Let's talk a bit about the crimes naked shorting brings into play, if the agencies did their job.
Insider trading: Shane was busted on this one. If you naked short into an offering, you are using a term sheet to your advantage when I can't see it. You signed a confidentiality agreement, then you went out, paid the Prime Brokers tribute (good eh Ratboy, tribute???) to naked short, knowing 1. you can always cover with the shares you will get from the company (if you want to. Many times they stay short) 2. you will get many more shares for your dollars and make even more money. This is acting on information that is not public. Very bad, Common, but bad.
Violating Companies Charter. You are, in effect, staging your own little secondary. Nobody authorized you to issue shares, but you are. You've sold shares, just like a company would issue shares, wi/o all that bothersome paperwork, voting... you know, that bothersome detail work.
Using the US Mail to commit a crime. Every notice that many of these criminal violations draw in Postal Inspectors? Easy to prove. He mailed a confirm. He mailed a check, or a cert.
Usurping the real shareholder vote. I buy a share, you sell a share, illegally, to someone else. Who votes the share? You stole my right to vote my share. Interestingly, Taser had an 80% vote rate in one of their proxies. Anybody ever hear of anything like that before? Well, when you have about three times the number of shares outthere that should be out there, it could happen.
Now, let's talk value. Any collector will tell you, value is based on condition and rarity. Since condition doesn't apply, let's focus on rarity. What is the value of company x with 50 mm out. Now, the NSS'rs are on board. there is 70 mm. Is the value the same. After all , the extra 20 were bought by investors. Their brokers say they bought real stock. Which is it? And where is the money? Where is the money the other people paid for that 20mm?
Yawn, such details. So, so distasteful.
