>> The five-day rule doesn’t seem very difficult to evade. <<
It's a relatively new law, second iteration. And secondary offerings AIN'T new. Shorting into a secondary was rampant in biotech, ~ 1997. There was no sacred boundary between banker and analyst, Chinese Wall or otherwise, and news re. a secondary was eagerly passed among fund managers (anybody remember the "von Emster" days?) after each level of informant had filled their short (or just plain sold, with an eye to reloading).
In the old days of level II, when armies of newbie traders (like me) were signing on to paid quotes? The days before ECNs, etc? You could virtually watch a bank as it sold shares that it did not own, shorting into a secondary where a portion of the underwritten shares were then used to cover. Best example ever was a dive in Agouron, just before their last offering. Goldman.
SEC was slow to act, effective regulation of this disgusting process is relatively fresh off press. |
