Top 5 Things I’ve Learned About #NakedShorts-Busting Special Dividends (No.1) Cash dividends don’t work as crooked brokers would rather pay dividends out of pocket and keep counterfeit shares hidden than have to cover. It’s a cheaper ‘cost of doing business’…
Top 5 Things (No.2) Blockchain based dividends force brokers to have to cover and clear counterfeit shares or be exposed. But approval process can take 6 months or more. Plus DTCC won’t distribute so needs 3rd party distribution. So can work but slow solution…
Top 5 Things (No.3) Merger or Spin-off can have same effect as No.2 in flushing out naked shorts and can be faster to get approval as they are more common practice. So more like 3 months. Faster but still not fast enough. Good solution if co has strong assets in subsidiaries.
Top 5 Things (No.4) Shareholder perks / bonus issue is fastest - possible within 30 days - doesn't flush out fake shares the same way but can still create pressure on brokers with fake shares if shareholders who have bought fake shares cannot verify - best if on blockchain.
Top 5 Things (No.5) all of the above won’t solve issue as one-offs. Brokers can cover fake shares a day before count and then sell fake shares again a day after. So best long term strategy is campaign involving ALL THE ABOVE. Why use just one bullet when you have a machine gun!
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