This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Naked Shorts Eye Internet Japan

Somebody really, really doesn't like Internet Initiative Japan (IIJI - Get Report).

And whoever it is took a sudden dislike to the company last month. Short interest on the Tokyo-based company's American Depository Shares, which are traded on Nasdaq, soared nearly 1,500% to 1,769,292 shares in June from 90,539 shares in May, according to the exchange.

Naturally, volume on the stock rocketed as well. In May, some 91,000 shares of IIJ traded on average, but in June the figure surged to an average of 6,426,225 shares a day. Even in the early days of July, a normally sleepy time for trading as U.S. investors extend the Fourth of July weekend, trading has remained above a million shares a day as the stock has hovered between $7 and $8.

What's more, the stock has been the victim of so-called naked short-selling, or selling short shares that aren't borrowed in time to deliver them for settlement. IIJ shares have been on Nasdaq's Threshold List since June 9. Stocks appear on an exchange's threshold list when a short-seller fails to deliver shares to the buyer within the standard settlement period for five straight trading days.

The Securities and Exchange Commission's Regulation SHO, which took effect last January in an effort to combat naked short-selling, requires broker dealers to buy out failure-to-deliver positions in stocks that have been on a threshold list for 13 straight trading days. IIJ shares have been on the Nasdaq list for 17 straight days.

Tom Ronk, who keeps a list of threshold stocks on his Web site,, says a stock will often pop up around the time broker-dealers are required to close out failure-to-deliver positions. Sure enough, on June 27 -- IIJ's 13th day on the threshold list -- the stock shot up 23% and volume rose nearly sevenfold to 10.2 million shares.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
IIJI $9.40 4.40%
AAPL $118.80 0.84%
FB $104.19 -1.20%
GOOG $745.84 -0.59%
TSLA $229.90 -0.74%


Chart of I:DJI
DOW 17,776.91 -21.58 -0.12%
S&P 500 2,087.10 -3.01 -0.14%
NASDAQ 5,118.8290 -8.6960 -0.17%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs