Category: Article – Media

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Article: SEC moves to close loopholes in short-selling rule

Article - Media

SEC moves to close loopholes in short-selling rule

James Langton

Investment Executive, 14 June 2007

The U.S. Securities and Exchange Commission has voted to take additional steps that it believes will close loopholes in its short-selling rule, Regulation SHO, further reducing persistent failures to deliver stock within the standard settlement period.

The SEC voted to adopt final amendments to its rules that, it says, will further reduce fails to deliver in certain equity securities. Regulation SHO, which became fully effective in January 2005, provides a regulatory framework governing short sales of securities.

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Article: Overstock attempts to uncover malicious naked shorts

Article - Media

Overstock attempts to uncover malicious naked shorts

Keith Hahn

Dealbreaker, 25 April 2007

Patrick Byrne, the CEO of Overstock.com, is seeking $3.5bn in damages from 10 prime brokers for intentionally manipulating Overstock’s share price through naked shorting. The big names charged are Bear Stearns, Citigroup, Credit Suisse, Goldman Sachs, Merrill Lynch, and Morgan Stanley.

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Article: SEC seen shy on naked shorting

Article - Media

SEC seen shy on naked shorting

Bloomberg, 23 April 2007

Critics of short-selling practices they deem abusive are up in arms over what they say is continued inaction by the Securities and Exchange Commission.
They say that the SEC delayed long-overdue reforms last month when it asked for more comments on proposals to tighten up exemptions to a rule intended to curb illegal “naked” short selling.

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Article: Bloomberg TV’s Special Report “Phantom Shares” (later nominated for an Emmy for Investigative Journalism)

Article - Media, Publications

Bloomberg TV’s Special Report “Phantom Shares” (later nominated for an Emmy for Investigative Journalism)

PATRICK BYRNE, 05 April 2007

Bloomberg Television has produced a shocking 25 minute exposé showing how Wall Street rogues are exploiting a crack in the system to steal tens of billions of dollars from Americans. The Bloomberg piece starts by talking about Overstock (I make a brief appearance, as a guy just trying to be a good citizen), but goes on to describe a wildly illegal scheme that hurts thousands of companies and millions of Americans with stock accounts. This may turn into a financial scandal that makes Enron look like a Sunday picnic.

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Article: Cramer controversy: Did he manipulate market?

Article - Media, Publications

Cramer controversy: Did he manipulate market?

Daniel Pannone, The Signal, 26 March 2007

When I wrote the story about Jim Cramer two weeks ago, I had the feeling that it would not be the last time I mentioned him. However, I’m surprised how quickly Cramer provided me with controversy to criticize.

Cramer has recently gotten himself into trouble after he made comments that could be construed as a discussion of stock and market manipulation on a Wall Street Confidential video segment from thestreet.com.

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Article: Cramer vs. Cramer

Article - Media, Publications

Cramer vs. Cramer

Henry Blodget, Slate, 22 March 2007

Jim Cramer and I had a bit of a tiff a few weeks ago, so some readers might view this column as just another round in that fight. Others might see it as the pot calling the kettle black, orschadenfreude. Think what you will—but as the author of a column about bad investment advice, I feel compelled to comment on what just might qualify as the worst financial counsel ever offered.

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Article: Jim Cramer Admits To Stock Manipulation When At Hedge Fund

Article - Media, Publications

Jim Cramer Admits To Stock Manipulation When At Hedge Fund

Philip David, Seeking Alpha, 21 March 2007

My thanks to Trader Mike, who wrote a nice article on a subject we had been discussing all weekend on the member site as all the market manipulation of the past two days made me forget to talk about the evidence of market manipulation we uncovered last week.

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Article: Cramer bragged of manipulating stock prices

Article - Media, Publications

Cramer bragged of manipulating stock prices

In an interview for a financial website, Jim Cramer, the extroverted host of CNBC’s “Mad Money,” boasted about manipulatin Cramer g stock prices when he was a Wall Street trader.

In a webcast on TheStreet.com that has been widely viewed on YouTube, Mr. Cramer spoke about bringing down the prices of a high-flying stock and admitted that his actions might have been illegal.
“A lot of times when I was short, I would create a level of activity beforehand that would drive the futures. . . . It’s a fun game,” he said in the interview with TheStreet.com’s executive editor Aaron Task.

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Article: Goldman to pay $2M to settle SEC case

Article - Media

Goldman to pay $2M to settle SEC case

Associated Press, 14 March 2007

Goldman Sachs Group Inc.’s clearing unit has agreed to pay $2 million in civil penalties to settle allegations that it allowed customers to illegally profit by selling securities short just before public offerings of stock, regulators said.

It marks the first settlement of a Securities and Exchange Commission and NYSE Regulation Inc. case alleging that a prime brokerage firm played a role in a type of abusive short-selling practice that has prompted some companies to launch a high-profile campaign against “naked” short selling. That involves selling borrowed shares without having first borrowed the shares.

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Article: Goldman Snared In Naked Shorting Probe

Article - Media

Goldman Snared In Naked Shorting Probe

Liz Moyer

Forbes, 14 March 2007

One of Wall Street’s biggest prime brokers has been taken to task by the Securities and Exchange Commission and the Big Board for not catching on to its customers’ illegal trading activities.

Goldman Sach’s clearing and execution division is paying $2 million to settle accusations it relied too heavily on what its customers told it without investigating trading activity that showed signs of something being amiss.

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Article: Bloomberg TV Examines ‘Phantom Shares’ in Special Report Tonight

Article - Media, Publications

Bloomberg TV Examines ‘Phantom Shares’ in Special Report Tonight

Bloomberg , 13 March 2007

NEW YORK, March 13 /PRNewswire/ — Tonight BLOOMBERG TELEVISION(R) examines a little-known stock trading practice that can be affecting your portfolio and your company. The special report, titled “Phantom Shares,” explores the problem of “naked shorting” in the stock market. The half-hour BLOOMBERG TELEVISION program is scheduled to air on Tuesday, March 13, 2007 at 7:00, 9:00 and 10:00 p.m. ET.

Every day, millions of shares of stock are sold but can’t be delivered because of an obscure trading practice called “naked short selling.” In a normal short sale, an investor borrows shares and sells them, making a profit if the price falls by replacing the borrowed shares with cheaper ones. In a naked short sale, an investor doesn’t borrow the shares, but sells them anyway. In extreme cases, the investor sells “Phantom Shares,” shares that don’t exist. The BLOOMBERG TELEVISION report, anchored by Mike Schneider, explains this practice, how it’s executed and what the Securities and Exchange Commission is doing in an effort to control it. Continue reading “Article: Bloomberg TV Examines ‘Phantom Shares’ in Special Report Tonight”

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Article: Naked and Confused

Article - Media

Naked and Confused

Liz Moyer

Forbes, 12 February 2007

How a tiny software outfit fell victim to an illegal but unrestrained practice known as naked short-selling.

Most investors have never heard of Sedona (otcbb: SDNA.OB – news – people ) Corp., a piddling Pennsylvania outfit that sells customer relationship management software for small U.S. banks and credit unions. But to a rogue band of short-selling hedge fund managers, Sedona was prime meat.

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Article: SEC is Looking at Stock Trading

Article - Media

Article: SEC is Looking at Stock Trading

Jenny Anderson

New York Times, 6 February 2007

The Securities and Exchange Commission has begun a broad examination into whether Wall Street bank employees are leaking information about big trades to favored clients, like hedge funds, in an effort to curry favor with those clients, executives at Wall Street banks said.

The inquiry, these people said, seems aimed at determining how pervasive insider trading, or the illegal use of market-moving nonpublic information, may be on Wall Street. Knowledge about a large trade, like the sale of a big block of stock by the mutual fund giant Fidelity, would tell a trader which way the stock would move.

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