Insiders possibly buying public shares from shell accounts?What prevents insiders with large ownership from opening shell companies in their "friends" names, then opening trading / broker accounts, lending the "friends" money to buy their public company's shares at the "market" price (which is cheaper than all the offering prices). In turn, when the public company sells, funds that were lent out to buy shares from shell accounts, are returned to the insider and the gains split with the "friends"?
Another scenario: what if you (the insider) were to buy out the public company and had a bunch of shell companies you open in your "friends" names, bought the public company's shares at cheap prices that do not reflect actual value, and when the transaction is completed (at actual value), you take your money back that you lent to "friends" to buy shares in the public company you just bought...
It's like paying yourself for the company you bought from yourself lol.
It's illegal right?
Yeah, so is shorting before a public offering to obtain the share even cheaper or setting up warrants at strike prices on manipulated share prices... But I wouldn’t be surprised if the above scenarios are also going on. Shout out at Roykerr, he mentioned a similar scenario not long ago.
The SP could also be suppressed in case of another offering which would give more buying power to the insiders...