Royale Energy: Welcome to the Russell 2000 and the Naked Short List

Royale Energy's (ROYL) management team did it all right. It conservatively and effectively managed the company in Q1 - increasing cash flow by 55%. The market responded with a 52 week high. After the annual stockholder meeting, the company promised to return to profitability - another 52 week high. Its accomplishments were acknowledged, and the company was added to the Russell 2000. Most importantly, it significantly exceeded Q2 expectations (see 10Q).

The reward - Royale has been added to the top of the naked short list. Many factors (i.e. oil, market, etc...) affect Royale's stock price. However, I have personally watched market makers systematically drive down the company's share price. Something is fundamentally wrong here. Numerous investors have been driven out of their positions via naked short selling - forcing margin calls; triggering stop loss orders; and flat out scaring many out of the stock. Complaints to the SEC have gone ignored, and many individuals understand first hand they are not playing on a level playing field.

The real irony is small, well managed companies are targeted. The individual investor in America is going to become extinct unless we clean up trading practices and start enforcing laws that are already on the books. The SEC needs to start prosecuting those involved in illegal manipulation of stocks. It also needs to take a close look at the value of naked short selling

Comments

[matyb123:]

amen to that!

2008 Aug 01 05:22 PM

[stock_analyzer:]

I understand what your saying and will be looking for a turn around next week on this stock. The huge sell off candles have slowed and I think we see a turn around going into next week....hopefully a push and hold over 7.00$

2008 Aug 01 08:42 PM

[DonaldRay:]

Your are right..but when will it happen?this seems to be the best time ever too get rid of naked short selling...but they(congress) are only stopping short selling on a few stocks.

2008 Aug 02 09:29 AM

[User 234834:]

With this type of volume they will continue to drive the price lower next week. The number of short shares continues to increase. The only thing that will stop it are large buyers. I have sent emails to my senators and congressman, but I expect they will do the same as the SEC - nothing.

2008 Aug 02 08:44 PM

[The Market ...:]

Here's a hint,

don't sign the hypothecation agreement with your online broker.Keep a separate cash account and a margin account.when you see a good companiy on the naked short list, buy it in the cash account and don't let the brokerage firm lend out the shares.

2008 Aug 03 01:26 PM

[The Pilgrim:]

The outright, flagrant manipulation of ROYL is a disgraceful example of the SEC's inaction. The SEC needs to get off its Ivy Leagye ass and and stop these attacks on small companies by market manipulators using naked shorting. What sense does it make to only restrict this fraudulent practice to a few financials stocks? It smacks of Wall Street cronyism. For those of us who have been following this company - and invested in it - it has been the equivalent of being mugged and robbed in public with a cop standing nearby eating a donut while waving at the the thieves! Thanks for bringing attention to this outrage!

2008 Aug 27 01:13 PM