Foreign Collusion, Naked Shorting (Counterfeiting) & Money Laundering — All Illicit Wealth
S.E.C. Temporarily Blocks Short Sales of Financial Stocks
Vikas Bajaj, Graham Bowley
The New York Times, 19 September 2008
The Securities and Exchange Commission issued a temporary ban on short sales of 799 financial stocks on Friday, a move against traders who have sought to profit from the financial crisis by betting against bank shares.
The SEC May Be The Country’s Worst Enemy
Bob O’Brien
Sanity Check via Wayback, 19 September 2008
Government has now, with the stroke of a pen, altered the way the markets work. Which again, is fine, if short selling goes the way of the buggy whip, for good. But that is unlikely. So what it has done is prepare the stage for volatility unlike any seen in the markets ever before. Wildly high highs, to be followed by devastating lows.
I’m not so concerned about the wildly high highs. It’s when the rule expires that I have a problem with. And it is the absence of coherence in the reasoning that I have a huge problem with.
SEC and FSA Take Actions Against Short Selling
Cary J. Meer, Christina E. Anzuoni, Manjinder Cacacie, Kay A. Gordon, Mark D. Perlow
K&L Gates, 19 September 2008
On September 17 and 18, 2008, in a series of emergency measures, the Securities and Exchange Commission (“SEC”) adopted two new rules, issued two orders (including a temporary ban on short sales in financial securities), amended Regulation SHO and Rule 10b-18, and announced enforcement initiatives aimed at preventing “naked” short selling and compelling disclosure of short positions. In the view of the SEC, but not of all observers, “naked” short selling and other manipulative trading practices have contributed to the recent turmoil in the markets and sudden declines in securities prices, particularly in the financial sector. “Naked” short selling is the practice of selling a security short without having borrowed the security.
Are Short Sellers to Blame for the Financial Crisis?
Bill Saporito
TIME, 18 September 2008
“It was sad to see Merrill go down as well,” said the voice from inside Lehman Brothers this week as he pondered his own future. “But at least they screwed the shorts. That was good to see.”
It was also, at least in the minds of many angry investment bank CEOs, a long time coming. In the months leading up to the current market chaos, the short sellers have been on the prowl. But now the witch hunt has begun. The shorts nailed Lehman and Bear Stearns by betting that their shares would continue to fall. And now they have Morgan Stanley and Goldman Sachs in their sights, sparking speculation that the last two remaining go-it-alone investment banking giants may have to find a deep-pocketed commercial bank to partner up with.
New SEC Rules Target ‘Naked’ Short-Selling
Marcy Gordon
Associated Press, 18 September 2008
Federal regulators yesterday took measures aimed at reining in aggressive forms of short-selling that were blamed in part for the demise of Lehman Brothers and that some feared could be used against other vulnerable companies in a turbulent market.
The Securities and Exchange Commission adopted rules it said would provide permanent protections against abusive “naked” short-selling. Unlike the SEC’s temporary emergency ban this summer covering naked short-selling in the stocks of mortgage finance giants Fannie Mae and Freddie Mac and 17 large investment banks, the new rules apply to trading in the broader market.
SEC reins in ‘naked’ short selling, will check recent trades
Adam Shell
abc, 18 September 2008
Reacting to concerns that many financial stocks were losing value at an alarming rate due to aggressive bets by short sellers who profit when prices fall, federal regulators on Wednesday acted to stem the abusive practice known as “naked short selling.”
In an ordinary short sale, a short seller borrows stock and sells it, with the hope of buying it back later at a lower price to replace the borrowed shares.
SEC puts ‘naked’ short sellers on notice
David Ellis
CNN, 17 September 2008
The Securities and Exchange Commission adopted a set of new rules Wednesday which would ultimately ban the practice of so-called “naked” short selling, possibly providing some much-needed comfort for financial markets.
The Counterfeiting of Shares of Fannie Mae and Freddie Mac: Where are Our Regulators and Who are They Protecting?
17 September 2008
Fannie Mae and Freddie Mac are publicly traded Government Sponsored Enterprises (―GSEs‖), a quasi – partnership between the private sector and the government. The shares of the GSEs trading in the public markets have been counterfeited and deliberately manipulated. This is not rocket science; known ownership of the GSEs shares exceeded the number of shares that were available. Counterfeiting shares of the GSEs caused their stock prices to collapse. The regulators turned a blind eye to the takedown, encouraged it or were not effective enough to recognize it and enforce the laws against market manipulation that have existed since the 1930s. The industry and the regulators have little room for a plausible deniability claim that they did not know what was occurring in the trading of the GSEs.
PDF (33 pages): The Counterfeiting of Shares of Fannie Mae and Freddie Mac: Where are Our Regulators and Who are They Protecting?
SEC Issues New Rules to Protect Investors Against Naked Short Selling Abuses
SEC, 17 September 2008
he Securities and Exchange Commission today took several coordinated actions to strengthen investor protections against “naked” short selling. The Commission’s actions will apply to the securities of all public companies, including all companies in the financial sector. The actions are effective at 12:01 a.m. ET on Thursday, Sept. 18, 2008.
Banking crisis: Regulators look to curb naked ambition of the short sellers
Simon Bowers
The Guardian, 17 September 2008
Short sellers in New York and London are facing tough new regulations as market officials attempt to curb what they see as “abusive” attacks on the proper functioning of stock markets — particularly the pricing of banking and financial stocks.
The US Securities and Exchange Commission will tomorrow impose new rules designed to end “price manipulating” through aggressive short selling. Earlier this week the chancellor, Alistair Darling, signalled the Financial Services Authority was also looking at closer policing of certain short-selling activities.
SEC Races Against Short Sellers
Julie Satow
The Sun, 16 September 2008
In an attempt to stanch the bloodletting on Wall Street, the Securities and Exchange Commission will rush to institute new rules as soon as this week to curb abusive short selling of stocks.
The rules — which are far less sweeping than restrictions the agency temporarily instituted in July on shorting shares of 19 financial firms — will make it fraudulent for traders to mislead brokers about whether they have located a stock they intend to short, and will no longer allow options traders to bet against a stock without borrowing it first. It will also require brokers to close out their short positions sooner.
A good summer for David Einhorn
Tracy Alloway
Financial Times, 15 September 2008
The outspoken hedgie David Einhorn would have made a killing from his bets against Lehman Bros this summer. He first announced his position in April, when Lehman’s share price was at about $40, saying he had questions about the company’s balance sheet. Lehman stock is now under $4 — giving Einhorn’s Greenlight Capital a 90 per cent return according to some estimates.
Could the role of short-sellers like Einhorn give fresh fodder to the push for a ban on certain forms of short-selling then?
Brief Chronology of SEC action on Naked Short Sales over 70 Years, 1938 – 2008
Robert Shapiro
15 September 2008
This paper highlights key SEC actions taken on Naked Short Sales.
PDF (2 pages): Brief Chronology of SEC action on Naked Short Sales over 70 Years, 1938 – 2008
Banks Fear Next Move by Shorts
Louise Story
The New York Times, 14 September 2008
In May, David Einhorn, one of the most vocal short-sellers on Wall Street, made no secret he was betting against Lehman Brothers.
Now, some investors are afraid that fund managers like him will take advantage of the climate of fear stirred up by the troubles of Lehman to target other weak financial firms whose declining share price would bring them rich rewards.
The Short Seller Myth of “Market Efficiency”
Mark Mitchell
DeepCapture, 12 September 2008
“The SEC’s public data say that on any given day over the first three months of this year, there were more than one billion shares that had been sold and failed to deliver (within the allotted 3 days) and that 70% of those fails were concentrated in just 100 companies. That’s a real red flag for the SEC that naked short selling is very widespread, is highly concentrated, and consequently might be being used today to manipulate the price of scores of stocks.”
-Former Deputy Secretary of Commerce Robert Shapiro on CNBC
It’s great that CNBC allowed someone to report this news. It seems pretty interesting – criminals manufacturing piles of phantom stock in order to systematically manipulate the share prices of perhaps 100 companies. Come to think of it, it sounds like a really big financial scandal.
THE DOLLAR HAS NO INTRINSIC VALUE : DO YOUR ASSETS?
