Thoughts and Observations of a Minister

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Sunday, January 13, 2008

Stock Manipulation

What happens when you want to buy stock in a company, but the float is already gone?
There is a Market Maker, that will sell you the stock, and borrow that share from the stock held in company name. What you then have is a diluted stock in the company you just bought.

Let's say the company has 1000 shares for sale in the float. All 1000 shares have been sold, but you want to buy 200 shares, The Market Maker will sell you the stock, borrowing from the 1000 they are holding, you now have 1200 shares owned but only 1000 shares for sale by the company. Your perches just lowered the pps of the company by about 20%. Making a market, is in fact manipulating the market.

With the power given to a Market Maker by the SEC, they can sell 1000, borrow 1000, and sell 1000, then you have 2000 owned and still only 1000 for sale. In banking that is called kiting checks.

How do they settle up, they do not need to, the SEC is so lenient, that the Market Makers, can sell 15,000 shares driving the price down so low, that those shorting the stock can sell for dollars, with no investment, and buy back for pennies the same shares. All 15,000 accounted for.

There is a real problem with naked short selling, because there is no accountability to the SEC for any of these transactions. Most of the time when the SEC looks at one of these companies, they seldom if ever pull trading records to see where the money went.

It is feasible for a off shore hedge fund, to sell millions of shares of a company they have never bought one share from, driving the price so low, just by diluting it so much, that the company can not survive. The company goes out of business, and the hedge fund, that sold all the shares by short selling, will never need to cover, because there is no company.

I have tried to get our government officials to look at this, it seem easy to prove just by pulling trading records on the company, but the SEC continues to look the other way. Money continues to flow from those who work and invest, into the hands of those that Ride these companies.

Why will the government not open these companies up, I think because it takes big money to do this kind of thing, and those with big money seem to always be protected, they donate to politicians, and there is no pressure for them to do anything.
I am not saying the politicians are crooks, they just do not do what they should do in many of these cases. The SEC officials do what they have always done, and the money continues to flow out of the county to fund everything we do not believe in.

I have studied many companies, and watch what groups get involved, and they target small companies, with a less than honorable CEO, knowing if anything goes wrong, the CEO will be the target of the SEC. The SEC hardly ever recovers any money, the shareholders always loose, a small time crook goes to jail, and the big time crooks that raided the company just walks away.
I believe that the raiders sometimes calls the SEC themselves, when they are finished with the company, and the SEC steps in and the company is finished. Everyone seems happy, but no money recovered, no trading records are ever pulled, if they are they are limited.

From what I see in the American market, it would be safer putting your money on black at a casino.
This needs to be fixed, if it continues to be ignored, or financial system as we know it will be in serious trouble.


lenofus said...

Well, Praise the Lord. Somebody really gets in. Please go to these links to get the unbiased and true story of the severity which the Pastor speaks:


You will truly be astounded. It's NYC vs. the rest of us, so it seems.

snake bit said...

Well said. I can't believe that with the severity of this problem it manages to stay under wraps from the general investing public year after year. There are some good signs on the horizon, the SEC finally seem to be getting semi-serious about prosecuting those perpetrating these frauds and rumor has it that major sting operation, years in the planning is about to blow the lid off the whole naked shorting/toxic financing world. It is only by exposing this can of worms to the light of day that we will see some real reform in the market place.

Anonymous said...

How do you know the float was bought up... just wondering?

Dr. Bob said...

This post was a hypothetical explaining what happens every day in our market.
Now if you reference a particular company I will be glad to offer my opinion.

Anonymous said...

Just start with CSHD.

How do you know the float was bought out?

Whens the last time the company/TA released the actual 0/S share structure?

Market Makers can borrow stock... if the stock is not fully paid for. Eg. You have LONGS that buy CSHD on margin. OK.. so they buy 10,000 shares instead of 3,000 shares. Because they borrowed money to buy the shares..they dont fully own the additional shares...those shares can now be used by another party to short the sale.

At one point CSHD was in such demand, some brokerages paid interest to borrow the stock (to sell or buy) from shareholders who fully paid for their position.

But my point just back to the float.. whats the proof it was bought out??

Dr. Bob said...

OK we will talk about CSHD.
The proof, would be in pulling all trading records, until then we only have what we believe to be true from events that have happened in this company.
1. TDAmeritrade, halted all buying of the stock in Aug of 06. They stated you can sell but you can not buy. I ask who they were selling to if they did not allow anyone to buy. My conclusion that they were short on the stock.
2. The NOBO list that was pulled, and the number of shares and shareholders in the company, that had 31 million in th float at that time. I do know they did correct it later, but which was true, if they got it wrong the first time, it somehow lessens their believability to get it right the second time.
3. There were a few brokerage companies sending letters to shareholders asking to borrow shares. To me that was saying they were short.
4. The CEO R.Paul Harris, stated that the float was gone 3 days after the merger.
5. The CEO ask for a halt right after the merger, saying his company was being naked shorted. No response from the SEC.
6. CSHD was a threshold stock, it is against the law to short a threshold stock.
7. With the asset values being established and 3 scenarios as to how they would reset the value to match the assets. There was option c. chosen. At the end of trading 10-16-06 all shares would receive 6 shares for each one owned. There was nothing but excitement from those who invested in this company.
Those who were short or naked short just went in shorter by 6-X
That is when everything that could have been tried was tried to stop this company from going ahead.
8. There seemed to be nothing illegal with a company bringing assets into another company they had purchased, it happens when a private company buys out a public company. This was different.
There was no way to cover a short position that was planning on the company going BK.
9. The SEC was called, by who. Not one shareholder in his right mind would have called the SEC.
It had to be someone who was about to get caught with illegally naked shorting the company. They were the only losers. It could not have been anyone else. The SEC need to look carefully into who called them and why.
10. CSHD was halted at around $2 a share, at that time the offices were closed, there has been no business conducted. There is no phone, no computers, and no address. The company continues to trade, millions. It is now at .001 with orders in to buy at .006.
11. Conclusion; CSHD was a target to be raided, the SEC allowed it to happen, and continue to allow it to happen.
12. CSHD need all trading records pulled, find the money, find the breakdown in the over-site process.
Change the law or enforce the law so it never happens again.
I hope that helps.

Anonymous said...

Just to follow up...

#1. Ameritrade allowed investors to sell their shares. The new buyers were other investors using another brokerage.

#2. NOBO list. Interesting but without a confirmed O/S .. its almost meaningless.

#3. Not necessarily.. they could be wanting to sell shares to other buyers/longs.

#4. Rufus also said many times to many

#5. CEO asking for a halt? So he can re-price the stock at $15 lol....the "book value".. come on now..

#6. Lets not get ahead of ourselves.

#7. Um. What assets?

#8. Not sure what you were trying to say here.

#9 SEC was called by various people...brokerage houses, investors watching out for other investors..and maybe even shorters.

#10. Whose offices were closed..CSHD? Not sure what your point was on that one..let me know

#11. Target to be who? who designed it to be a target?

#12. Agree. But not sure what its going to show.

Liked to know what the accurate O/S , also like to read some more depos... (which Rufus never showed).

CSHD was a get rich scam..OTC is place where many trade and dont invest. Many flipped, traded, entered and exited mulitiple times...while alot of suckers stayed in and ordered Certs.

You already know the type of the people that were involved in this stock. Lots of scammers and Rufus was one of them.

Rufus said alot of baloney... (institutions going to buy/share the pps at $15.00 (Just not when it was at .10/.90 cents..they want the regular joe penny investor to make millions before they get in).

CSHD did not own the bonds and didnot have access to them. They cant try to pass a audited balance sheet putting the bond as a asset.

Rufus has never done anything except open his mouth.

Looking forward to more developments in the case..and pretty soon the other depos will referenced or posted somewhere for all to see...

good luck....

Dr. Bob said...

Mr or Ms Anonymous
Feel free to post on my site, but please refrain from bashing anyone here.
I do agree it was a scam and CSHD needs opened up. All trading records need pulled, every one of them.
There were many people involved here, 3 CEO, 2 SEC lawyers, and a federal Judge.Only one is asking for complete disclosure.
I have not and will not tolerate any lynchings here.Your only using one name and bashing his is quit telling.
If and when someone is convicted, then is the time for names, until then, it appears the law enforcement folks are still looking.
No arrest after accusations of the biggest pump and dump in history. The bonds in this company have yet to be proven as illegal.
You must agree, only a total investigation that finds who has taken money from this company will serfice, as your answers are only theories, at best.
The shareholders of CSHD deserve to know the facts about their losses.
Take a look at the Video at the top of this blog by the past SEC chairman H. Pitt.
It happens, and it appears that it happened to CSHD.
The SEC needs to prove it, a default judgment is not good enough for honest shareholders.

Your reasoning goes along with, if you are on that street you should expect to be mugged. If you wear those clothes you deserve to be raped.
It is never right to be mugged, raped, or stolen from in a market that was designed for investors.
I agree there are few investors left in the penny stocks, only thieves and their targets.
It is time to clean it up.

Anonymous said...

Good reply.. i agree. If i bashing anyone.. i apologize.

Lets see what happens.

Anonymous said...

What happened to Rufus...all his different websites down??

Dr. Bob said...

I talk to Rufus often, he is doing fine.
There is a closed forum, where alot of shareholders hang out.
We have accounted for over 70 million shares, with names and addresses.
This is long from being over.
We await Judge Coopers decision, then we make our nest move.
First we wait to see if he rules favorably, or if he grants a default.
Either way this is long from over.

Anonymous said...

70 Million shares.. just curious how you guys are getting the share counts? everyone just emailing it.. are these # of share certs? what if i emailed and said i had 10,000 shares.. how do they verify?

Also how do you know the O/S is the same... what has the T/A told you??

Is the $310 million UCC note still valid??

Just curious.. is there anything that will prove to you or change your mind that maybe Rufus was the manipulator/scam artist...? Just wondering....

Dr. Bob said...

Anonymous, who mustread I-Hub.
If you were a shareholder you would know more than you now know.
So IMHO you need to know nothing else, but I will give my opinion.
Rufus has been accused of some serious thangs by the SEC and the bashers, as well a Lee Webb.
He has been convicted of nothing, after 2 years of accusations.
If and when he is convicted, I will change my mind about him.
I will not change my mind about what happened to this stock.
This stock was a tragedy from the beginning, the deal with AJW, and Mike Alexander was the dirty side.
Run it up, Naked short it, and then close it down. and run off with all the money.Yes all the money, but why am I explaining that to you, I am sure you know how it works better than I do.
I do not know who all the crooks may be, nor do I know for sure if Rufus is as clean as I believe him to be.
What I do know, there was a crime committed with CSHD, and alot of people got hurt. Their money went someone. I will work, write letters, and pound on doors, until I find a honest official that will open this company up, and do the job they have been sworn to do.
Now would you please, read the rest of my blog, and realize, I am a honest man, and tell your buddies to stop with the attacks.
There is no need whatsoever for them. I know they just want me to stop, well I will not. I can not. I have committed my life to helping those who can not help themselves. I will use every thing I know, to bring the criminals to justice. That you can take to the bank. Have a good day.
I will pass your concerns on, to those who I know, that might be interested in you questions.
If you would give your real name, it would really help, I do understand if you want to hide.
I just have never been afraid to let people know where I stand, or who I am. I have lived in a glass bowl most of my life, and I learned along time ago to never let a bully win. I do not intend to this time.

Anonymous said...

Rufus has not been convicted..last time i checked the trial was not over either. His motions are entertaining though...

Id be happy to email you my name, just let me know know where to send it. I dont have anything to hide, nor am i part of any group. Just someone who smelled the bad odor and went looking to see where it came from.

I first got turned on to FHAL when they were "selected" to provide 3rd party logistics for the sunken logs in Brazil. I work in the maritime industy and could quickly do alittle to see if FHAL was even registered with the FMC. ( Need to be licensed freight forwarder or an OTI..). of course neither came up.... then of course the entertainment factor came into play..etc.

The wheels of justice are slow.. should be done faster..but such is reality.

As far s AJW and Mike Alesxander.. to run up with convertible stock.. they need demand.. attention..suckers/investors/traders to buy the stock.. They made their millions as people got excited about the BOOK VALUE and millions of dollars in Bonds..etc that Rufus was suppose to bring to the table...

Probably be another year before we hea anything new..

but hey didnt answer my last question...... how are the shareholders shares been counted/validated??? and has the T/A confirmed the o/S?