Dog Pile On The Rabbit

Everything Ming ever found worth learning he had already learned on the playground of good old P.S. 23. Only the names change. Lets assume a bully wants to rough up little Billy Biotech without getting into trouble with the Principal. As a child he waits until Billy gets off school grounds beyond the reach of the Principal. As an adult he forms an offshore hedge fund in the Cayman Islands whose sole shareholder and director is A Luxemburg G.m.b.H. whose own sole shareholder is a Liechtenstein Anstalt which the bully owns. Sheltered by the laws of three accommodating jurisdictions and having less than 100 shareholders puts him beyond the reach of The Investment Company Act of 1940. Anonymity without liability. He then naked shorts Billy Biotech for 8 million shares with a broker who knows damn well that he has no shares or even the possibility of a share locate. The broker wants this business for commissions, use of the proceeds which remain on deposit and most of all for the knowledge that enables him to front-run his customer. The market maker now seeing a sell order for 16 million shares looks on this as a sure thing sent from the gods. He front-runs both of them for another 8 million shares. To keep the shares from collapse, Billy's shareholders need to either put up real cash to buy 24 million shares or call the Principal. In this case the Principal, Mr. SEC is out to lunch since these shares, being offshore, are not even on the Reg SHO list. Tomorrow, the bully can play dog pile on the rabbit yet again unless little Billy decides to share his lunch with a very big friend willing to watch his back.