BRN 20.5% 23.5¢ brainchip holdings ltd

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    Interesting section in the ASX website on Activist short selling campaigns. This is directly what happens here with AFR & Motley Fool practices.

    A definite read for all. Learn what & how they are doing it with the compliance of ASX.

    Link - Activist Short Selling ASX

    Activist short selling

    Activist short selling involves a person taking a short position in a financial product and then publicly disseminating information (e.g. one or more reports) directly or through an agent to negatively impact the price of the product ('short report'). A short report may, for example, criticise an entity's finances, management, public disclosures or future prospects. A short report does not necessarily have to be in the form of a formal report. It could be, for example, a post on a social media platform, blog or online forum. The activist short seller expects the short report to cause the price of the financial product to fall, enabling them to realise a profit.

    Activist short selling campaigns are not new. Over time, they have received more attention with online news and social media outlets providing instantaneous access to a broad audience. This can exacerbate the speed and depth of the market's response to a short report.

    Most campaigns against Australian entities have been by overseas activist short sellers that caveat their reports as not intended for an Australian audience. In practice, online distribution and reporting of campaigns by Australian media mean the reports (or their key messages) are widely accessed by Australians.

    Our research indicates that activist short selling campaigns tend to target entities with complex and opaque corporate structures and accounting practices, or poor disclosure. They also tend to target companies with lower market capitalisation. There is also a tendency to follow cyclical trends (e.g. to target entities and industries that are high growth/high risk or may be overvalued or have experienced rapid security price growth). They may also target sectors that are technically complex and/or easily misunderstood (e.g. medical research, technology and mining).

    Impact of activist short selling

    Investors expect to transact in a fair and informed market. When activist short sellers provide accurate and meaningful new information, they can have a positive impact on price formation and market integrity as they may counterbalance excessive market optimism.

    Short reports can provide new research and analysis and test the veracity of information released by a target entity. Some activist short sellers have exposed flawed business models, questionable business or accounting practices, insolvency and fraud in targeted entities.

    However, activist short sellers can also unduly distort the price of a target entity's securities. For example, by making false or misleading statements, providing an incomplete view of the facts, drawing conclusions unsupported by adequate evidence or by using overly emotive or inflammatory language to distort the facts ('short and distort' campaigns).

    Short reports are often released during trading hours for maximum and immediate effect on the price of the target entity's securities. The time taken:

    to request and implement a trading halt, andfor the target entity to issue a response,

    may result in a period of trading in the target entity's securities where the market is not fully informed.

    If the claims in a short report appear plausible or if the market suspects the target entity is subject to a 'short and distort' campaign (regardless of the plausibility of the short report claims), they can cause significant and immediate security price volatility. Other investors may be induced into selling the target entity's securities for less than their true value, potentially resulting in financial loss. If the price fall is as a result of a false or misleading statement, this can undermine investor confidence in the market and may affect their willingness to participate in the future.

    This activity can also harm the reputation of the target entity. In addition to creating doubt in the minds of existing shareholders, it may discourage future investors, negatively influence future valuations and the price of the target entity's securities, and impact the target entity's ability to raise capital.



    Yes the ASX regulatory framework and the Australian Government are there to protect you and your investment - NOT.

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