Posted On: 08/02/2015 1:29:54 PM
Post# of 39368
Some aspiring dufus was just busted by the FBI for doing what I'm about to paste below,
Does anybody remember those little PIPES deals ARGY did in 2003-5?
So there is a long-running game in which penny-stock financiers find ways to get stock to the public, the SEC shuts them down, the financiers find new ways, etc. Here's a simple classic: The financier sells the company's stock short, selling X shares of stock into the market for $Y of proceeds. Then he gives the company $Z (Z << Y), the company gives him X shares of stock, and the financier closes out his short sale with the shares from the company. The financier is never long shares, and is never "really" short either, because he's arranged with the company to get shares to close out his short. So he's never at risk. This is a good trade, but also super illegal.
So what if the financiers never have to go long after shorting the stock?
Yes.... By forcing revocation or bankruptcy .... That's how ...
Does anybody remember those little PIPES deals ARGY did in 2003-5?
So there is a long-running game in which penny-stock financiers find ways to get stock to the public, the SEC shuts them down, the financiers find new ways, etc. Here's a simple classic: The financier sells the company's stock short, selling X shares of stock into the market for $Y of proceeds. Then he gives the company $Z (Z << Y), the company gives him X shares of stock, and the financier closes out his short sale with the shares from the company. The financier is never long shares, and is never "really" short either, because he's arranged with the company to get shares to close out his short. So he's never at risk. This is a good trade, but also super illegal.
So what if the financiers never have to go long after shorting the stock?
Yes.... By forcing revocation or bankruptcy .... That's how ...
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