*Really* bad week for SCO

[Gary Layng]

I think I can google something up, but for now:
 - kiting is illegal.  The scheme depends on how long it takes cheques to
clear the central clearing facility that all banks share.  Imagine you have
two bank accounts with, say, $50 in each.  You cut a cheque from your
account in Bank 1 for, say, $5 million, and deposit it into the account you
have in Bank 2.  At the same time you also cut a cheque from the Bank 2
account and deposit it into the account in Bank 1.  When the cheques clear,
you have enough money to cover them.  You get the interest on the $10
million dollars you had for two-three days in the two accounts.
 - Margin is perfectly legal.  "On margin" means that you borrowed money
from your broker to buy shares.  Typically the broker lends you up to about
75% of the value of the shares.  If the value of the shares drops 25% you
get a "margin call" and they can sell the shares.  You're leveraging your
potential capital gains by borrowing the money, but it's quite dangerous.

 
His Lordship Mayhem

-----Original Message-----
From: owner-tlug-lxSQFCZeNF4 at public.gmane.org [mailto:owner-tlug at ss.org] On Behalf Of Byron Sonne
Sent: Monday, December 08, 2003 7:30 PM
To: tlug-lxSQFCZeNF4 at public.gmane.org
Subject: Re: [TLUG]: *Really* bad week for SCO

> its stock price may jump to $50, and if you hold -100 of them, you'll
> now have to pay $5000 to close out your position, and you're in the hole
big
> time.

Does anyone have a link to a site or some docs that explain, to a putz 
like me, what all this various financial wizardry is?

I've seen shorting briefly explained here, but what about kiting, 
selling on margin, etc, and various other techniques and scams? I'd like 
to know but I don't have the inclination to read entire books about this 
stuff, or become a CPA or something.

Later,
B
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