Category: Paper

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Paper: The Deep Capture Story by Mark Mitchell

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The Story of Deep Capture

By Mark Mitchell, with reporting by the Deep Capture Team

The Columbia School of Journalism is our nation’s finest. They grant the Pulitzer Prize, and their journal, The Columbia Journalism Review, is the profession’s gold standard. CJR reporters are high priests of a decaying temple, tending a flame in a land going dark. In 2006 a CJR editor (a seasoned journalist formerly with Time magazine in Asia, The Wall Street Journal Europe, and The Far Eastern Economic Review) called me to discuss suspicions he was forming about the US financial media. I gave him leads but warned, “Chasing this will take you down a rabbit hole with no bottom.” For months he pursued his story against pressure and threats he once described as, “something out of a Hollywood B movie, but unlike the movies, the evil corporations fighting the journalist are not thugs burying toxic waste, they are Wall Street and the financial media itself.” His exposé reveals a circle of corruption enclosing venerable Wall Street banks, shady offshore financiers, and suspiciously compliant reporters at The Wall Street Journal, Fortune, CNBC, and The New York Times. If you ever wonder how reporters react when a journalist investigates them (answer: like white-collar crooks they dodge interviews, lie, and hide behind lawyers), or if financial corruption interests you, then this is for you. It makes Grisham read like a book of bedtime stories, and exposes a scandal that may make Enron look like an afternoon tea.

Introduction By Patrick M. Byrne, Deep Capture Reporter

PDF (69 Pages): Deep Capture Story

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Paper: 500 Million Shares of Stock Are Missing A Report on the Impact of Allowing Stock Sales to Go Undelivered for Long Periods

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500 Million Shares of Stock Are Missing: A Report on the Impact of Allowing Stock Sales to Go Undelivered for Long Periods

Robert J. Shapiro

Sonecon, March 2006

It has been well established that every day, millions of shares of stock in U.S. companies that are sold go undelivered. In November 2004, an SEC visiting economist, Dr. Leslie Boni, reported that on any given day, there are some 120 million to 180 million shares of companies listed on the NYSE or NASDAQ and some 300 million to 420 million shares over-the-counter (OTC) or unlisted public companies – a average total of 510 million shares – that have been sold and gone undelivered for at least 3 days. Her conclusions came from official data of the DTCC, the organization that clears and settles all U.S. stock sales and purchases, and holds most of these assets in electronic form.

PDF (19 pages):  500 Million Shares of Stock Are Missing: A Report on the Impact of Allowing Stock Sales to Go Undelivered for Long Periods

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Paper: The Concentration of Undelivered Shares Among Threshold Securities: Prospects of Stock Manipulation Using Naked Short Sales

Paper

The Concentration of Undelivered Shares Among Threshold Securities:
Prospects of Stock Manipulation Using Naked Short Sales

Robert J.  Shapiro

Sonecon, 14 November 2005

American public companies and their shareholders face a significant threat. Last year, researchers determined that naked short sales – short sales in which the shares are credited to buyer, but the short seller fails to borrow and deliver those shares – occur on a large scale, often extending for months at a time. New data now suggest that these “failures to deliver” or “fails” are concentrated in a relative handful of companies. This raises the prospect of naked short sales being used to manipulate some companies’ stock prices. The enormous extent of naked shorting and its likely use in stock manipulation could threaten the integrity of our financial markets and international confidence in them.

PDF (13 pages): The Concentration of Undelivered Shares Among Threshold Securities: Prospects of Stock Manipulation Using Naked Short Sales

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Paper: Boni Analysis of Failures-to-Deliver

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Boni Analysis of Failures-to-Deliver

Robert Shapiro

Sonecon, November 2004

A new study documents that significant failures to promptly deliver shares sold short (“fails” or “failures”) are not, as many market participants assume, rare, brief and inadvertent, but rather pervasive, extended and deliberate. The analysis was done by Dr. Leslie Boni, recently a visiting financial economist at the SEC and now economics professor at the University of New Mexico. Boni’s data show that failures-to-deliver affect almost all public companies and usually last several weeks. On any day, there are 180 million-to-300 million shares involving more than 10 percent of public companies that have gone undelivered for at least two months. Failures of these dimensions can seriously distort the normal economic operations of U.S. equity markets.

PDF (2 pages): Boni Analysis of Failures-to-Deliver

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Paper: Without a Trace: The Importance of Information in Markets

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Without a Trace: The Importance of Information in Markets

Susanne Trimbath

Milken Institute Working Paper, January  2004

Economists and practitioners alike would agree that information plays an important role in capital markets. But the practical job of gathering, organizing and disseminating information in markets is too often left to chance. This paper dramatizes the difficulties that can occur when that happens by using the high yield market as an example. The transition from rapid expansion in the 1980s to stable growth in the 1990s was not without its informational road-bumps. The main point of the paper is to emphasize the importance of the informational role being played by industry organizations such as the Loan Syndication and Trading Association (LSTA) in the U.S.

PDF (14 pages): Without a Trace: The Importance of Information in Markets

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Paper: High Yield Financing and Efficiency-Enhancing Takeovers

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High Yield Financing and Efficiency-Enhancing Takeovers

Susanne Trimbath

Milken Institute Policy Brief No. 22, 27 November 2000

This study analyzes the determinants of the risk of takeover from 1981 to 1997 based on a sample of 896 Fortune 500 firms using sophisticated methodology. The measure of firm efficiency includes both production costs and overhead expenses. If relatively inefficient firms are chosen as the targets in takeovers and the new owners reduce the costs of these inefficiencies, then the potential for gains from takeovers for the US economy exists. Because firm-level costs are adjusted for the industry median, the study is able to capture the inefficiency implications of firms where it is clear that other firms in the same general product line are better controlling their costs. Indeed, high total cost per unit of revenue is a powerful determinant of the risk of takeover throughout the period under study. The impact of size on the risk of takeover, however, changed across time.

PDF (29 pages): High Yield Financing and Efficiency-Enhancing Takeovers

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