<story><title>The SEC has temporarily halted trading of Neuromama Ltd.</title><url>https://www.bloomberg.com/news/articles/2016-08-15/a-35-billion-stock-was-just-halted-on-manipulation-concerns</url></story><parent_chain><item><author>ChuckMcM</author><text>This sounds pretty amazing but I can&amp;#x27;t figure out bindings for all the pronouns.&lt;p&gt;Who are the short sellers? Who are the brokers? are they complicit? Is one of them acting as the market maker for the stock? When the con is exploded and the money gets paid back, where did it come from? The short sellers? the brokers? thin air?</text></item><item><author>thegranderson</author><text>Very helpful explanation from a thread about this on reddit (narrated from the first person perspective of the scammer):&lt;p&gt;It&amp;#x27;s pretty beautiful in an illegal sort of way:
So the clever short sellers borrow and sell 100,000 shares of stock at $2 each, hoping to profit when it crashes to zero.&lt;p&gt;By hypothesis, there are no buyers. But we buy. We buy those 100,000 shares for $2 each, laying out $200,000.
Now we own 300.1 million shares, out of 300 million outstanding.&lt;p&gt;On Thursday we go to our brokers and say &amp;quot;you know what, we changed our minds, we want our stock back from whoever you loaned it to.&amp;quot;&lt;p&gt;So the brokers call in the short sales.&lt;p&gt;The short sellers can&amp;#x27;t borrow the stock anywhere else. We own it all. So they have to close out their short sales by buying in the stock.&lt;p&gt;But they can&amp;#x27;t buy the stock anywhere else either. We own it all. So they have to buy it from us.
How much do we charge?&lt;p&gt;Yeah, $15. Or $20 or whatever, I don&amp;#x27;t know. We can charge whatever we want. If the short sellers don&amp;#x27;t buy the stock, they&amp;#x27;re breaking the law. So they&amp;#x27;ll pay whatever we ask.&lt;p&gt;They pay $20 to buy back the shares they sold us at $2, making us a $1.8 million profit.&lt;p&gt;source: &lt;a href=&quot;https:&amp;#x2F;&amp;#x2F;www.reddit.com&amp;#x2F;r&amp;#x2F;investing&amp;#x2F;comments&amp;#x2F;4wvlkv&amp;#x2F;a_scam_with_354b_market_cap_dafuq&amp;#x2F;d6absj0&quot; rel=&quot;nofollow&quot;&gt;https:&amp;#x2F;&amp;#x2F;www.reddit.com&amp;#x2F;r&amp;#x2F;investing&amp;#x2F;comments&amp;#x2F;4wvlkv&amp;#x2F;a_scam_wi...&lt;/a&gt;&lt;p&gt;[edit: formatting]</text></item><item><author>Animats</author><text>Trading was just halted in Neuromama (OTC:NERO), a startup with a $35 billion market cap.  They have a search engine (&lt;a href=&quot;https:&amp;#x2F;&amp;#x2F;neuromama.com&amp;#x2F;&quot; rel=&quot;nofollow&quot;&gt;https:&amp;#x2F;&amp;#x2F;neuromama.com&amp;#x2F;&lt;/a&gt;), a social network (&lt;a href=&quot;http:&amp;#x2F;&amp;#x2F;vica.life&amp;#x2F;&quot; rel=&quot;nofollow&quot;&gt;http:&amp;#x2F;&amp;#x2F;vica.life&amp;#x2F;&lt;/a&gt;), and claim &amp;quot;heavy ion fusion&amp;quot; and oceanfront property in Mexico.  The CEO got out of prison 6 years ago.&lt;p&gt;WTF?</text></item></parent_chain><comment><author>kevinpet</author><text>Eve finds NeuroMama, a worthless stack of nothing but shady documents, and importantly, without a significant number of shares available to borrow. She knows how to manipulate markets and doesn&amp;#x27;t care much for legality. Eve buys a significant position in NeuroMama over a period of time. She can do this cheaply, but slightly drives up the price.&lt;p&gt;Alice sees that the stock price has increased and this puts it on her radar of companies to investigate. She sees that NeuroMama is a worthless stack of nothing but shady incorporation papers. Alice thinks the stock value will decline. She goes to her broker, Bob, to borrow shares so that she can short sell. Bob calls around Long Island and locates some shares belonging to Eve for Alice to borrow.&lt;p&gt;Alice offers these shares for sale. Eve buys up a significant portion of them and puts them back on the market for sale at a massive markup.&lt;p&gt;Eve calls back her shares. Alice is required to return the shares to Eve. But Alice has sold those shares, so she must buy them back. She tries to find anyone to buy them from. Unfortunately, Eve is the only one selling, so Alice must pay Eve&amp;#x27;s price.&lt;p&gt;The only money that has changed hands is between Alice and Eve. There was no $34B, only a small fraction of the shares changing hands at highly inflated prices. If Eve is caught she&amp;#x27;ll need to disgorge her earnings to Alice.</text></comment>
<story><title>The SEC has temporarily halted trading of Neuromama Ltd.</title><url>https://www.bloomberg.com/news/articles/2016-08-15/a-35-billion-stock-was-just-halted-on-manipulation-concerns</url></story><parent_chain><item><author>ChuckMcM</author><text>This sounds pretty amazing but I can&amp;#x27;t figure out bindings for all the pronouns.&lt;p&gt;Who are the short sellers? Who are the brokers? are they complicit? Is one of them acting as the market maker for the stock? When the con is exploded and the money gets paid back, where did it come from? The short sellers? the brokers? thin air?</text></item><item><author>thegranderson</author><text>Very helpful explanation from a thread about this on reddit (narrated from the first person perspective of the scammer):&lt;p&gt;It&amp;#x27;s pretty beautiful in an illegal sort of way:
So the clever short sellers borrow and sell 100,000 shares of stock at $2 each, hoping to profit when it crashes to zero.&lt;p&gt;By hypothesis, there are no buyers. But we buy. We buy those 100,000 shares for $2 each, laying out $200,000.
Now we own 300.1 million shares, out of 300 million outstanding.&lt;p&gt;On Thursday we go to our brokers and say &amp;quot;you know what, we changed our minds, we want our stock back from whoever you loaned it to.&amp;quot;&lt;p&gt;So the brokers call in the short sales.&lt;p&gt;The short sellers can&amp;#x27;t borrow the stock anywhere else. We own it all. So they have to close out their short sales by buying in the stock.&lt;p&gt;But they can&amp;#x27;t buy the stock anywhere else either. We own it all. So they have to buy it from us.
How much do we charge?&lt;p&gt;Yeah, $15. Or $20 or whatever, I don&amp;#x27;t know. We can charge whatever we want. If the short sellers don&amp;#x27;t buy the stock, they&amp;#x27;re breaking the law. So they&amp;#x27;ll pay whatever we ask.&lt;p&gt;They pay $20 to buy back the shares they sold us at $2, making us a $1.8 million profit.&lt;p&gt;source: &lt;a href=&quot;https:&amp;#x2F;&amp;#x2F;www.reddit.com&amp;#x2F;r&amp;#x2F;investing&amp;#x2F;comments&amp;#x2F;4wvlkv&amp;#x2F;a_scam_with_354b_market_cap_dafuq&amp;#x2F;d6absj0&quot; rel=&quot;nofollow&quot;&gt;https:&amp;#x2F;&amp;#x2F;www.reddit.com&amp;#x2F;r&amp;#x2F;investing&amp;#x2F;comments&amp;#x2F;4wvlkv&amp;#x2F;a_scam_wi...&lt;/a&gt;&lt;p&gt;[edit: formatting]</text></item><item><author>Animats</author><text>Trading was just halted in Neuromama (OTC:NERO), a startup with a $35 billion market cap.  They have a search engine (&lt;a href=&quot;https:&amp;#x2F;&amp;#x2F;neuromama.com&amp;#x2F;&quot; rel=&quot;nofollow&quot;&gt;https:&amp;#x2F;&amp;#x2F;neuromama.com&amp;#x2F;&lt;/a&gt;), a social network (&lt;a href=&quot;http:&amp;#x2F;&amp;#x2F;vica.life&amp;#x2F;&quot; rel=&quot;nofollow&quot;&gt;http:&amp;#x2F;&amp;#x2F;vica.life&amp;#x2F;&lt;/a&gt;), and claim &amp;quot;heavy ion fusion&amp;quot; and oceanfront property in Mexico.  The CEO got out of prison 6 years ago.&lt;p&gt;WTF?</text></item></parent_chain><comment><author>elevensies</author><text>This is a typical short squeeze. ( &lt;a href=&quot;https:&amp;#x2F;&amp;#x2F;en.wikipedia.org&amp;#x2F;wiki&amp;#x2F;Short_squeeze&quot; rel=&quot;nofollow&quot;&gt;https:&amp;#x2F;&amp;#x2F;en.wikipedia.org&amp;#x2F;wiki&amp;#x2F;Short_squeeze&lt;/a&gt; ) [ With the caveat that I&amp;#x27;m far from an expert on this, I just have a collection of documents of many failed corners and very few successful corners. ]&lt;p&gt;The short sellers are anyone with a negative outlook on the stock. For example, some hedge funds do 50% buying, 50% short selling, so in theory they are neutral to overall market conditions.&lt;p&gt;The brokers in this case have been permitted to lend out the stock to earn extra money, the short sellers are ordinary customers of the brokers, the short sellers don&amp;#x27;t necessarily have any special relationship with the brokers.&lt;p&gt;The market maker would be buying as much as selling, and not holding any position over extended time, so they don&amp;#x27;t influence this event.&lt;p&gt;In theory, the short sellers have to pay up to meet their obligations.</text></comment>