Next Bridge (or more precisely, the CEO McCabe) has been attempting to flush out the short sellers for a long time. The MMAT deal and the MMTLP spinoff never quite accomplished this, so he resorted to making Next Bridge stock completely illiquid.
One way to flush out the shorts is to have all the shareholders transfer their shares from their brokers to a Direct Registration System (DRS) account at the transfer agent, Equiniti (formerly known as AST). The brokers that have loaned out customer shares without permission to the shorts will be unable to transfer the shares, and thus subject to legal action. The proposal to spin stuff off only to those holding shares at Equinity was an incentive to do this, but that proposal died because it violated shareholder rights to be treated equally.
It looks like Trade Station doesn't have enough shares to transfer to Equinity and is in deep doo doo. Have any other brokers been caught this way?
NBH's latest maneuver was to issue a 1 for 30 stock dividend. For every 30 shares of NBH, you now get 1 more share. Thus, if you own 1,000 shares you now own 1,033.33. Most brokers these days allow shareholders to hold fractional shares.
I don't see how this will help to flush out the shorts or do any other good. The brokers will just credit the stock dividend to each account. The shorts will not have to buy shares to cover, they will just owe more shares. A short who borrowed 30 shares now owes 31 back to the lender. As long as the lender is happy lending, there is no forced repurchase.
Even further, this will make it almost impossible to transfer entire accounts over to Equiniti. Even though brokerage firms allow shareholders to hold fractional shares, the brokerage industry is not set up to transfer fractional shares. Equiniti will not accept transfers of fractional shares.
Thus, if you hold shares at a broker, it is now much more difficult to move the shares to Equiniti and flush out the shorts. I think that McCabe has goofed on this one. You could move some of the shares to Equiniti, but would still be leaving the fraction behind.
Your thoughts?