Foreign Collusion, Naked Shorting (Counterfeiting) & Money Laundering — All Illicit Wealth
Fails to Deliver Pre- and Post-Regulation SHO
21 August 2006
Office of Economic Analysis
This memorandum provides summary data on fails to deliver through May 2006. It examines fails to deliver before and after the implementation of the Rule 203 of Regulation SHO. The data, as reported by NSCC, cover all stocks with aggregate fails to deliver of 10,000 shares or more.
PDF (6 pages): Fails to Deliver Pre- and Post-Regulation SHO
‘Not MY Stock’: The Latest Way To Fight Shorts
Kara Scannell
The Wall Street Journal, 2 August 2006
Some executives are reaching for an odd tactic in an expanding battle against short sellers, who profit when share prices fall.
The executives — at smaller companies that often don’t trade on big exchanges — are pushing shareholders to lock away their physical stock certificates so the short sellers can’t get their hands on the shares.
Sell-out: Why hedge funds will destroy the world
Janet Bush
NewStatesman, 31 July 2006
Something ominous is going on in world finance – again. On 11 May, the US Federal Reserve, America’s central bank, raised rates and hinted that it might do so again. Wall Street wobbled but stock markets in the emerging economies fell through the floor. Since that day, Colombia’s stock market has slumped by 42 per cent; Turkey’s by 38 per cent; Pakistan and Egypt by 28 per cent; India by 25 per cent; the Czech Republic by 22 per cent.
Liz Moyer
Forbes cited by RGM Communications via Wayback, 28 July 2006
Toronto-based Fairfax Financial Holdings filed a $5 billion lawsuit against SAC Capital, Rocker Partners and a number of other hedge funds, claiming they manipulated the insurance company’s stock, shearing its market cap by one-third.
Earlier this week, the regulatory arm of NYSE Group, fined Daiwa Securities America, Goldman Sachs Execution & Clearing, Credit Suisse Securities, and Citigroup Global Markets $1.25 million for violations of Regulation SHO–a rule put in place in January 2005 to clamp down on abuses–related to how they handle and monitor short-sale transactions by hedge funds and other clients.
Lawsuits Accuse “Prime Brokers” of Securities Fraud
Wayne Jett
San Gabriel Valley Tribune cited by RGM Communications via Wayback, 19 July 2006
Two class-action lawsuits filed in Manhattan federal court in April allege fraud by the world’s largest “prime brokers” in securities lending practices.
Goldman Sachs, Bear Stearns, Lehman Brothers, Morgan Stanley, Merrill Lynch, Citigroup, Banc of America Securities, Credit Suisse, Deutsche Bank Securities, UBS Financial and Bank of New York allegedly charge high fees to lend securities for short selling, but fail to deliver the securities sold short by hedge funds.
Short Sales on the New York Stock Exchange: Their Share of All Trades and the Types of Companies Most Likely to be Sold Short
Robert J. Shapiro
Sonecon, July 2006
We analyzed the extent and focus of short sales of New York Stock Exchange (NYSE) companies over a six-month period, February – July 2006.
PDF (3 pages): Short Sales on the New York Stock Exchange: Their Share of All Trades and the Types of Companies Most Likely to be Sold Short
Speech by SEC Chairman Cox on Proposed Amendments to Regulation SHO
12 July 2006
The next item on our agenda is the serious problem of abusive naked short sales, which can be used as a tool to drive down a company’s stock price to the detriment of all of its investors. The Commission is particularly concerned about persistent failures to deliver in the market for some securities that may be due to loopholes in the Commission’s Regulation SHO, adopted just two years ago.
Harvey Pitt
Forbes, 11 July 2006
As crisis after crisis afflicts the business community and our capital markets, all too often the response is a form of reverse laissez faire. Business waits for government to tell it three things: if it has done something wrong, why it’s wrong and how to fix it. The ineluctable result is that, like Rick’s crooked police pal, Captain Renault, in the movie Casablanca, we’re “shocked, shocked to discover” we don’t like the government’s responses.
Christopher Byron
New York Post cited by RGM Communications via Wayback, 3 July 2006
It looks like the Securities and Exchange Commission has finally come up with a plan for dealing with the devastating Court of Appeals decision two weeks ago that nullified the SEC’s efforts to regulate the hedge fund industry.
The strategy: Do nothing – except perhaps pout a bit and blame everything on the media.
Deutsche Bank Settles Fraud Case
Sheryl Jean
St. Paul Pioneer Press, 29 June 2006
Deutsche Bank has settled a lawsuit filed against it by Stockwalk Group to recover losses incurred as part of a massive securities fraud allegedly orchestrated by the German financial giant, a fugitive Saudi arms dealer and other individuals that bankrupted the Minneapolis-based securities firm.
Terms of the settlement, reached last week, are confidential. Local industry insiders estimated the settlement was for tens of millions of dollars.
Liz Moyer
Forbes, 28 June 2006
So who should be overseeing the $1.2 trillion hedge fund industry? Apparently no one is now. But the U.S. Senate Judiciary Committee has two ideas.
Either the nation needs new legislation to tackle allegations of widespread trading abuses by the hedge funds, or law enforcement officials should simply be encouraged to do the right thing with laws they already have at their disposal?
Liz Moyer
Forbes, 27 June 2006
Former U.S. Securities and Exchange Commission investigator Gary Aguirre is slated to testify at a hearing Wednesday as the Senate Judiciary Committee takes up the issue of hedge funds and manipulative short-selling.
Investigator claims he was Fired for Hedge Fund Inquiry
Andrew Clark
The Guardian cited by RGM Communications via Wayback, 24 June 2006
The low-profile, high-earning world of hedge funds suffered a jolt yesterday as allegations surfaced of political influence and insider dealing at one of America’s most prominent players, Pequot Capital Management.
A former investigator at the Securities and Exchange Commission has disclosed that the authority has been examining suspicious trades at Pequot – a Connecticut-based fund which has $7bn (£3.8bn) under management and operates from offices in both the US and Britain.
Brokers in an Uproar over Utah Law Cracking Down on “Naked Short Selling”
Lincoln Journal Star cited by RGM Communications via Wayback, 28 May 2006
A bill approved by the Utah Legislature is causing an angry revolt among Wall Street firms with Utah operations.
The measure cracks down on a stock trading practice defended by some as necessary for orderly markets and assailed by others as easily exploited for stock manipulation.
At issue is short selling, the investors’ practice of borrowing stock and selling it, hoping the share price declines so they can buy cheaper shares, return them to the lender and pocket the difference.
Circle Group Zeroes In on Naked Shorts
ThinkAdvisor, 2 May 2006
”Any wrongdoers will be taken to the mat,” said the chairman and chief executive of Circle Group Holdings Inc., Gregory J. Halpern, in a salvo issued in a statement Monday (April 17). “We’ve come to fight and we believe that by joining forces with John O’Quinn, his team of lawyers and A-list experts, we will prevail.”
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