Question for 4kids Following is an extract from a
Post# of 43064
Posted On: 02/20/2014 2:47:05 PM
Question for 4kids
Following is an extract from an SEC ruling. Comments?
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Extract -
http://www.sec.gov/litigation/admin/2014/ia-3781.pdf
The Commission’s complaint alleged, among other things, that during 2010, Williams perpetrated a fraudulent scalping scheme involving the stock of Green Oasis Environmental, Inc. (“Green Oasis”). As part of the fraudulent scheme, Williams told the USHPF that he would apply a trading strategy, called a “Float Lock Down,” while trading for the benefit of the Fund. According to Williams’ Float Lock Down strategy, certain market participants, specifically market makers, routinely engaged in “naked short selling” of penny stock companies – i.e., selling short stocks without having arranged to borrow the stock needed to cover their short position. Williams claimed that by purchasing all the outstanding shares of a company (the “float”) whose stock the market makers had sold short, they could create a “short squeeze” that would force the market makers to eventually cover their short position at prices dictated by those who had accumulated the float. In fact, the purported Float Lock Down strategy was simply a pretext for Williams to drive up the share price of a stock so that he could sell his personal holdings of the stock at higher prices.
Following is an extract from an SEC ruling. Comments?
-------------------------
Extract -
http://www.sec.gov/litigation/admin/2014/ia-3781.pdf
The Commission’s complaint alleged, among other things, that during 2010, Williams perpetrated a fraudulent scalping scheme involving the stock of Green Oasis Environmental, Inc. (“Green Oasis”). As part of the fraudulent scheme, Williams told the USHPF that he would apply a trading strategy, called a “Float Lock Down,” while trading for the benefit of the Fund. According to Williams’ Float Lock Down strategy, certain market participants, specifically market makers, routinely engaged in “naked short selling” of penny stock companies – i.e., selling short stocks without having arranged to borrow the stock needed to cover their short position. Williams claimed that by purchasing all the outstanding shares of a company (the “float”) whose stock the market makers had sold short, they could create a “short squeeze” that would force the market makers to eventually cover their short position at prices dictated by those who had accumulated the float. In fact, the purported Float Lock Down strategy was simply a pretext for Williams to drive up the share price of a stock so that he could sell his personal holdings of the stock at higher prices.
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