William F. Browder, once the largest foreign investor in the Russian stock market, filed court documents in New York this week contending that other Western investors in Russia had colluded with the authorities to steal hundreds of millions of dollars through tax refunds and then laundered the money through New York banks. Continue reading “Article: Major Investor in Russia Sees Wide Fraud Scheme”
Until the current financial crisis, the SEC did not view short selling of large, blue-chip stocks as a problem. In July 2008, however, the SEC temporarily banned naked short sales of the stock of Fannie Mae, Freddie Mac, and 17 other large financial institutions. On September 18, 2008, the SEC banned all short selling of the shares of more than 700 financial companies in an emergency action that expired on October 8, 2008. On October 1, 2008, the SEC adopted an interim rule requiring short sellers’ brokers to actually borrow shares to deliver to buyers, within one day after the expiration the normal three-day settlement time frame. The rule was made permanent on July 27, 2009, and it applies to all stocks. This report will be updated as events warrant.
Cramer says: “Senator Kaufman (of Delaware) was on … he called for exactly this issue on the naked shorting … I thought that was great. That was a good first step. And they have not defeated the uptick rule. Let’s hope they go and roll everything back. There’s lots of chatter that says it doesn’t matter. These are people who have never traded before. If you traded before, you know that it slows things down, gives the market a chance to catch its breath. And that’s what we want.”
SEC Takes Steps to Curtail Abusive Short Sales and Increase Market Transparency
SEC, 27 July 2009
The Securities and Exchange Commission today announced several actions that would protect against abusive short sales and make more short sale information available to the public.
“Today’s actions demonstrate the Commission’s determination to address short selling abuses while at the same time increasing public disclosure of short selling activities that affect our markets,” said SEC Chairman Mary Schapiro.
Cramer has railed against naked short selling throughout the entire credit crisis. And he’s been quick to blame the collapse of at least a couple of the market’s bellwether companies on the traders who do it. Luckily for the rest of us, it looks like a group of US senators have found a solution to the problem.
The CNBC “journalist” assured his viewers that the FDA advisory panel would vote that Dendreon’s treatment for prostate cancer was neither safe nor effective (notwithstanding the fact that the FDA had given the treatment “priority review” status because Provenge had shown strong trial results and was destined for critically ill patients).
Abbey Spanier Rodd & Abrams has filed a class action lawsuit in the US District Court for the Southern District of New York on behalf of a class consisting of all persons or entities who purchased the securities of Manulife Financial between March 28, 2008 and June 22, 2009. The complaint charged Manulife and certain of the company’s executive officers with violations of federal securities laws. On June 19, 2009, after the market closed, Manulife received an enforcement notice from the Ontario Securities Commission (OSC) relating to its disclosure of risks concerning its variable annuity guarantee and segregated funds business. Continue reading “Article: Law Firm Files Class Action Lawsuit Against Manulife Financial”
Regulatory and media concern has focused heavily on the potentially manipulative distortion of market prices associated with naked short selling. However, naked shorting can also have beneficial effects for liquidity and pricing efficiency. We empirically investigate the impact of naked short-selling on market quality, and find that naked shorting leads to significant reduction in positive pricing errors, the volatility of stock price returns, bid-ask spreads, and pricing error volatility. We study naked shorting surrounding the demise of financial institutions hardest hit by the financial crisis in 2008 and find no evidence that stock price declines were caused by naked shorting.