Repost from, https://investorshub.advfn.com/boards/board.aspx?board_id=10701 The following board has been created to discuss Market Manipulators and Market Manipulation as a whole. In my timeas an investor I have notice brokerage firms and other sources that have used Naked Short Selling,Market Maker tricks,Message boards etc... All of the listed sources have been used over the years to trick investors into selling or buying a stock. If you have any information on new bashing,Market Marker tricks and others please feel free to post that information no this board.The reason I will not say much about pumping is pumpers can only hurt you if you have lack of DDs. Which bashers used to be that simple but now there are reports of Market Makers and CEO of companies posting on a message board in attempts to bash. Please read the basher handbook that I have posted. It will give you the different classes of bashers.VERRRRRY IMPORTANT IF YOU DO NOT LOOK AT ANY OTHER LINK PLEASE READ THIS ONE.https://www.basherbusters.com/I will delete Posts that are personal attacks and off topic..Market Makers Method of STock Manipulationwww.imanet.org/pdf/1832.pdfHere is a nice link to read on FTDS.. one way of market manipulation..https://www.financialsense.com/fsu/editorials/kirby/2006/1030.htmlBasher Handbook(A Must Read)https://www.novakcapital.com/bashers.htmMarket Manipulatorhttps://www.laytheodds.com/articles/163/1/Smart-Money-Trading---Market-Manipulators/Betfair-Trading.h....Oh and my favorite..Another one on bashing which their are unconfirm reports of Market Makers joining boards now so they can be apart of this too..https://www.advancedsmallbusiness.org/positionpaper.htmNice little letter back in 2000 put out about Market Markershttps://www.sec.gov/rules/concept/s72499/klaser1.txtOh and when Sec was making some changes to the Short Rule Guess who had a problem with it Market Makers hahaha Read thishttps://www.forbes.com/wallstreet/2007/06/07/sec-options-cboe-biz-wall_cx_lm_0607options.htmlhttps://www.dailykos.com/story/2005/3/31/0481/68954https://www.sos.mo.gov/securities/pubs/pennystocks.aspManipulationEspecially when there are few or only one market maker, penny stocks are susceptible to price manipulation. A common and easy manipulation is for a broker-dealer to gather a large holding of a penny stock at a very low price. Through the use of high-pressure sales techniques, the sales force of the broker-dealer hypes the stock and stirs up demand, which seemingly justifies the continual rise in prices given by the broker-dealer (which is probably also the only market maker).The price continues to rise until there are no more investors who will buy, and then the bottom falls out and the price plummets. Sometimes the broker-dealer will buy back the securities at the fallen prices to recapture the stockpile for a futurerevival of the stock; more often investors are simply left holding the worthless stock.BASHERS DO THE FOLLOWING:1. Be anonymous2. Use 10% fact. 90% suggestion. The facts will lend credibility to your suggestions.3. Let others help you learn about the stock. Build rapport and a support base before initiating your bashing routine.4. Enter w/ humor and reply to all who reply to you.5. Use multiple ISP's, handles and aliases.6. Use two (2) or more aliases to simulate a discussion.7. Do not start with an all out slam of the stock. Build to it.8. Identify your foes (hypesters) and the boards "guru" Use them to your advantage. Lead them do not follow their lead.9. Only bash until the tide/momentum turns. Let doubt carry it the rest of the way.10. Give the appearance of being open minded.11. Be bold in your statements. People follow strength.12. Write headlines in caps with catchy statements.13. Pour it on as your position gains momentum. Not your personality.14. Don't worry about being labeled a "basher". Newbies won't know your history.15. When identified put up a brief fight, then back off. Return in an hour unless your foe is a weak in reasoning powers.16. Your goal is to limit the momentum of the run. Not to tank the company or create a plunge in the stock; be subtle and consistent.17. Kill the dreams of profits, not the company or the stock.18. Use questions to create critical thinking. Statements to reinforce facts.19. DO NOT LIE, DO NOT NAME CALL and DO NOT USE PROFANITY.20. Encourage people to call the company. 99% won't. They'll take your word for claims made. If they do call you can always find something that is inaccurate in how they report their findings.21. Discourage people for taking the companies word for anything. Encourage them to call the company. They won't out of laziness.22. If the companies history/PR's are negative constantly point to that. Compile a list of this data prior to beginning your efforts.23. If the price rises blame it on the hype or the PR, temporary mass reaction, the market, etc. Anything but the stock itself.24. If other posters share your concerns, play on that and share theirs too.25. Always cite low volume, even when it's not.26. Three or four aliases can dominate a board and wear down the longs.27. Bait the hypesters into personal debates putting their focus/efforts on you and not the stock or facts. Divert their attention from facts. Show them the facts from a "different angle."28. Promote other stocks that would-be investors can turn to instead of the one your bashing.30. Do not fall for challenges on the "values" of what you are doing, it's a game and you are playing it with your own rules.Market Maker Manipulation: Are Market Makers Playing Games With Our Profits?https://www.smartprofitsreport.com/Archives/2005/20050826.htmlInteresting Message board topic.https://finance.google.com/group/google.finance.663863/browse_thread/thread/4935197df7270c3dhttps://cmkxshareholderscoalition.net/subpage4.htmlCould this be real or fake. Sometimes websites like this are called fake but sometimes can be true. Make your own mind up.https://www.willywizard.com/method_of_operation_of_the_profe.htmCounterfeiting Stockhttps://counterfeitingstock.com/CounterfeitingStock.htmlSomething to laugh at but you know how you can tell the truth in a joking wayhttps://www.freedomfunds.net/employ.htmlSH Poster suedhttps://www.agoracom.com/ir/Noront/messages/586551Whole Foods CEO Caught Bashing Wild Oats Stock On Yahoo Forumshttps://consumerist.com/consumer/my,-that.s-professional/whole-foods-ceo-caught-bashing-wild-oats-sto....CONGRESS AND SEChttps://www.faulkingtruth.com/Articles/Investing101/1019.htmlCompanies Request Legal COUNSEL TO ADDRESS DEFAMATORY COMMENTS ON MESSAGE BOARDSSt. Elias huffs and puffs about Stockhouse posters2005-10-13 09:48 ET - News ReleaseMs. Lori McClenahan reportsST. ELIAS RETAINS LEGALSt. Elias Mines Ltd. confirms that, due to repeated defamatory comments concerning the company and its president, Lori McClenahan, posted on the Stockhouse forum chat lines prompting serious concern from the company's long-time investors, the company has retained counsel to begin taking appropriate action against certain parties who post malicious and inaccurate information deemed to be damaging to the company's reputation.The company believes that the Internet is one of the most powerful tools for communication ever invented. Posting defamatory comments on a widely read Internet bulletin board must be considered in the same light as publishing them in any other way because the accusations are available to a potentially broad and worldwide audience. For example, statements transmitted and published over Stockhouse about particular companies are accessible by millions of individuals including investors and potential investors.While management believes in focusing its efforts on advancing the company and its projects, it is management's responsibility to address defamatory comments when they cause interference and/or damage to the company.In the past, anonymous posters were hard to identify, however, recent Internet libel cases have set precedents and this lack of information is no longer an obstacle to obtaining the identity of anonymous Internet posters and launching an Internet libel suit. In a case decided in Alberta last year, Madame Justice C.A. Kent awarded oil and gas producer Vaquero Energy Ltd. $75,000 in damages over defamatory Stockhouse posts. During the trial, it was revealed that the anonymous poster was easily tracked down by his IP address, a unique number assigned to every computer accessing the Internet. Other cases include libel lawsuits filed by (1) Adanac Gold Corp. and Molycor Gold Corp., (2) Epic Data Inc. and (3) Farallon Resources Ltd. In addition, Barrick Gold Corp. recently won a $125,000 libel award over defamatory Internet postings. Based on these cases, it is evident that the Canadian courts take an unfavourable view of defamatory comments posted by cyberchatters.CONGRESS SEC HEARING on NAKED SHORT ABUSEDALLAS (June 26, 2007) -- For the first time in over a decade, all five members of the U.S. Securities and Exchange Commission (SEC) are testifying together in a hearing today at 2 p.m. EDT. The commission, summoned by Congress, is expected to defend itself against accusations that its focus has shifted toward business interests and away from the individual investors, and to respond to public outcry surrounding continual short selling.SEC Chairman Christopher Cox and Commissioners Paul S. Atkins, Roel C. Campos, Annette L. Nazareth, and Kathleen L. Casey are set to gather before the House Committee on Financial Services regarding numerous regulatory issues.An issue expected to be addressed in the hearing is the concern surrounding foul short selling and unrest among investors."The commission is eager to discuss its investor protection efforts - past, present and future," John Nester, SEC spokesman, said in a statement. "We have a great investor protection story to tell and we're happy to tell it."Last week the commission voted unanimously to adopt amendments to build muscle for Rule 105 of Regulation M, which helps prevent abusive short selling and market manipulation. The rule ensures that offering prices are set by the natural wave of supply and demand for the securities being offered, rather than by a manipulative hand.According to a press release regarding the vote, the amendments replace the rule's current limitation on covering the short sales in the offering with a prohibition on purchasing in the offering after a short sale in the securities.The change was in response to continual non-compliance with Rule 105. Under the new rule, if a person sells short during the period prior to pricing, that person will no longer be able to purchase the offered security. However, to ensure the rule does not "unduly" limit the possible purchasers in follow-on and secondary offerings a restricted period short seller is permitted to participate in an offering if they make a legitimate purchase prior to the offering.And its not just short selling at the table today - the SEC will discuss a variety of regulation and policy issues, including the pending securities lawsuit before the Supreme Court in which commissioners sided with investors still fighting the Enron scandal. The 3 to 2 vote was stomped by the Bush administration declining to side with investors in lawsuits involving investment banks, attorneys or vendors entwined in "fraudulent" activity.Congress Sells America Shortby Mark FaulkIn yet another twist in the stock market scandal known as Stockgate, the Faulking Truth has learned that Senator Richard Shelby (R-AL), Chairman of the Senate Banking Committee, has shelved a planned Senate Subcommittee Hearing investigating the issue. Originally scheduled for February of this year, and then postponed several times, the hearing, which has been advocated by Senator Robert Bennett (R-UT), has been cancelled indefinitely.According to a reliable source inside of the planned investigation, "The authority and the responsibility to take the necessary steps to deal with the issue of naked short selling lies squarely at the feet of Senator Shelby, and he has chosen not to allow the planned Senate Banking Subcommittee hearing to go forward." In an earlier interview with the same source, we were told that "Senator Shelby tends to grab things like this for his own purposes, and his own purposes don't always mesh with what's best for the public."Translation: Senator Shelby has sold out America in the name of special interests, and sold out the small investors to the hedge funds and their multi-millionaire clients. According to a trader who has been in the business for over 20 years, "the issue of naked short selling, or to put it more bluntly, 'stock counterfeiting', affects nearly every person who has ever bought or sold stock or invested in mutual funds. This scandal has cost investors and companies trillions of dollars, cost our country billions in tax revenues, and the money stolen from investors has even found its way into the hands of organized crime and terrorist organizations."While Congress and the SEC, who are and should be responsible for insuring that our markets are fair and honest, do nothing as company after company is forced into bankruptcy, and while private investors lose millions of dollars every single day, offshore hedge funds, whose clients are already multi-millionaires, continue to move money out of America and into tax havens in Bermuda and the Cayman Islands.When the stock market began its precipitous crash in 2000, eventually losing 38% of its value (with NASDAQ stocks losing 60%) and trillions of dollars, that money didn't simply "disappear." It just changed hands, from long investors to hedge funds and short sellers, and much of it was moved to offshore tax havens, out of our economy, out of our tax coffers, out of America. It is the largest money drain in the history of our country, and thanks to the inaction of Congress and the SEC, it is still going on every day.In the meantime, an eleven state task force, under the auspices of the North American Securities Administrators Association, has begun its own investigation into naked short selling, and is already plotting a strategy to deal with the massive scandal. In a September 8th letter from Ralph Lambiase, the head of the Connecticut division of securities and business investments, who is heading the task force, to Dave Patch, editor of www.investigatethesec.com , Lambiase says:"The federal securities laws prohibit the manipulation of securities. Specifically, manipulation is intentional conduct designed to deceive investors by controlling or artificially affecting the market for a security. Manipulation can involve a number of techniques to affect the supply of, or demand for, a stock. They include: spreading false or misleading information about a company; improperly limiting the number of publicly-available shares; or rigging quotes, prices or trades to create afalse or deceptive picture of the demand for a security.NICE READ I HOPE THEY GET COMPLAINTSWhile the First Amendment protects freedom of speech, a charge of slander may be brought against someone who knowingly makes a false statement. Please note that this is a civil matter, not a matter under the federal securities laws.If you want to provide us specific details of persons being paid to bash a company, we would appreciate your letting us know. You can do this by filing a complaint at https://www.sec.gov/complaint.shtml.Sincerely,ROBERT T GREENEU.S. Securities and Exchange Commission(202)942-7221 "NICE READ ON Naked Short SELLINGhttps://investorshub.advfn.com/boards/read_msg.asp?message_id=24345181Hopefully this is what we have been waiting for.DEC 4TH should be when NSS Needs to be covered. This is the email from Knight asking the SEC for more time to cover because they were scared it would case to many short squeezes.. Dec 4th should be fun for alot of stocks. ..Knight Capital Worried about Reg Sho ChangesSeptember 20, 2006Nancy M. MorrisSecretarySecurities and Exchange Commission100 F. Street, NEWashington, DC 20549-9303Re: Release No. 34-54154; File Number S7-12-06Proposed Amendments to Regulation SHODear Ms. Morris:Knight Capital Group, Inc. (“Knight”)[1] welcomes the opportunity to offer our comments to the Securities and Exchange Commission (“Commission”) on the proposed amendments to Regulation SHO.[2] The proposed amendments seek to: (i) eliminate the grandfather provision for fails; (ii) modify the options market maker exemption for closing out fails; and (iii) address the unwinding index arbitrage positions. The Commission also requests comment on a number of additional questions. Since our business will be impacted directly by the proposal relating to the elimination of the grandfather provision, we will focus most of our comments on that issue.Proposed elimination of the grandfather provisionThe Commission proposes to eliminate the grandfather clause of Rule 203(b)(3)(i). This rule generally exempts fails to deliver that existed prior to the security becoming a threshold security. The new amendment would require that all grandfathered fails be closed-out within 35 settlement days from the effective date of the amendment and if a security becomes a threshold security after the effective date, all fails would need to be closed out within 13 consecutive settlement days. We respectfully oppose such a change.We believe that the empirical data now available shows that this proposal is not necessary – see, Memorandum from the Commission’s Office of Economic Analysis (August 21, 2006). For example, “99.2% of the fails that existed on January 3, 2005 are no longer outstanding as of March 31, 2006” (Memorandum at page 2).Additionally, the elimination of the grandfather provision will lead to increased volatility in these securities, created by short squeezes as individuals attempt to cover positions. Importantly, the elimination of the grandfather provision will negatively impact bona fide market making and the ability of market makers to provide liquidity. As the Division of Market Regulation correctly noted,There may be legitimate reasons for a failure to deliver….For example, market makers who sell short thinly traded, illiquid stock in response to customer demand may encounter difficulty in obtaining securities when the time for delivery arrives.Naked short selling is not necessarily a violation of the federal securities laws or the Commission's rules. Indeed, in certain circumstances, naked short selling contributes to market liquidity. For example, broker-dealers that make a market in a security generally stand ready to buy and sell the security on a regular and continuous basis at a publicly quoted price, even when there are no other buyers or sellers. Thus, market makers must sell a security to a buyer even when there are temporary shortages of that security available in the market. This may occur, for example, if there is a sudden surge in buying interest in that security, or if few investors are selling the security at that time. Because it may take a market maker considerable time to purchase or arrange to borrow the security, a market maker engaged in bona fide market making, particularly in a fast-moving market, may need to sell the security short without having arranged to borrow shares. This is especially true for market makers in thinly traded, illiquid stocks such as securities quoted on the OTC Bulletin Board, as there may be few shares available to purchase or borrow at a given time. (emphasis supplied and citations omitted)See, Division of Market Regulation: Key Points About Regulation SHO (April 11, 2005).Thus, to restrict – indeed eliminate, the ability of market makers to satisfy these investor needs will undoubtedly lead to less liquidity, greater volatility, and widening of spreads. Further, in certain instances, restricting bona fide market making in such a fashion could lead to upward price manipulation (i.e., the return of “pump & dump” schemes) causing investors to purchase shares at inflated prices.If the Commission does determine, however, to move forward with the elimination of the grandfather clause, we urge the Commission to adopt a permanent phase-in period of 35 days for all fails to deliver incurred in securities prior to those securities becoming a threshold security. In addition to the reasons stated above, Knight is very concerned that the elimination of the grandfather provision will necessarily inject a new risk dynamic into the market making process that is nearly impossible to predict and even more difficult to measure. More specifically, when making a decision whether to sell short to an investor seeking to buy a “non-threshold” stock, a market maker today can adequately assess the risk associated with providing liquidity and capital to that order. Although there is always a risk of price movement, a market maker can manage that risk by deciding when to buy back that position. Under the current proposal, the market maker loses that risk management capability. Thus, if the stock is not a threshold security the day the market maker sells short to an investor, but becomes a threshold security shortly thereafter, the risk incurred by the market maker on the day it went short will exponentially increase – since, the market maker can no longer manage its exit point on the position and will now be forced to close that position within 13 consecutive settlement days. In effect, a new and substantial risk will be applied retroactively to a market making decision made in the past. So, through no fault of its own, the market maker is now forced into a potentially precarious – and costly, position.Consequently, in light of the additional and substantial new risks the market maker is being asked to bear, and since this risk will be incurred in connection with activities designed to serve the investing public (i.e., bona fide market making), we suggest an extended, permanent buy-in period of 35 settlement days in these situations. No harm will come to any investor or the marketplace with this modest extension of time, however it will help market makers somewhat manage this newly created risk.Additional questions posed by the CommissionThe Commission raised additional questions in the proposed amendments which we would also like to address:1. Should there be, “a mandatory pre-borrow requirement in lieu of a locate requirement for threshold securities with extended fails?”If the Commission was to adopt a mandatory pre-borrow requirement in lieu of a locate requirement for threshold securities with extended fails to deliver, we submit that the Commission should clarify that such requirement would not be imposed on transactions that are exempted from Rule 203(b)(1) by Rule 203(b)(2). If such transactions are not exempted from the pre-borrow requirement, it could impact a market maker even if it did not have an extended fail. Such a requirement could also provide an un-level playing field to certain market participants. Specifically, broker/dealers that have extensive stock loan businesses will have the advantage of transacting in securities at costs much lower than other firms. Overall costs to other broker/dealers would increase as they would have to use capital and pay higher borrow costs to make a market in the stock even though they are not contributing to the fail. In addition, a market maker would be required to incur these borrow costs if it wanted to post quotations if such quotations may result in the market maker selling stock short. This will impact negatively a market maker’s ability to make markets in threshold securities – thereby reducing liquidity for threshold securities.2. Should the, “current close-out requirement of 13 consecutive settlement days for Rule 144 restricted threshold securities or other types of threshold securities should be extended?”Knight supports extending the close-out requirement from 13 consecutive settlement days to at least 35 settlement days for sales in threshold securities related to sales effected pursuant to SEC Rule 144, or other similar situations where delays may occur in settlement. Requiring a close-out of “owned” shares in the 13-day period has resulted in serious consequences to sellers that “own” a security who, through no fault of the seller, were not able to settle the transaction by the 13th day. For example, the mechanics of having the transfer agent remove a restrictive legend often results in delays of settling transaction beyond 13 settlement days. [3] These delays are not a result of the abusive short selling practices that Regulation SHO was intended to address. Instead, they are typically a result of ensuring that proper documentation is received to remove the legend (e.g., an opinion of counsel).In addition, transactions in restricted securities are typically larger in size and occur over several days or weeks which increases the risk that such transactions will be subject to a buy-in because: (i) the fails associated with the sales of restricted shares may be sufficient enough to cause the security to become a threshold security or delay a security from being removed from the threshold list; [4] and (ii) sellers are typically not permitted to start the process of removing the restrictive legend until after the shares are sold. Moreover, using the last-in-first-out (“LIFO”) method of closing out fails-to-deliver, the seller of restricted securities is subject to a greater risk of buy-in because shares that are delivered to settle one trade may be applied to a subsequent trade that is also causing a fail-to-deliver.[5]3. Should the Commission except “ETFs or other types of structured products from the definition of threshold securities?”We support such a proposal and submit that such an exception should extend to other structured products and American Depository Receipts (ADRs). These types of securities are not subject to the potential short selling abuses as there value is derived from an underlying basket of securities or underlying foreign security. In addition, ETFs and ADRs are in continuous distributions making it difficult to determine the correct outstanding shares for such securities. Thus, the securities may become threshold securities when the fails-to-deliver do not amount to 0.5% of the true outstanding shares.4. Should the Commission, “consider tightening the locate requirements?”The Commission asks whether it should require that brokers/dealers obtain locates only from sources that will decrement shares. We respectfully oppose this proposal, as it will negatively impact the ability of a broker/dealer to borrow stock. Since the vast majority of locates do not result in an actual borrow by settlement, requiring a decrement base simply on a locate request would have the effect of reducing substantially the available stock for lending – thus, increasing the cost to borrow the shares and overall clearing costs (which, ultimately, may be passed on to the investor). Further, we also believe that a great deal of time and money will need to be spent by the clearing industry in developing systems and procedures designed to accurately count and decrement shares each time a locate is requested, cancelled, etc. In our view, the stock lending market is not based on the ability to deliver all shares for which there is a locate requested – rather, it is based on the ability to deliver stock in those instances where a broker/dealer is required to borrow the stock to settle a short sale. Since most locates do not result in a need to borrow shares to settle trades, there is no compelling reason to tie-up all stock available for lending.5. Should the Commission require the, “dissemination of aggregate fails data or fails data by individual security?”We respectfully disagree with this proposal. Such disclosure would cause more confusion as the information is not indicative of abusive short selling, especially in light of fails caused by “owned” securities (restricted sales). Thus, for example, investors may mistakenly believe that a large percentage of fails to deliver is indicative of abusive short selling or problems with the issuer, when it could be a result of an operational delay with a transfer agent or a delay in removing the legend for a restricted securities transaction. This mistaken belief could result in increased volatility in the stock and increased short selling.If the Commission were to require aggregate fail data to be published, Knight believes that such information should be limited to aggregate street-wide fails by cusip number, and that SROs should publish the data they receive from the National Securities Clearing Corporation (“NSCC”). In addition, the data should only be published for securities that are on the threshold list for 35 consecutive settlement days to avoid situations where the security became a threshold security as a result of restricted securities transactions or operational delays.6. Should the Commission require, “additional specific documentation of long sales?”We would oppose such a new requirement. We are not aware of any data which suggests there is a problem in this area. Most broker/dealers have fairly extensive compliance and supervisory requirements designed to confirm sales are properly marked “long” or “short” and to monitor settlement of transactions by its clients. This new proposal will add substantial costs to an already robust infrastructure, with minimal benefit. However, if the Commission does seek to amend Regulation SHO to require increased documentation for long sales, Knight submits that an executing broker should be exempt from such requirements when there is: (i) a prime brokerage relationship; (ii) the trade is a DVP trade; (iii) settlement instructions are on file with the executing broker; or, (iv) the order is sent electronically.ConclusionWe commend the continued efforts of the Commission to make improvements to Regulation SHO and the marketplace. Knight would welcome the opportunity to discuss our comments with the CommissionNSS Maybe in serious trouble. ( They just do not know it yet)Maybe of Interest: Ballot initiative targets illegal short sellinghttps://www.siouxcityjournal.com/articles/2007/11/29/news/south_dakota/be7fd1bb9063631f862573a200175b7f.txtSIOUX FALLS (AP) -- An initiative that would impose state penalties for the illegal short selling of stock shares appears to be the first headed to the 2008 ballot in South Dakota.It's part of a nationwide effort to convince states to pass their own laws against "naked" short selling, which involves selling borrowed shares without having borrowed them first.The practice is already illegal in the eyes of the federal Securities and Exchange Commission because it tends to lower a company's share price by artificially creating more sellers than buyers. But proponents of state laws against the practice say the SEC is not enforcing its laws so states need to act.State Rep. Hal Wick, R-Sioux Falls, said South Dakotans for Securities Reform has gathered 27,500 signatures and plans to deliver the petitions to the South Dakota secretary of state on Thursday.Wick said he knew nothing of "naked" short selling until last March, when Tim Mooney, spokesman for the Union, Mo.-based American Entrepreneurs for Securities Reform, brought it to his attention.If passed by voters, the law would require stock shares to be delivered to the buyer within three days of their purchase."This is a consumer protection issue that needs to be addressed," Wick said Wednesday. "The people of South Dakota deserve to have the protection of both the state and the federal government when they invest their hard-earned dollars in the stock market."Travis Larson, spokesman for the Securities Industry and Financial Markets Association, said the SEC has addressed the issue and any state law dealing with short selling would likely run counter to current federal regulations."The SEC has been given control of our financial market regulations so that we have one single set of rules and regulations for our financial markets," Larson said. "And if every state were to pass its own rules -- some of which may run counter to the SEC -- the patchwork quilt of resulting rules and regulations would tie up our financial markets and slow them, hurting our competitiveness."Larson added that where short selling occurs illegally, it should be punished to the fullest extent of existing federal law.In a July letter to the industry association, South Dakota Gov. Mike Rounds said promoters might have good intentions, but the proposed initiative would unduly burden and obstruct interstate commerce."The initiative will not receive support from this office and, unfortunately, there is no realistic way to prevent the short sale initiative from appearing on the November 4, 2008, ballot if the proper signatures are obtained," Rounds wrote.Traditional short sellers borrow a stock, then sell it, betting its price will decline and they will be able to buy it back and return it to their lender at a cheaper price. In "naked" short selling, as defined by the SEC, the seller does not borrow or arrange to borrow the securities in time to "make the delivery" to the buyer within the standard three-day settlement period for trades. It's called a failure to deliver.Mooney said the practice amounts to fraud, and the American Entrepreneurs for Securities Reform is trying to get similar legislation passed in Oklahoma and Missouri."Phantom shares of stock are created in excess of that which has been issued," Mooney said. "It's the same economic impact as putting a $100 bill in the Xerox machine and hitting 'copy."'"Naked" short selling has received some attention in recent years from Patrick Byrne, chief executive officer of Overstock.com, who has become a vocal critic of the practice. The Salt Lake City-based Internet retailer is suing a stock research firm and hedge fund managers for allegedly driving down the company's shares.Utah's legislature passed a law against the practice in 2006, but repealed it a year later.The extent of "naked" short selling is not known.Mooney estimates that as much as $6 billion a day worth of stock is not delivered, but he added that some of that is fixed over time.Other business analysts contend the issue is overblown.Failures to deliver can occur for a number of reasons, including human or mechanical errors or processing delays, and they can occur on both long and short sales.Wick said he wasn't sure how prevalent the practice is in South Dakota, but he said he knows of one company in the state that has been impacted by it. He said he did not want to name the company.But startup companies need protection against the practice so brokerage firms can't drive them into bankruptcy, Wick said. The conversion of the old Homestake gold mine in Lead into an underground laboratory will draw many startup companies to the state, he added.Asked why he didn't introduce the bill in the Legislature rather than using the ballot initiative process, Wick said short selling is not the kind of issue that would otherwise get a lot of media attention."The things that go through the Legislature, most people never see," Wick said. "By doing this publicly and asking the people to vote on it, we let the people of South Dakota really say what they want."Mooney said state efforts will also help get the attention of the SEC, which can then better enforce its laws.Wick said he hasn't had any discussions with the South Dakota Attorney General's Office on how it would handle enforcement of the proposed law, but it would fall under the state's consumer protection division.The ballot measure is titled the South Dakota Small Investors Protection InitiativeVERRRRRY IMPORTANT IF YOU DO NOT LOOK AT ANY OTHER LINK PLEASE READ THIS ONE.https://www.basherbusters.com/Post from another boardMarket Maker Speaks Out: Ways of a Market Maker Nice ReadI was an OTC MM for about 10 years ending in the late 80's. Since then I have been strictly an investor. Since I have not been that up to date in MM rules I will only make statements that I feel fairly confident are still accurate regarding these activities. By and large most MM don't have a clue nor do they care to learn, about the fundamentals of the stocks they trade.They just try to make orderly markets. When dealing with BB stocks it is very easy for a MM to get trapped into being short in dealing in a fast moving market. Reason being; most of the MM's in this stock are what are called "wholesalers" this means they don't have retail brokers "working" the stocks.So they have to rely on what's known as the "call" from larger retail houses. If a "Big" retail firm like an E-trade calls up a market maker to purchase say 5,000 shares of a stock, they expect to get an "execution" from that market maker. If he turns them down, or only gives a partial then the "Big" firm will go to another MM.If this second MM "fills the order" then that "Big" firm has a moral obligation to continue to give future "business" in that stock to that MM who performed (his life blood). This will go on until he "fails" to perform and so on.Contrary to popular opinion the "Big" firms Do NOT neccessarily go to the "Low Offer" to fill a buy order (Or high bid for a sell). They "Go" to who they think will perform to fill the order and expect that MM to "match" the "low offer" in the case of a buy (bid in the case of a sell). Even though this MM might in fact be the "high bid" and not really want to sell any more.As a wholesaler he must perform or he will get a reputation as a "non-performer" with the "Big" houses and will cease getting "calls" which means he will soon go out of business. I mentioned above that this activity is very significant to BB stocks. I say this because most of the trades in these BB stocks are "unsolicited" and are done through discount houses.With the above groundwork laid, let me try to explain how market makers get short even if they like the Company; Lets say that a stock (shell) has been lying quietly at $.25 bid $.50 offered. A limit order comes into one of the MM's to Buy at $.50 for a thousand shares. Prior to this trade that MM may be "flat" (neither long or short any shares). He fills the order and is now short 1,000 shares. He may raise his bid hoping to find a seller to "flatten" out his position. But before he realizes it a wave of buyers have come in and cleared out all the $.50 offers. Now the stock is $.50 bid .75 offered. Here comes that "Big" firm he just sold the 1,000 shares to at .50 with another bid for 1000 at .75. He makes this print. Now he is short 2,000 at an average of .625. The market keeps moving and now its .75 bid 1.00 offered. Now he has to make a decision.Just like investors, MM Hate to take a loss. So 9 times out of 10 he will now sell 2000 at 1.00 making him short 4000 but with an average .81. At this time he would love to see a seller at .75 so he can cover his short and make a few bucks.But instead the market keeps moving up. Now it is 1.00 to 1.25 and here comes the buyer again at 1.25. He doesn't want to lose the call so now he needs to sell 4,000 at 1.25 to keep his break even point above the bid. Now he is short 8,000. Market moves up to 1.25 bid 1.50 offer here comes the buyer now he feels he must sell 8000 here because "stocks don't go up forever".Now he is short 16,000. And so on and so on. If the stock keeps moving up, before he realizes it he could be short 50k or 100k shares (depending how big his bank is). _________________________Finally the market closes for the day and on paper he may look all right in that his "break even" price may be around the closing price. But now he has to figure out how to entice sellers so he can cover this short. It is important to note that if this happened to one MM it has probably happened to most all of them.Some ways MM's entice sellers; Run the stock up with a "tight spread" in a fast market, then "open" up the spread to slow down the buying interest. After it has "cooled off" for a little while lower the offer below the last trade right after a small piece trades on the offer then tighten the spread so that the sellers feel they can take a "quick profit" by "hitting the bid" on the tight spread.Once the selling starts the MM's will walk it down quickly by only making small prints on the way down with the tight spread. Another way is by running the stock up in the morning, averaging up their short then use the above technique to walk it down in the afternoon.Hopefully after doing this for several days, it will demoralize the buyers. The volume will dry up and the sellers will materialize thinking that the game is over.Contrary to popular opinion, MM usually Do Not Cover in Fast moving markets either Up or Down if they are short. They Short More. They usually try to cover after the frenzy is out of the market. There are many other techniques they use but the above are the most popular.This technique works about 9 times out of 10 particularly in a BB market. However that is because 9 out of 10 BB stocks are BS. Remember what I said above. Most MM's don't have a clue as to the value of a Company until they get trapped. If the Company has solid fundementals and a bright future. Then the stock will do very well. And the activity that caused the situation will prove to even help the future stock activity because it created an audience."Naked Short Selling letters to the SEChttps://www.sec.gov/comments/s7-08-08/s70808.shtmlLISTEN TO THIS NSS EXPLAIN!!listen to this:https://www.netcastdaily.com/broadcast/fsn2008-0621-3b.mp3IMPORTANT NAKED SHORT SELLING RULE SEC Issues New Rules to Protect Investors Against Naked Short Selling AbusesFOR IMMEDIATE RELEASE2008-204Washington, D.C., Sept. 17, 2008 — The Securities and Exchange Commission today took several coordinated actions to strengthen investor protections against "naked" short selling. The Commission's actions will apply to the securities of all public companies, including all companies in the financial sector. The actions are effective at 12:01 a.m. ET on Thursday, Sept. 18, 2008."These several actions today make it crystal clear that the SEC has zero tolerance for abusive naked short selling," said SEC Chairman Christopher Cox. "The Enforcement Division, the Office of Compliance Inspections and Examinations, and the Division of Trading and Markets will now have these weapons in their arsenal in their continuing battle to stop unlawful manipulation."In an ordinary short sale, the short seller borrows a stock and sells it, with the understanding that the loan must be repaid by buying the stock in the market (hopefully at a lower price). But in an abusive naked short transaction, the seller doesn't actually borrow the stock, and fails to deliver it to the buyer. For this reason, naked shorting can allow manipulators to force prices down far lower than would be possible in legitimate short-selling conditions.Today's Commission actions, which are the result of rulemaking under the Administrative Procedure Act, go beyond its previously issued emergency order, which was limited to the securities of financial firms with access to the Federal Reserve's Primary Dealer Credit Facility. Because the agency's exercise of its emergency authority is limited to 30 days, the previous order under Section 12(k)(2) of the Securities Exchange Act of 1934 expired on Aug. 12, 2008.The Commission's actions were as follows:Hard T+3 Close-Out Requirement; Penalties for Violation Include Prohibition of Further Short Sales, Mandatory Pre-BorrowThe Commission adopted, on an interim final basis, a new rule requiring that short sellers and their broker-dealers deliver securities by the close of business on the settlement date (three days after the sale transaction date, or T+3) and imposing penalties for failure to do so.If a short sale violates this close-out requirement, then any broker-dealer acting on the short seller's behalf will be prohibited from further short sales in the same security unless the shares are not only located but also pre-borrowed. The prohibition on the broker-dealer's activity applies not only to short sales for the particular naked short seller, but to all short sales for any customer.Although the rule will be effective immediately, the Commission is seeking comment during a period of 30 days on all aspects of the rule. The Commission expects to follow further rulemaking procedures at the expiration of the comment period.Exception for Options Market Makers from Short Selling Close-Out Provisions in Reg SHO RepealedThe Commission approved a final rule to eliminate the options market maker exception from the close-out requirement of Rule 203(b)(3) in Regulation SHO. This rule change also becomes effective at 12:01 a.m. ET on Thursday, Sept. 18, 2008.As a result, options market makers will be treated in the same way as all other market participants, and required to abide by the hard T+3 closeout requirements that effectively ban naked short selling.Rule 10b-21 Short Selling Anti-Fraud RuleThe Commission adopted Rule 10b-21, which expressly targets fraudulent short selling transactions. The new rule covers short sellers who deceive broker-dealers or any other market participants. Specifically, the new rule makes clear that those who lie about their intention or ability to deliver securities in time for settlement are violating the law when they fail to deliver. This rule also becomes effective at 12:01 a.m. ET on Thursday.