Appears that JR30 beat me to it. I was just readin
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Posted On: 02/08/2019 5:26:11 PM
Re: Both shallow #12043
Appears that JR30 beat me to it. I was just reading the same article about "NAKED SHORTS CAN’T STAY NAKED FOREVER" As he said, it appears that naked shorts don't ever have to buy back shares. It just sits as an obligation on their books.
But I guess the catch is, it can sit there forever until someone makes it an issue, like the SEC.
If you read some of the comments, such as from ANT below, some say that a company is being misinformed if they are being told a RS and Reverse Merger is going to cure the problem???? I don't know.
ANT
September 28 2016, 3:55 p.m.
“Once that CUSIP changes, the naked shorter has no apparent way to close out the naked short position. No stock under the old CUSIP number exists anymore; it all automatically converts to the new CUSIP.”
This statement reflects a gross ignorance of how CUSIPs are treated during splits and reverse splits. In either case the shares held under old CUSIP are exchanged for shares under the new post-split CUSIP and all existing positions are adjusted accordingly. If you were short 10K of a stock doing a 1-10 reverse split, you would now be short 1K of the new CUSIP. This practice is standard and happens dozens, 100s of times a month for any stock splitting
Whoever Dayen the info quoted above is a fool or a liar.
While we are at it, anyone advising companies that a reverse split is a good way to fight the short sellers is selling snake oil. Stock splits have 0, zero, effect on the dollar value of the position.
But I guess the catch is, it can sit there forever until someone makes it an issue, like the SEC.
If you read some of the comments, such as from ANT below, some say that a company is being misinformed if they are being told a RS and Reverse Merger is going to cure the problem???? I don't know.
ANT
September 28 2016, 3:55 p.m.
“Once that CUSIP changes, the naked shorter has no apparent way to close out the naked short position. No stock under the old CUSIP number exists anymore; it all automatically converts to the new CUSIP.”
This statement reflects a gross ignorance of how CUSIPs are treated during splits and reverse splits. In either case the shares held under old CUSIP are exchanged for shares under the new post-split CUSIP and all existing positions are adjusted accordingly. If you were short 10K of a stock doing a 1-10 reverse split, you would now be short 1K of the new CUSIP. This practice is standard and happens dozens, 100s of times a month for any stock splitting
Whoever Dayen the info quoted above is a fool or a liar.
While we are at it, anyone advising companies that a reverse split is a good way to fight the short sellers is selling snake oil. Stock splits have 0, zero, effect on the dollar value of the position.
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