMs and margin maintenance requirements for the co-
conspiring hedge funds and others operating out of the more than
13,000 naked short selling margin accounts set up in Canada. And of
course covering the naked short position is out of the question since
they can’t even stop the day-to-day naked short selling in the first
place and you can't be covering at the same time you continue to naked
short sell.
What typically happens in these situations is that the victim company
has to massively dilute its share structure from the constant paying
of the monthly burn rate with money received from the selling of
“real” shares at artificially low levels. Then the goal of the naked
short sellers is to point out to the investors, usually via paid
“Internet bashers”, that with the, let’s say, 50 billion shares
currently issued and outstanding, that this lousy company is not worth
the $5 million market cap it is trading at, especially if it is just a
shell company whose primary business plan was wiped out by the naked
short sellers’ tortuous interference earlier on.
The truth of the matter is that the single biggest asset of these
victim companies often becomes the astronomically large aggregate
naked short position that has accumulated throughout the initial “bear
raid” and also during the “cellar boxing” phase. The goal of the
victim company now becomes to avoid the 3 main goals of the naked
short sellers, namely: bankruptcy, a reverse split, or the forced
signing of a death spiral convertible debenture out of desperation. As
long as the victim company can continue to pay the monthly burn rate,
then the game plan becomes to make some of the strategic moves that
hundreds of victim companies have been forced into doing which
includes name changes, CUSIP # changes, cancel/reissue procedures,
dividend distributions, amending of by-laws and Articles of
Corporation, etc. Nevada domiciled companies usually cancel all of
their shares in the system, both real and fake, and force shareholders
and their b/ds to PROVE the ownership of the old “real” shares before
they get a new “real” share. Many also file their civil suits at this
time also. This indirect forcing of hundreds of U.S. micro cap
corporations to go through all of these extraneous hoops and hurdles
as a means to survive, whether it be due to regulatory apathy or lack
of resources, is probably one of the biggest black eyes the U.S.
financial systems have ever sustained. In a perfect world it would be
the regulators that periodically audit the “C” and “D” sub-accounts at
the DTCC, the proprietary accounts of the MMs, clearing firms, and
Canadian b/ds, and force the buy-in of counterfeit shares, many of
which are hiding behind altered CUSIP #s, that are detected above the
Rule 11830 guidelines for allowable “failed deliveries” of one half of
1% of the shares issued. U.S. micro cap corporations should not have
to periodically “purge” their share structure of counterfeit
electronic book entries but if the regulators will not do it then
management has a fiduciary duty to do it.
A lot of management teams become overwhelmed with grief and guilt in
regards to the huge increase in the number of shares issued and
outstanding that have accumulated during their “watch”. The truth
however is that as long as management made the proper corporate
governance moves throughout this ordeal then a huge number of
resultant shares issued and outstanding is unavoidable and often
indicative of an astronomically high naked short position and is
nothing to be ashamed of. These massive naked short positions need to
be looked upon as huge assets that need to be developed. Hopefully the
regulators will come to grips with the reality of naked short selling
and tactics like "Cellar boxing" and quickly address this fraud that
has decimated thousands of U.S. micro cap corporations and the tens of
millions of U.S. investors therein."
I think we should take dilivery of about 90%of our shares and put GTC
order in on the rest for a dollar $1.00 and watch the short sellers
heads explode
Interessante articolo a riguardo, buona lettura
“CELLAR BOXING”
There’s a form of the securities fraud known as naked short selling
that is becoming very popular and lucrative to the market makers that
practice it. It is known as “Cellar boxing” and it has to do with the
fact that the NASD and the SEC had to arbitrarily set a minimum level
at which a stock can trade. This level was set at $.0001 or one-one
hundredth of a penny. This level is appropriately referred to as “the
cellar”. This $.0001 level can be used as a "backstop" for all kinds
of market maker and naked short selling manipulations.
“Cellar boxing” has been one of the security frauds du jour since 1999
when the market went to a “decimalization” basis. In the pre-
decimalization days the minimum market spread for most stocks was set
at 1/8th of a dollar and the market makers were guaranteed a healthy
“spread”. Since decimalization came into effect, those one-eighth of a
dollar spreads now are often only a penny as you can see in
Microsoft’s quote throughout the day. Where did the unscrupulous MMs
go to make up for all of this lost income? They headed "south" to the
OTCBB and Pink Sheets where the protective effects from naked short
selling like Rule 10-a, and NASD Rules 3350, 3360, and 3370 are
nonexistent.
The unique aspect of needing an arbitrary “cellar” level is that the
lowest possible incremental gain above this cellar level represents a
100% spread available to MMs making a market in these securities. When
compared to the typical spread in Microsoft of perhaps four-tenths of
1%, this is pretty tempting territory. In fact, when the market is no
bid to $.0001 offer there is theoretically an infinite spread.
In order to participate in “cellar boxing”, the MMs first need to
pummel the price per share down to these levels. The lower they can
force the share price, the larger are the percentage spreads to feed
off of. This is easily done via garden variety naked short selling. In
fact if the MM is large enough and has enough visibility of buy and
sell orders as well as order flow, he can simultaneously be acting as
the conduit for the sale of nonexistent shares through Canadian co-
conspiring broker/dealers and their associates with his right hand at
the same time that his left hand is naked short selling into every buy
order that appears through its own proprietary accounts. The key here
is to be a dominant enough of a MM to have visibility of these buy
orders. This is referred to as "broker/dealer internalization" or
naked short selling via "desking" which refers to the market makers
trading desk. While the right hand is busy flooding the victim
company's market with "counterfeit" shares that can be sold at any
instant in time the left hand is nullifying any upward pressure in
share price by neutralizing the demand for the securities. The net
effect becomes no demonstrable demand for shares and a huge oversupply
of shares which induces a downward spiral in share price.
In fact, until the "beefed up" version of Rule 3370 (Affirmative
determination in writing of "borrowability" by settlement date)
becomes effective, U.S. MMs have been "legally" processing naked short
sale orders out of Canada and other offshore locations even though
they and the clearing firms involved knew by history that these shares
were in no way going to be delivered. The question that then begs to
be asked is how "the system" can allow these obviously bogus sell
orders to clear and settle. To find the answer to this one need look
no further than to Addendum "C" to the Rules and Regulations of the
NSCC subdivision of the DTCC. This gaping loophole allows the DTCC,
which is basically the 11,000 b/ds and banks that we refer to as "Wall
Street”, to borrow shares from those investors naive enough to hold
these shares in "street name" at their brokerage firm. This amounts to
about 95% of us. Theoretically, this “borrow” was designed to allow
trades to clear and settle that involved LEGITIMATE 1 OR 2 DAY delays
in delivery. This "borrow" is done unbeknownst to the investor that
purchased the shares in question and amounts to probably the largest
"conflict of interest" known to mankind. The question becomes would
these investors knowingly loan, without compensation, their shares to
those whose intent is to bankrupt their investment if they knew that
the loan process was the key mechanism needed for the naked short
sellers to effect their goal? Another question that arises is should
the investor's b/d who just earned a commission and therefore owes its
client a fiduciary duty of care, be acting as the intermediary in this
loan process keeping in mind that this b/d is being paid the cash
value of the shares being loaned as a means of collateralizing the
loan, all unbeknownst to his client the purchaser.
An interesting phenomenon occurs at these "cellar" levels. Since NASD
Rule 3370 allows MMs to legally naked short sell into markets
characterized by a plethora of buy orders at a time when few sell
orders are in existence, a MM can theoretically "legally" sit at the $.
0001 level and sell nonexistent shares all day long because at no bid
and $.0001 ask there is obviously a huge disparity between buy orders
and sell orders. What tends to happen is that every time the share
price tries to get off of the cellar floor and onto the first step of
the stairway at $.0001 there is somebody there to step on the hands of
the victim corporation's market.
Once a given micro cap corporation is “boxed in the cellar” it doesn’t
have a whole lot of options to climb its way out of the cellar. One
obvious option would be for it to reverse split its way out of the
cellar but history has shown that these are counter-productive as the
market capitalization typically gets hammered and the post split share
price level starts heading back to its original pre-split level.
Another option would be to organize a sustained buying effort and
muscle your way out of the cellar but typically there will, as if by
magic, be a naked short sell order there to meet each and every buy
order. Sometimes the shareholder base can muster up enough buying
pressure to put the market at $.0001 bid and $.0002 offer for a
limited amount of time. Later the market makers will typically pound
the $.0001 bids with a blitzkrieg of selling to wipe out all of the
bids and the market goes back to no bid and $.0001 offer. When the
weak-kneed shareholders see this a few times they usually make up
their mind to sell their shares the next time that a $.0001 bid
appears and to get the heck out of Dodge. This phenomenon is referred
to as “shaking the tree” for weak-kneed investors and it is very
effective.
At times the market will go to $.0001 bid and $.0003 offer. This sets
up a juicy 200% spread for the MMs and tends to dissuade any buyers
from reaching up to the "lofty" level of $.0003. If a $.0002 bid
should appear from a MM not "playing ball" with the unscrupulous MMs,
it will be hit so quickly that Level 2 will never reveal the existence
of the bid. The $.0001 bid at $.0003 offer market sets up a
"stalemate" wherein market makers can leisurely enjoy the huge spreads
while the victim company slowly dilutes itself to death by paying the
monthly bills with "real" shares sold at incredibly low levels. Since
all of these development-stage corporations have to pay their monthly
bills, time becomes on the side of the naked short sellers.
At times it almost seems that the unscrupulous market makers are not
actively trying to kill the victim corporation but instead want to
milk the situation for as long of a period of time as possible and let
the corporation die a slow death by dilution. The reality is that it
is extremely easy to strip away 99% of a victim company’s share price
or market cap and to keep the victim corporation “boxed“ in the
cellar, but it really is difficult to kill a corporation especially
after management and the shareholder base have figured out the game
that is being played at their expense.
As the weeks and months go by the market makers make a fortune with
these huge percentage spreads but the net aggregate naked short
positions become astronomical from all of this activity. This leads to
some apprehension amongst the co-conspiring MMs. The predicament they
find themselves in is that they can’t even stop naked short selling
into every buy order that appears because if they do the share price
will gap and this will put tremendous pressures on net capital
reserves for the MMs and margin maintenance requirements for the co-
conspiring hedge funds and others operating out of the more than
13,000 naked short selling margin accounts set up in Canada. And of
course covering the naked short position is out of the question since
they can’t even stop the day-to-day naked short selling in the first
place and you can't be covering at the same time you continue to naked
short sell.
What typically happens in these situations is that the victim company
has to massively dilute its share structure from the constant paying
of the monthly burn rate with money received from the selling of
“real” shares at artificially low levels. Then the goal of the naked
short sellers is to point out to the investors, usually via paid
“Internet bashers”, that with the, let’s say, 50 billion shares
currently issued and outstanding, that this lousy company is not worth
the $5 million market cap it is trading at, especially if it is just a
shell company whose primary business plan was wiped out by the naked
short sellers’ tortuous interference earlier on.
The truth of the matter is that the single biggest asset of these
victim companies often becomes the astronomically large aggregate
naked short position that has accumulated throughout the initial “bear
raid” and also during the “cellar boxing” phase. The goal of the
victim company now becomes to avoid the 3 main goals of the naked
short sellers, namely: bankruptcy, a reverse split, or the forced
signing of a death spiral convertible debenture out of desperation. As
long as the victim company can continue to pay the monthly burn rate,
then the game plan becomes to make some of the strategic moves that
hundreds of victim companies have been forced into doing which
includes name changes, CUSIP # changes, cancel/reissue procedures,
dividend distributions, amending of by-laws and Articles of
Corporation, etc. Nevada domiciled companies usually cancel all of
their shares in the system, both real and fake, and force shareholders
and their b/ds to PROVE the ownership of the old “real” shares before
they get a new “real” share. Many also file their civil suits at this
time also. This indirect forcing of hundreds of U.S. micro cap
corporations to go through all of these extraneous hoops and hurdles
as a means to survive, whether it be due to regulatory apathy or lack
of resources, is probably one of the biggest black eyes the U.S.
financial systems have ever sustained. In a perfect world it would be
the regulators that periodically audit the “C” and “D” sub-accounts at
the DTCC, the proprietary accounts of the MMs, clearing firms, and
Canadian b/ds, and force the buy-in of counterfeit shares, many of
which are hiding behind altered CUSIP #s, that are detected above the
Rule 11830 guidelines for allowable “failed deliveries” of one half of
1% of the shares issued. U.S. micro cap corporations should not have
to periodically “purge” their share structure of counterfeit
electronic book entries but if the regulators will not do it then
management has a fiduciary duty to do it.
A lot of management teams become overwhelmed with grief and guilt in
regards to the huge increase in the number of shares issued and
outstanding that have accumulated during their “watch”. The truth
however is that as long as management made the proper corporate
governance moves throughout this ordeal then a huge number of
resultant shares issued and outstanding is unavoidable and often
indicative of an astronomically high naked short position and is
nothing to be ashamed of. These massive naked short positions need to
be looked upon as huge assets that need to be developed. Hopefully the
regulators will come to grips with the reality of naked short selling
and tactics like "Cellar boxing" and quickly address this fraud that
has decimated thousands of U.S. micro cap corporations and the tens of
millions of U.S. investors therein."
I think we should take dilivery of about 90%of our shares and put GTC
order in on the rest for a dollar $1.00 and watch the short sellers
heads explode