Frankie Muhammad
There are allegations that on any given day their are billions of naked shorts and counterfeit shares in the U.S Stock Market. Over the past 3 decades Short Seller have used this corruption business model to still trillions of dollars from Retai Investor, Pension Funds, 401 K Plans and Institutions. Also, Criminal Short Sellers have destroyed thousands of corruption.
The problems appears to be according to alot of retail investors and companies that they cant get help from the SEC. So what can companies do if their company is being destroyed by Criminal Short Sellers and the SEC want help.
If a public company believes it is the target of abusive naked short selling (selling stock without borrowing or locating the shares) and the Securities and Exchange Commission (SEC) is not taking immediate action, management can execute several independent legal, operational, and corporate strategies to protect its share price and uncover predatory trading. [1, 2, 3, 4, 5]
1. Pursue Private Litigation [1]
Public companies can bypass regulators entirely by hiring specialized securities litigation firms to file private civil lawsuits. Recent federal cases demonstrate that judges are letting these actions move forward. [1]
- File “Spoofing” and Fraud Lawsuits: File lawsuits in federal court against specific market makers or “John Doe” defendants. Claims typically allege market manipulation, spoofing (placing fake orders to depress prices), and violations of anti-fraud rules. [1]
- Force Discovery: A successful lawsuit allows the company’s legal team to force broker-dealers and clearing houses to hand over internal trading logs, order books, and communication records during the discovery phase. [1]
- Seek Financial Damages: Multi-million and billion-dollar damage claims can be pursued if the company can prove artificial downward pressure destroyed corporate value or forced highly dilutive financing. [1, 2]
2. Retain Private Share Intelligence Firms
The SEC rarely acts without overwhelming, undeniable proof. Companies can build their own data repository to force regulatory or judicial attention. [1, 2]
- Audit the “Fails to Deliver” (FTDs): Hire proprietary data firms (such as Shareholder Intelligence Services) to track daily trading imbalances, analyze Depository Trust & Clearing Corporation (DTCC) settlement data, and track prolonged FTD spikes. [1, 2, 3]
- Trace Short Activist Networks: Document coordinated “short-and-distort” campaigns. If short sellers are spreading intentionally false information online while executing unbacked short sales, this evidence can be handed directly to the Department of Justice (DOJ) for criminal securities fraud investigations, which sometimes move faster than civil SEC tracks. [1, 2]
3. Implement Operational & Capital Adjustments
A company can change its corporate structure or security architecture to make it structurally harder or more expensive for short sellers to maintain naked positions.
- Issue Digital or Tokenized Dividends: Issuing a dividend via blockchain or a digital transfer agent forces a structural reconciliation. Because naked short positions represent “phantom” shares, short-sellers cannot replicate or pay out a proprietary crypto-token or digital asset to the buyers, forcing them to close their positions. [1, 2]
- Execute a Share Buyback: If the company has excess cash, purchasing its own undervalued shares on the open market reduces the available float and increases upward price pressure, triggering a short squeeze. [1, 2]
- Reverse Splits with CUSIP Changes: Undergoing a corporate reorganization that changes the stock’s CUSIP identification number can sometimes force brokers to reconcile old shares and settle outstanding failures to deliver (FTDs), though this must be timed carefully to prevent shorts from hiding positions in grandfathered wrappers.
4. Mobilize and Educate Shareholders [1]
An engaged retail investor base can use structural market mechanisms to protect the stock.
- Encourage Direct Registration (DRS): Educate shareholders on how to move their shares from standard brokerage accounts to the company’s official transfer agent via the Direct Registration System (DRS). DRS removes shares from the DTCC lending pool completely, preventing brokerages from using those shares as “locates” for short sales. [1, 2, 3]
- Advise Opting Out of Share Lending: Instruct shareholders to disable “fully paid securities lending programs” on retail brokerage apps, which automatically rent out their shares to short sellers.
Strategic Considerations & Pitfalls
While fighting back is necessary, corporate leadership must avoid common strategic blind spots: [1]
| Strategy [1, 2, 3, 4] | Primary Benefit | Potential Danger |
|---|---|---|
| Public Outcry / Social Media | Rallies retail investor support and pressures brokers. | Can be dismissed by Wall Street as a “diversion tactic” to mask weak financial performance. |
| Aggressive Litigation | Can uncover specific bad actors through discovery. | Extremely expensive, time-consuming, and takes years to yield results. |
| Operational Focus | Building a highly profitable business naturally destroys the short thesis. | Does not immediately stop near-term stock price manipulation or artificial dilution. |
Next Steps for Corporate Leadership:
- Retain an elite, independent securities litigation firm experienced in market manipulation.
- Begin a forensic audit of the company’s daily trading volume against official DTCC clearing data to calculate the exact scope of unresolved FTDs. [1, 2, 3]
Information Comes From Google AI
