NQ US: Now on the REG SHO Threshold Security List

[Gator]

NQ MOBILE INC AMERICAN DEPOSITARY SHARES ("NQ-N")

- Now on the REG SHO Threshold Security List

//st

Date On List     Date Off List     Reg SHO Flag     Rule 3210

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2013/10/28           /  /              Y                N

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//et

     This issuer is subject to mandatory close-out requirements outlined in the

SEC's Regulation SHO.  There was an aggregate fail to deliver position for five

consecutive settlement days at a registered clearing agency totaling 10,000

shares or more and

 equal to at least 0.5% of the issuer's total shares outstanding.

More info at http://www.sec.gov/divisions/marketreg/mrfaqregsho1204.htm

This list can be found at

http://www.nyse.com/regulation/nyse/Threshold_Securities.shtml

[admin]

Surprise surprise..
Thanks Gator.

Did I see that correctly, just two names on the list for 10/29?

[kshen]

Am I interpreting this correctly that someone was improperly shorting? ie someone couldn't deliver the shares they promised?

[admin]

Am I interpreting this correctly that someone was improperly shorting? ie someone couldn't deliver the shares they promised?

Yep, although in theory, it could just be a settlement problem, depending on how large the numbers are this becomes increasingly improbable. and to be on the SHO list is already exceeding their threshold

[chenlica]

what does it mean? totally new to this...is it a good or bad thing??

[kshen]

Usually when a transaction happens there's an allowance of 3 days for the seller to deliver the stock and the buyer to deliver the money.

What that statement is saying is that for 5 days consecutively, some seller of NQ's stock could not deliver the stocks they committed to sell to the buyer and on each of these days 1. the volume was over 10,000 shares each AND 2. 0.5% of the issuer's total shares outstanding.


Edit: so .5% of total shares outstanding (51M) is 255,000 Shares. Thats 5 days over 255,000 shares failed to deliver

theres generally strict penalties
after a certain amount of time the NSCC can do a "buy-in". This means that they purchase the shares in the market, and charge you in cash for the cost of the buy-in + a penalty charge.

Also if a broker has a pattern of failing to deliver it will attract the attention of the SEC, who will suspect (correctly) that they are engaging in illegal naked shorting. You could get kicked out of the securities markets eventually.

Here is the official SEC definition from 2008

Hard T+3 Close-Out Requirement; Penalties for Violation Include Prohibition of Further Short Sales, Mandatory Pre-Borrow

The Commission adopted, on an interim final basis, a new rule requiring that short sellers and their broker-dealers deliver securities by the close of business on the settlement date (three days after the sale transaction date, or T+3) and imposing penalties for failure to do so.

If a short sale violates this close-out requirement, then any broker-dealer acting on the short seller's behalf will be prohibited from further short sales in the same security unless the shares are not only located but also pre-borrowed. The prohibition on the broker-dealer's activity applies not only to short sales for the particular naked short seller, but to all short sales for any customer.

Although the rule will be effective immediately, the Commission is seeking comment during a period of 30 days on all aspects of the rule. The Commission expects to follow further rulemaking procedures at the expiration of the comment period.

What this potentially means is at least 1 shortseller or broker who is 'forced' to buy at market value and deliver the stocks it promised. Also, they are no longer able to short sell for a time

[chenlica]

Usually when a transaction happens there's an allowance of 3 days for the seller to deliver the stock and the buyer to deliver the money. What that statement is saying is that for 5 days consecutively, some seller of NQ's stock could not deliver the stocks they committed to sell to the buyer and on each of these days 1. the volume was over 10,000 shares each AND 2. 0.5% of the issuer's total shares outstanding. Edit: so .5% of total shares outstanding (51M) is 255,000 Shares. Thats 5 days over 255,000 shares failed to deliver theres generally strict penalties after a certain amount of time the NSCC can do a "buy-in". This means that they purchase the shares in the market, and charge you in cash for the cost of the buy-in + a penalty charge. Also if a broker has a pattern of failing to deliver it will attract the attention of the SEC, who will suspect (correctly) that they are engaging in illegal naked shorting. You could get kicked out of the securities markets eventually. Here is the official SEC definition from 2008 Hard T+3 Close-Out Requirement; Penalties for Violation Include Prohibition of Further Short Sales, Mandatory Pre-Borrow The Commission adopted, on an interim final basis, a new rule requiring that short sellers and their broker-dealers deliver securities by the close of business on the settlement date (three days after the sale transaction date, or T+3) and imposing penalties for failure to do so. If a short sale violates this close-out requirement, then any broker-dealer acting on the short seller's behalf will be prohibited from further short sales in the same security unless the shares are not only located but also pre-borrowed. The prohibition on the broker-dealer's activity applies not only to short sales for the particular naked short seller, but to all short sales for any customer. Although the rule will be effective immediately, the Commission is seeking comment during a period of 30 days on all aspects of the rule. The Commission expects to follow further rulemaking procedures at the expiration of the comment period. What this potentially means is at least 1 shortseller or broker who is 'forced' to buy at market value and deliver the stocks it promised. Also, they are no longer able to short sell for a time

thanks for the clarification!

[TxPm]

With today's volume and the fact that NQ is still on this list I have to presume we are sue for another run up next week. Id be curious to hear what others have to say. For what its worth I bought a few more Nov/Dec calls today and a few more shares at $12.75

[kshen]

I bought some Nov k15 calls today as well

[TxPm]

Due*** sorry spell check on my phone

Id love to see a few more big institutions pick up shares next week....come on Carl you went head to head with Ackman lets see you take on Block