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  • oldguitarplyr oldguitarplyr Jan 16, 2010 10:33 PM Flag

    No OTC or Pink Sheet Shorts - Really?

    Ok so is it really possible to short an OTC? I won't short any stock for personal ethics beliefs so I don't know much about it. A little digging though shows some interesting stuff. Near as I can tell retail investors (us small guys & gals) can't but Market Makers and Hedge Fund Brokers can.

    If that is true then that explains a lot about why the hundreds of new bashers showed up during the major volume and price swing last year. Look at some of the links if you are intested in if these guys are fleecing folks through short-selling. If you have better data please contribute it.

    This is a link to a bio for a former SEC Chairman. I led with the bio rather than the YouTube so you'd know who he is.

    This is his commentary on a few market practices including Naked Shorting.

    Interesting arcticle on Shorting OTC.

    This is Investopedia which appears to be a Forbes company. I don't know any about Investopedia but they say it can be done.

    Do your own digging and contribute. That's why I contributed my previous post on Fraud. I know suspicious behavior patterns when I see them but haven't figured out yet what these guys have to gain. The only two that seem to make sense is Shorting or being a hired gun for a competitor.


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    • Thanks for that link OGP.
      It validates what I've been saying all along. Of course it's nice to make some money in your trading, but it's nowhere near as satisfying as acting in a manner of which you can be proud. There are many kinds of "gain" and "financial gain" is far from the most compelling.

      "Although short selling is allowed on these securities, it is not without its problems. Short selling on OTC is extremely risky because these securities are often very thinly traded, which makes them very illiquid. This illiquidity can prove hazardous if an investor needs to cover an increasingly unprofitable short position. If the volume is very low, covering the position may become a very unlikely prospect. Another problem that has arisen with short selling in OTC securities is the use of pump and dump schemes. These schemes are done by con artists who use internet message boards and SPAM emails to heavily promote a thinly traded stock in which they have long positions. When this happens, the result is often a high spike in the price of the stock, followed by a fall. However, the initial spike will devastate any investor with a short position. These schemes often use OTC stocks because they are relatively unknown when compared to exchange traded stocks."

      • 1 Reply to kezzek
      • kezzek. A lot of uninformed new investors do not realize that Canada is the the source of much "short-selling" in US markets. Canada has no central SEC-type regulatory authority, just 13 provincial regulators who are ineffectual. Look at what comes out of Vancouver, e.g.

        Canadian brokers not subject to SEC or NASD.

        It's tough out there for small retail investors. NO ONE is looking out for them. The message boards are infested with stock touts and pumpers.

        Small investors have to keep their own counsel and do all their own DD and research. Anyone who thinks they can do it from these message boards is kidding themselves. The boards have entertainment value but only rarely do they point someone in the right direction.

    • OGP. You're a loose cannon for sure.

      The biggest risk small investors face is their own gullibility and greed.

      Stock promoters prey on those weaknesses.

      Ask the SEC how much money small investors lose in penny stocks each year. Last I heard it was about $6 Billion per year.

      Lousy companies and pumpers are always crying "Short Seller CONSPIRACY".

      Your imaginary short sellers didn't reverse split Celsius. They didn't force the CFO, Jan Norelid to dump so many shares last summer.

      GET REAL!

    • It seems to me that getting listed on a Big Board is a really good idea.

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