Shorts, page-40

Oh, I see now where you are going. I assumed you were a net buyer on the day of say, 20,000 shares per the example in question, and that you simply had to complete the last 10,000 on you buy order.

In that case, the broker's computer algo will make sure your order is executed in the match, if that's what you have instructed.

But in the case that you halve sold 100,000 shares over the day, and at the close of trade, but pre-match, you had only bought 90,000, well that would constitute a naked short position, and I think - without knowing for sure - that you would be in a compliance breach in that case.

So at the start of that day you would probably have put arrangements in place for the broker's algorithm to make sure you were net long at all times.

Ohterwise, if you wanted to be net short, your dealing department would have had to source loan stock from a prime brokerage firm prior to that, otherwise this would constitute a compliance breach.

I know you referred to ASIC and/or the ASX not having enough manpower to monitor this sort of irregularity, but knowing a bit about the reporting requirements of both brokers and institutional investors, and the sophisticated exception reporting technology that exists, I'd say that any dealer that ends the day being net short has this come up as a big red flag, as required by his own firm's compliance regime and systems, and before long will find him or herself without a job.

In order to maintain a licence to do business, all investment institutions, stockbrokers prime brokers and investment banks need to have back office capability wherein compliance functions autonomously from the dealing department. And normally the Chief Investment Officer as well as the Managing Director of such organisations carry liability for any breaches of law in relation to stock trading.

For people to systemically manipulate stocks requires such an extensive conspiracy, that it is fanciful to think it happens, especially for years on end without detection, which is what has on occasion been suggested is MSB's case.

I think that people spend waaaaay too much time trying to speculate on who is buying and selling shares on any given day/week/month, and what the motives of those buyers or sellers might be.

It's a complete fool's errand. Far better to focus on the business fundamentals and intrinsic value, and the share price will follow.

It cannot be help to note that that there is a correlation between shares whose prices go down and allegations of manipulation relating to those shares.

It's a phenomenon I call The "Stock-Goes-Up; I-am-Smart-Investor... Stock-Goes-Down, Obvious-Manipulation" Syndrome. You see it all the time.