Because it has been used many times, I decided to look into the actual "market" we are in and it's effect on valuation. Too many time we hear "the market has set the price at $.31, so that is what it is worth" This is a statement built on the assumption that the "market" is some sort of fair gold standard of value. The OTC is far from it. Below are some of the practices employed to control an OTC stock price:
- bid support: by placing orders for issuers’ stock for relatively small amounts of shares at prices immediately below the “inside,” or highest, bid price posted by market makers.The intended effect of these orders was to absorb sell orders to prevent market sales from causing stock prices to fall significantly. By placing orders at slightly lower prices than the prevailing bid price, this creates an artificial floor for the price of a particular stock and “supported” the prevailing bid.
- placing orders through different brokerage firms so that market
participants would see a substantial number of bids posted, all close to the inside bid,·and conclude that there was greater demand for the stocks than truly existed.
- traded through several different brokerage firms to give the false
impression of market depth to those looking at the market using a “Level II” or “Level III” trading service, which identify the market makers that are originating bids.
- engaging in coordinated trading in which MMs purchased and
quickly sold stocks, resulting in artificially increased trading volume designed to attract interest to the stocks and increase the prices.
- So you have invested in or were thinking of investing in a stock but noticed very strange occurrences in trading, such as selling of more shares than are available to be freely traded. Or despite buying at the offer, the offer moves lower. Or perhaps then strange and alarming amount of negative comments, innuendoes and predictions of doom and gloom....This may be short & distort market manipulation.
market makers, hedge funds and others with the ability to short securities start by selling stock they do not own. After a substantial position is obtained, i.e. sold a desired amount of shares, they then start a smear campaign against the company, its management, the security and even the industry they are in.
While they are doing this, the short traders offer stock below the lowest quoted offer. Known as "low offering". They might then start to sell more shares of the stock hitting the bid. Again with shares they likely do not even own. Then, through another trader or market maker, they low offer the last offer. Then continue to do this to make it appear people are rushing to get our of this stock. All the while messages are posted saying things like "I told you, insiders are dumping", "SEC halt pending" or "big sell off again".
If the short position is big enough ie has enough money on the line they may even hire dubious writers to write propaganda on the company and then increase the trading tactics described above.
All this is designed for us to panic and sell our shares we bought much higher so the shorts can buy these shares back and cover the short position for a hefty profit. ie sell high buy low. They make the spread in the middle.
- bid support: by placing orders for issuers’ stock for relatively small amounts of shares at prices immediately below the “inside,” or highest, bid price posted by market makers.The intended effect of these orders was to absorb sell orders to prevent market sales from causing stock prices to fall significantly. By placing orders at slightly lower prices than the prevailing bid price, this creates an artificial floor for the price of a particular stock and “supported” the prevailing bid.
- placing orders through different brokerage firms so that market
participants would see a substantial number of bids posted, all close to the inside bid,·and conclude that there was greater demand for the stocks than truly existed.
- traded through several different brokerage firms to give the false
impression of market depth to those looking at the market using a “Level II” or “Level III” trading service, which identify the market makers that are originating bids.
- engaging in coordinated trading in which MMs purchased and
quickly sold stocks, resulting in artificially increased trading volume designed to attract interest to the stocks and increase the prices.
- So you have invested in or were thinking of investing in a stock but noticed very strange occurrences in trading, such as selling of more shares than are available to be freely traded. Or despite buying at the offer, the offer moves lower. Or perhaps then strange and alarming amount of negative comments, innuendoes and predictions of doom and gloom....This may be short & distort market manipulation.
market makers, hedge funds and others with the ability to short securities start by selling stock they do not own. After a substantial position is obtained, i.e. sold a desired amount of shares, they then start a smear campaign against the company, its management, the security and even the industry they are in.
While they are doing this, the short traders offer stock below the lowest quoted offer. Known as "low offering". They might then start to sell more shares of the stock hitting the bid. Again with shares they likely do not even own. Then, through another trader or market maker, they low offer the last offer. Then continue to do this to make it appear people are rushing to get our of this stock. All the while messages are posted saying things like "I told you, insiders are dumping", "SEC halt pending" or "big sell off again".
If the short position is big enough ie has enough money on the line they may even hire dubious writers to write propaganda on the company and then increase the trading tactics described above.
All this is designed for us to panic and sell our shares we bought much higher so the shorts can buy these shares back and cover the short position for a hefty profit. ie sell high buy low. They make the spread in the middle.
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