cudeco(cdu) limited - representations, page-14

Hi jadel,

Abuses of short selling in CDU possibly represent the single most potent trading activity responsible for generating artificial pricing levels.

Short selling is legal on the ASX but practices associated with short selling that result in artificial picing are illegal.

The key to short selling is price discovery.

If prices are inflated and short selling lowers them to more realistic levels, then any subsequent purchases to make a profit from the activity, is a legimitate trading activity.

What is not legitimate is when pices are reduced through short selling forcing them to artificial or undervalued levels, and then for exposed open short positions to be covered by activity that avoids price discovery. It is common practice for large short positions to be unwound through off market adjustments which avoid price discovery, not through the re-puchase of shares through the market.

This practice has been sanctioned by the Regulator but the recent High Court judgment suggests that it represents share price manipulation through the imposing of artificial constraints on pricing levels.

Let us all hope that the Senate Inquiry can sort out the problems to ensure a fairer market.



cheers,

Max