SEC Follow Up Exhibits Part C SEC_OEA_FCIC_001760-2501

selling. The purple bar indicates total short selling volume reported through Form
SH. For some days, the short selling volume identified through Form SH (purple
bar) is as high, or higher than the total trading volume (blue bar). Finally, the
bright pink bar indicates short selling volume by this particular filer (identified in
the title).
16. How to interpret the charts - Example: The first chart shows the data for
Entropic Communications, Inc., a semiconductor company creating products for
home entertainment systems. On December 30 th , Morgan Stanley disclosed a
short position of approximately 485,000 shares on Form SH, which is close to the
638,000 shares of total reported trading volume on that day. 13 This is an example
of a potential manipulation. However, there are several caveats that should be
noted. First, we don’t know if Morgan Stanley’s trades are executed on behalf of
proprietary accounts, through its advisor services, or on behalf of clients. Also,
there may be an error in the data; either on the part of NASDAQ reported trading
volume, or an incorrect Form SH filing, unless Morgan Stanley is reporting trades
that were executed overseas. In addition, there may be reasons other than
manipulation for Morgan Stanley’s short selling behavior.
5. How can we use the data: Identifying short-sellers
17. Example - Citigroup, November 17-21: As illustrated in Chart 2, between
November 17 and 21, 2008, Citigroup’s stock price fell from a closing price of
$9.36 to $3.77. Form SH filings allow us to identify many of the institutional
13 Factiva does not report any news for Entropic Communications between December 22 and January 5.
However, on January 6, 2009, the company reported that it had exceeded a milestone of shipping 20
million chipsets, and the stock price rose.
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SEC_OEA_FCIC_001878