That is simply impossible. You can not short on a down-tick, therefore, short-sellers can not drive a stock price down by selling.
I wrote:
One part of Elgindy's scam was to short Applied Digital Solutions (ADSXE) (the implantable microchip company). He managed to reduce their market cap by over 100 million in one day.
You responded
That is simply impossible. You can not short on a down-tick, therefore, short-sellers can not drive a stock price down by selling.
My response to you:
One of of Elgindys methods was “Short & Distort”, whereby both he and those who followed his advice would short an equity and them spam numerous online message boards with half truths and other misrepresentations of facts in order to scare weak hands out of their shares, thus causing a panic sale and subsequent share price reduction. It can be executed quite well in bear markets.
His coconspirators in the FBI were providing him with information he was then able to utilize to his advantage.
Now, according to my understanding of how to affect a short sale, your statement about not being able to short on a down tick is correct, but irrelevant!
If you’ve ever read an intraday chart, you’ll see at least some form of a “saw tooth” pattern. Those “teeth” are formed by down ticks and up ticks. With a heavily traded stock, there are 100K’s if not millions of “teeth” every trading day.
And anyway, Elgindys short sale orders were quite likely placed prior to the time the distortion was being played out. Then after the price fell far enough, the short sales were covered.
By the way, I did make a mistake in understating the ADSXE market cap reduction. Their float at that date was approximately 265 million shares. Elgindys scam caused a price drop of well over $1.00 / share.
I can’t say where else Elgindy pulled this off. I just happen to have been following the affairs of Applied Digital Solutions due to their being the point man in this implantable GPS chip business.