Saturday 20 August 2022

Mining Alliance of Trust: Naked Short Selling, Silver Squeeze and Gold Manipulation - "Naked Shorting Targeted by New IIROC Notice"

Our Mining Alliance of Trust movement against Predatory Naked Short Selling and Kamikaze Pilots In Junior Mining is getting more and more support in the mining industry. Finally, we have the first tangible steps from regulators in Canada in order to prevent this criminal practice that is destroying junior mining. 

"A legally enforced ban on illegal Naked Short Selling must be implemented by all banks, brokerage houses and platforms providing apps-based trading facilities. It will bring a life-changing opportunity for junior mining companies. Dirty banksters are not only stealing our money, they are stealing our future." 

The bloody massacre in Crypto screams "Real Assets"! We have the catalyst for Gold and Silver in place now. Amplified by Reddit and Twitter investment communities Silver Squeeze movement opens pandora's box of the criminal Gold Manipulation by banksters next.

"Gold and Silver market manipulations have been considered "conspiracy theories" for years until they become the trials in the courtrooms. But not a lot of things changed for real so far. The same banks which paid billions in fines for markets manipulations made billions back manipulating the same markets and continue to master their dirty deeds. Blowing up hedge funds that are facing the Robinhood brave souls can be the louder message this time." 

The Deep Dive:

Naked Shorting Targeted By New IIROC Notice


This morning IIROC, who oversees all investment dealers and trading activity on debt and equity markets in Canada, issued a notice effectively aimed at the practice of “naked short selling.” The note states that short sellers without a reasonable expectation that they will have access to sufficient securities to settle any resulting trade on settlement date, which generally is two days following the trade date, is prohibited by UMIR 2.2 – Manipulative and Deceptive Activities.”

Understanding Two Types of Short Sales

In general, there are two ways to describe short sales: “covered” or “naked.”

covered short sale is when a seller arranges to borrow or acquire the shares when a short sale is made. Conversely, a naked short sale is when a seller has sold shares they do not own, and has made no prior arrangements to borrow or acquire, but hopes to obtain shares to settle the trade.

Our Interpretation of the IIROC Notice

Essentially, our interpretation of IIROC’s notice after speaking with industry insiders is that the note is primarily aimed at those who are attempting to sell shares they have made no prior arrangements for, thus naked short sales

From our interpretation, short sales:

  • Must have borrow in place.
  • Or if it is a short sale with underlying securities that have a restrictive legend, the legend must be off before the settlement date (or the day of).
  • Or if it is a short sale prior to closing a new issue (i.e., a financing that will see new shares issued), the closing date must be before settlement date (or the day of).

Investors Feel They Pay for Short Sellers Gains

Naked short-selling has been a hotly debated issue amongst Canadian retail investors. From our view, many retail investors feel they aren’t fully supporting a company’s future when they buy shares in the open market, instead, they are supporting a wealth transfer mechanism that includes various Bay Street Investment Banksand Predatory Hedge Funds.

Law Firm McMillan LLP wrote a blog post back in 2019 analyzing the impact the lack of regulation has caused the Canadian Capital Markets, saying that Canada took a hands-off approach, while other countries got more active. They wrote, “From 2015 to 2018 there was an increase in the number of short campaigns in Canada, while generally in other jurisdictions there was a decrease. ” editor James Stafford wrote an editorial piece for Business Insider in 2021, highlighting the issues with naked short-selling. At the time, Stafford wrote, “Stocks are sent into a tailspin when shorters fail to settle a trade and cannot find any stock to buy back, meaning that there are more shares which seem to be outstanding than there really are on the market. It’s an existential crisis for companies targeted by naked shorters. While technically, traders only have two days to settle those shorts, they are often given 10 days under “exceptional circumstances”, according to CME.”

Whether or not this notice will have a profound impact on the Canadian Capital Markets remains to be seen. But hopefully, this clarification paves the way to make an example of those abusing the Canadian Junior Markets. Too often, it feels like funds with large balance sheets crush companies leaving founders, executives, employees, investors, and other stakeholders left holding a bag for a company that never got a fair chance. All so that a portfolio manager could add a few basis points to their performance. Let’s hope this is a step in the right direction.

For more information, we encourage investors to read the original IIROC notice or contact a licensed financial advisor."

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