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OmniVision Technologies, Inc. Message Board

  • erickarr erickarr Mar 9, 2007 11:50 PM Flag

    Reg SHO and SEC Rule 203


    First, you need to understand that before you short a stock, unless you're a market maker, you have to borrow the stock. If you don't and you still short it, the sale is known as an illegal naked short sale. The guy that you shorted the stock to will never get it because you never had it to sell in the first place. This causes what is known as a failure to deliver or fail.

    SEC Rule 203(b)(3) requires brokers to act on all fails 10 days after the normal settlement date, i.e., 13 consecutive settlement days. The broker must cover the position.Basically a stock that is subject to the rule is one that is registered with the SEC and which, for five consecutive settlement days has 10,000 shares worth of fails and which represent at least .5% of the stock's total shares outstanding. The stock will also be listed on an exchange's, e.g., NASD's, Reg SHO list. To be put on the list, the stock must exceed the maximum fail level for 5 consecutive settlement days. To be removed from the list, the stock can't exceed the maximum fail level for five consecutive settlement days. Here's a link to Rule 203:
    Here's a link to the NASD Reg SHO list:
    Scroll down to the OVTI entry, it's easy because it's listed alphabetically, and you'll see OVTI is on the list. The Q in the column next to the symbol means it's traded on the NASD, the Y next to that means it has been flagged as violating Reg SHO. The problem is that it doesn't tell you how many days it's been on the Reg SHO list so you can't determine if its's been on the list for more than 12 consecutive settlement days.

    To determine this you may go to You'll note there are two lists on this site and the stocks on them are not listed alphabetically so finding the line for OVTI entry is a chore. One list, the green list is for stocks that have been on the Reg SHO list for more than 12 consecutive settlement days. The second list, the Red list, is for stocks that have been on the Reg SHO list for less than 13 consecutive settlement days.

    As of Friday, based on the list for the close on Thursday, OVTI is on the Red List. To find it quickly, use your browsers Edit drop down menu, choose "find," and in the dialog box that opens, insert OVTI, and hit next, it will take you to the appropriate line. On Friday, it was line 157. It shows OVTI has been on the Reg SHO list for 12 consecutive settlement days.

    So Monday may be a big deal since the Reg SHO list based on Friday's close may be posted. If OVTI remains on the list (because it hasn't had five consecutive settlement days that it did not exceed the maximum fails requirement), the list will show it on the green list as buyin imminent. This means that brokers must cover their illegal shorts if the customers don't do it first. If the customer hasn't covered his illegal shorts by the end of the day, the broker has to do it for him and may apparently use a market order.

    Because of the posting lag of the Reg SHO list, the the information for a day is not going to be available until after the close for that day, the exchange,i.e., NASD, is suppose to publish the list for that day before the open of trading on the next trading day. So for the Reg SHO list for Friday, the 13th consecutive settlement day, this means Monday morning. SEE Footnote 90 of Rule 203.

    So I expect Monday may be a wild day for illegal naked shorts.

    This topic is deleted.
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    • Hi,

      You can watch the program about naked shorts here :
      Special Report: Phantom Shares

    • I am not short. I hold 700 shares at an average of 20.25. I am against naked shorting and I hope one day SEC will take some action. But from the way things are going, doesn't look like there is enough pressure to put SEC to work. Most of the people who started taking action against it was either bought out or threatened.
      An NBC dateline presentation was shelved by the same people.
      The UTAH legislation has been repealed.
      Reg SHO was rigged by grand fathering clause.
      The requirement to borrow shares has been compromised to just needing to "Locate" shares for shorting.
      Uptick rule was abolished.
      Augurrie was fired.

      There is a program on Bloomberg tomorrow about naked shorting. I have become too skeptical now that I don't believe it will take place until I see it.

      Welcome to the real world.

      PS: I believe that OVTI will be at 12:50 for option expiration. This game is too much rigged.


    • Eric, congratulations, you have added so much credibility to this board, thanks.

    • You are right man, the illegal short Decrease -5.38 % because they are under the forces behind:

      OVTI $ 12.34
      OmniVision Technologies Inc. - Common Stock 0.01
      Shares Short 21,314,775
      Days to Cover (Short Ratio) 6.5
      Short % of Float 40.72 %
      Shares Short - Prior 22,526,922
      Short % Increase / Decrease -5.38 %
      Squeeze Ranking´┐Ż -132
      % from 52-Wk HIGH ( 34.49 ) -179.50 %
      % from 52-Wk LOW ( 11.00 ) 10.86 %
      % from 200-Day MA ( 14.55 ) -17.91 %
      % from 50-Day MA ( 12.25 )
      0.73 %
      I'm favorite trading up with 100 m buyback follow 50-Day MA to 200-Day MA ( 14.80 ) is current emerging trends.

    • Yes, that's true, of course.

    • Eric,

      You are wrong on some of the points.

      1. The person shorting doesn't have to borrow or locate the stock to short. The broker is supposed to do it for you.

      2. No one covers the short within 13 days even if the stock goes on Reg SHO list. It is a law which is violated frequently. The brokerage houses are not even supposed to allow ths shorting of a stock on th SHO list, but they do allow. There has been even instances where short sales were marked as Long as a work around to short hard to borrow stocks. People agreed to pay penalty, but "without accepting or denying any wrong doing" per the SEC wordings.


    • <<Did you listen to the last CC? The majority of analysts that asked quesions were either from India or Asian>>

      If an analyst is indepandant then you may be right. unfortunatelt the most analysts follow their brokerage house view (the big boss) to avoid risking their jobs and other issues. So, It does not matter if analyst is indian or asian when the boss wants to implement his view.

    • Is it true that one can put in a sell at a hight price to keep shares from being shorted?


      good trades.

    • It is very interesting post. But i haven't understand two things:
      1. How can it be that stocks in the green list are listted for more than 13 days (there are ones listted for more than a year)
      2. I saw that stocks that are listed up to 20 25 days without any change in there price or volume?

      Did I misunderstand something or is this list is meaningless to the stock price?

      plz reply

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