26 Apr Promotion Secrets – Trying to make sense of the short squeeze on LOTE and how the Berlin exchange comes into play
So on Thursday morning before the market opened I mentioned that some information was floating around about a naked short squeeze on LOTE. At the time the stock was trading at $2.58/share and even dipped to $2.30/share before starting its run up to now over $6.00/share.
I'm not sure where exactly the information originated, but I had the information checked out as well as possible and it seemed very credible. Credible enough that I felt comfortable mentioning it in the PSS chatroom before the open on Thursday morning.
It seems the information has either also been getting passed around by an IHUB poster using the alias Jhound212 or Jhound202 is a main source. Either way this poster that created his IHUB alias just to share this information has been pretty spot on about the information that could be verified. Here are some of those messages:
Now I live and die by the advice that you should never believe anything you read on a message board. So in this case I've tried to do some of my own DD to see how much of this could be true and I've been able to verify enough to consider it credible. The information helps me piece together other research and understand the significance of that research.
Here are some facts:
The 4 best promotions of the past 6 months (ECAU, GNIN, OCTX, and LOTE) all have applied to trade on the Berlin exchange using the same lead Broker/market maker - mwb fairtrade Wertpapierhandelsbank AG
The last 5 - 6 AwesomePennyStock plays have all listed on the Berlin stock exchange using - Renell Wertpapierhandelsbank AG
There has to be a reason why these big name promoters need/want to have their tickers trading on the Berlin exchange. Until today I didn't really understand that reason but now I do.
After sending out an inquiry about the Berlin listing, the response I received was that the company, Lot78 Inc, did not initiate the listing on the Berlin exchange. They didn't even know that somebody had applied for Lot78 Inc to be listed there. Whether or not that is true I can't be sure, but the correspondence led to more information. Allegedly the Berlin exchange is one of the only exchanges that allows listing and trading of a company's stock without the consent or authorization of the company being listed. That means that anybody including the promoter or one of the market makers that are participating in the illegal wash trading or illegal naked short positions could have applied for the listing there. Lot 78, Inc further explained that they would be having the company delisted from the Berlin exchange and would be submitting a press release to clarify that they had nothing to do with the listing. Even Lot78, Inc said that they had reason to believe that the naked short position was bigger than the free trading retail stock position held in DTC.
So now we have LOTE verifying the same information that Jhound212 has been posting on the IHUB forum about the naked short position being bigger than the retail stock position.
Here is a copy of that press release that came out about an hour after that correspondence.
Lot78, Inc., would like to notify its investors and regulators that it has come to our attention that the company was listed on the Boerse Berlin Stock Exchange ("BBSE") by an unidentified third party, without our approval, consent or knowledge. The company did not authorize or direct any broker on the BBSE to act as a market maker for the company's common stock. Accordingly, we will be initiating contact with the BBSE to demand the immediate delisting of the Company's stock from the BBSE.
Company counsel has advised us that the BBSE is one of the few exchanges in the world that allows listing and trading of a company's stock without the consent or authorization of the company being listed. This practice may facilitate both domestic and foreign brokers in circumvent restrictions imposed by both the Financial Industry Regulatory Authority ("FINRA") and the Securities and Exchange Commission relating to the trading practice referred to as "naked short selling." Short selling is a trading practice whereby investors borrow stock from a broker to sell in the hopes that the stock price will decline before they have to return the share to the broker to cover their position. Simply stated, "naked short selling" involves groups of people working in concert to manipulate the market in order to force a comany's share price lower. Naked short sellers can list an OTCBB company on the BBSE in order to delay delivery of shares under the short position.
The company believes this BBSE listing is the first step in what will be a significant naked shorting attack directed at the company. We believe that this attack may culminate in a net short position exceeding all shares owned by investors in street name.
Accordingly, the company through its counsel will be contacting the BBSE and the broker sponsoring the listing in order to delist immediately the company's stock from the BBSE. The company reserves all rights to pursue legal action against the broker sponsoring this listing and any market maker that has engaged in naked short selling in direct violation of Regulation SHO.
Further, we would also like to inform both regulators and our shareholders that there is no valid reason for any failure to deliver to persist in the securities of the company. Further, we believe that it is in the best interest of our shareholders to ensure that the company sanctions any listing of our stock.
Since Jhound212 appears to be right about the naked short position, let's assume that Jhound212 is right about more stuff.
If we are to believe other parts from Jhound212 the short position was created by WDCO (Tony Kerrigone), Cantor Fitzgerald, and a large retail investor. The involvement of Tony Kerrigone of WDCO in wash trading and other practices done to support these paid promotions is already well documented.
Cantor Fitzgerald took a major offside short position in the stock starting on or before April 18, 2013. It as an offside short position because the position was bigger than the total amount of free trading stock held by retail investors (530,000 shares). On April 24, 2013, WDCO (Tony Kerrigone) tried to create a panic to cover that short position by flashing a huge artificial offer (Naked) and a large retail investor then took out 1.1mm shares from $2.00 - $1.50 helping keep the position from getting covered. As a result, at this point, the naked short seller (WDCO) has no way to cover thus creating a short squeeze.
This type of practice has actually been going on for a long time, but usually the promoters/insiders with all the stock to sell during the paid promotion will sell. In this case the promoters/insiders did not sell. Somebody with big money instead sunk a lot of money into the market to do just the opposite; to create a short squeeze. Not every promotion has somebody linked to the promotion willing to buy up 1.1 million shares between $2.00 and $1.50 so obviously there is some serious money involved here.
So based on the information in the LOTE press release today, it sounds like the Berlin listing was applied for yesterday by somebody needing to cover a naked short position because of the fact that the Berlin exchange helps the market maker/broker to circumvent restrictions imposed by both FINRA and the SEC with selling these naked shorts. If WDCO truly is the one stuck with the naked short position then they are the logical culprit to have engaged in trying to get Lot78, Inc trading on the Berlin exchange as a way to save themselves.
That plot has now apparently been foiled and the naked short Market Maker, WDCO, is now at the mercy of the promoter and insiders running this promotion. As long as they continue to not sell, the LOTE share price could continue to see an epic naked short squeeze to much higher prices.
At some point though, the insiders will sell, and when the short squeeze is over the LOTE share price will crash and crash hard. For now it will be fun watching what happens with the LOTE share price.
The one thing this doesn't fully explain is why all those other tickers were also listed on the Berlin exchange. Were short squeezes attempted on those tickers also and thus the Berlin listing was in place to help the market maker exit their short position? That seems like the logical answer. If that is the case then it sounds like it is a joint effort by the promoter, the insiders, and the market maker to make the short squeeze happen knowing that the market maker has the Berlin listing to fall back on to escape.
It is fun learning that some of these links I have been making between GNIN and OCTX and LOTE and ECAU are real. It probably is no coincidence that they all used the same broker in Germany for the listing or that GNIN and OCTX both can be linked to Bank Gutenberg AG, or that GNIN and LOTE both received some interesting comparisons to LEXG by what I believe to be the same insider showing up to post on both of those forums under different aliases. I believe that our big retail investor might be Francisco Abellan and that Abellan (who is the proven mastermind of LEXG) is the true link between GNIN, OCTX, LOTE, and ECAU quarterbacking these promotions from behind the scenes. Each ticker used a different promoter, but they all had enough in common to make me believe that they were all run by the same group of insiders hiding in the background.
The goal now is to take all of these new links and all of this new knowledge and continue to add to it so we can quickly find the next LEXG/ECAU/GNIN/OCTX/LOTE and identify it as such as soon as possible.