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Article: Naked Short Selling Banned By EU
Article - Media, PublicationsNaked Short Selling Banned By EU
Global Custodian, 15 September 2010
European Regulators have issued new rules aimed at controlling naked short selling and derivatives trading. Naked short selling, where the investor sells shares short without confirming the availability of the stock, has been banned.
Investors will also be forced to disclose their short position in a firm to regulators if it exceeds 0.2%, and to the market as a whole if it crosses 0.5%. Investors will have to disclose short positions on sovereign bonds, even if the position was obtained using credit default swaps.
The ban on naked short selling by the European Commission will be enforced from July 2012 after approval from the European Parliament. Previously, the seller did not have to prove their ability to obtain the stock. According to todays proposal, in order to “to enter a short sale an investor must have borrowed the instruments concerned, entered into an agreement to borrow them, or have an arrangement with a third party to locate and reserve them for lending so that they are delivered by the settlement date [at the latest 4 days after the transaction].” Continue reading “Article: Naked Short Selling Banned By EU”
Article: Chinese coal company’s share placement produces interesting collection of investors
Article - MediaChinese coal company’s share placement produces interesting collection of investors
Chris Carey
sharesleuth, 13 September 2010
Sharesleuth took a closer look at the registration statement covering the resale of those shares, and found that no fewer than eight people who participated in the placement have been the subject of Securities and Exchange Commission actions or criminal prosecutions.
The list includes at least four people who were directly or indirectly linked to stock-manipulation schemes. Several other investors were previously involved in a small cluster of U.S. companies whose placements were manipulated by a ring of boiler room brokerages in the 1990s.
Article: Manhattan District Court Writes Final Chapter in Litigation Between Internet Law Library and Hedge Fund Adviser Southridge Capital Management; Orders Tech Firm to Pay Adviser Almost $1.2 Million in Attorney’s Fees on Top of Damages
Article - Media, PublicationsAlisa Greenstein, Hedge Fund Law Report, 27 August 2010
On August 9, 2010, the United States District Court for the Southern District of New York (Southern District) effectively ended the decade-long litigation between Internet Law Library, Inc. (INL), its executives and several of its shareholders, and Southridge Capital Management, LLC (Southridge), its principals and affiliates, including hedge fund Cootes Drive, LLC, and its broker, Thomson Kernaghan & Co., Ltd. (TK & Co.). The litigation arose out of a “floorless” or “toxic” convertible securities purchase agreement between INL and Cootes Drive.
The agreement allowed Cootes Drive to demand conversion of its INL preferred stock into common stock based on a floating conversion ratio tied to the common stock’s market price, and obligated Cootes Drive to float a $25 million line of equity, so long as INL common stock remained priced above a certain level. This arrangement arguably provided Cootes Drive and its affiliates with an incentive to aggressively short-sell INL common stock, because the further they decreased its price, the more common stock Cootes Drive could obtain on conversion (which it could use to cover its short positions and profit from the difference), and because that decrease would eliminate its obligation to provide a line of equity. The agreement proved disastrous for INL, just as it has for many other companies with similar financing arrangements. Continue reading “Article: Manhattan District Court Writes Final Chapter in Litigation Between Internet Law Library and Hedge Fund Adviser Southridge Capital Management; Orders Tech Firm to Pay Adviser Almost $1.2 Million in Attorney’s Fees on Top of Damages”
Article: Naked Shorting Will Cause U.S. Exchange Exodus
Article - MediaNaked Shorting Will Cause U.S. Exchange Exodus
Bud Burrell
Financial Wire, 5 August 2010
This week, an important online news service released an article that should send shockwaves into our public markets. In very curt form, the article chronicles the many abuses of U.S. public companies by short selling manipulators, particularly through naked short selling and regular and derivative based synthetic shorting. By implication, the article recites the sheer embarrassing ineffectiveness of our regulators, who are engaged in a pattern of systematic conflicts of interest with revolving doors that are a major disgrace to our own government.
Article: Wall Street’s Big Win
Article - MediaMatt Taibbi
Rolling Stone, 4 August 2010
Cue the credits: the era of financial thuggery is officially over. Three hellish years of panic, all done and gone – the mass bankruptcies, midnight bailouts, shotgun mergers of dying megabanks, high-stakes SEC investigations, all capped by a legislative orgy in which industry lobbyists hurled more than $600 million at Congress. It all supposedly came to an end one Wednesday morning a few weeks back, when President Obama, flanked by hundreds of party flacks and congressional bigwigs, stepped up to the lectern at an extravagant ceremony to sign into law his sweeping new bill to clean up Wall Street.
Article: Short selling – legitimate trading or market abuse?
Article - MediaShort selling – legitimate trading or market abuse?
Kevin Terhaar, CFA Institute
Financial Times, 1 August 2010
Naked shorting runs afoul of rules and regulations in most jurisdictions, and for good reason. It can undermine investor confidence because uninformed buyers are deprived of the basic benefits of ownership, such as voting and dividends, when naked short sellers fail to deliver shares or deliver unauthorised shares. In essence, naked shorting is a fraud perpetrated on buyers because sellers may have no ability (and indeed no intention) to fulfil their end of the deal.
Article: Psst, Wanna Borrow Some Shares?
Article - MediaPsst, Wanna Borrow Some Shares?
Theresa W. Carey
Barron’s, 17 July 2010
Several brokerages recently instituted programs allowing wealthy investors with big positions in hard-to-borrow stocks to lend those shares to short sellers, generating interest income in the process.
Article: UK’s collusion with Islamists ‘catastrophic’
Article - Media, PublicationsUK’s collusion with Islamists ‘catastrophic’
Richard Norton-Taylor, 05 July 2010
British collusion with radical Islamist forces, including extremists who provided training camps for the leader of the 7/7 London suicide bombers and who are fomenting the insurgency in Afghanistan, has had a catastrophic impact, according to an account of British policy in the Middle East and central Asia.
Writing in the Guardian, Mark Curtis, author of Secret Affairs, says: “The terrorist threat to Britain is partly ‘blowback’, resulting from a web of British covert operations with militant Islamic groups stretching back decades. And while terrorism is upheld as the country’s biggest security challenge, Whitehall’s collusion with radical Islam is continuing.”” Continue reading “Article: UK’s collusion with Islamists ‘catastrophic’”
Article: Notes on David Einhorn: The Predator in a Cute T-Shirt
Article - MediaNotes on David Einhorn: The Predator in a Cute T-Shirt
Mark Mitchell
DeepCapture, 10 June 2010
I received an email a while back from Jim Brickman, a crony of short selling hedge fund manager David Einhorn, demanding that I post the Securities and Exchange Commission inspector general’s report on the commission’s investigation of Allied Capital. According to Brickman, the report proves that Einhorn was right about Allied being a massive fraud. Moreover, says Brickman, the report definitively establishes that Einhorn did not seek to drive down Allied’s stock price. The report, which I gladly post below, does nothing of the sort. I will discuss the report in further detail, but first a little history.
Article: Goldman Sachs to pay $450,000 fine for illegal short-selling
Article - Media, PublicationsGoldman Sachs to pay $450,000 fine for illegal short-selling
Mark Sands, 02 June 2010
NEW YORK – Goldman Sachs has been condemned by the Securities and Exchange Commission (SEC) and NYSE Regulation for failing to implement controls to comply with regulations against ‘naked’ short-selling between September 2008 and January 2009. Goldman was also fined over allegations that it took part in illegal naked shorting. Continue reading “Article: Goldman Sachs to pay $450,000 fine for illegal short-selling”
Article: China INSOnline Corp. to Aggressively Combat Naked Short Sales of Company’s Common Stock
Article - Media, PublicationsChina INSOnline Corp. to Aggressively Combat Naked Short Sales of Company’s Common Stock
PRNewswire, 01 June 2010
China INSOnline Corp. (Nasdaq: CHIO), which operates http://www.soobao.cn , one of China’s leading insurance services web portals, today declares its intention to aggressively combat naked short selling of the Company’s common stock and protect its shareholder’s interests. This is expected to improve stability in the value of its stock and improve long-term investor confidence in the market.
Today the company’s suspicions were confirmed when NASDAQ OMX published the results on the short list under the regulation SHO Threshold Security List. Continue reading “Article: China INSOnline Corp. to Aggressively Combat Naked Short Sales of Company’s Common Stock”
Article: Europe plans ban on naked short selling
Article - MediaEurope plans ban on naked short selling
Steve Johnson and Baptiste Aboulian
Financial Times, 23 May 2010
European politicians have proposed a complete ban on naked short selling, significantly widening the scope of the clampdown implemented last week by Angela Merkel, the German chancellor.
Naked shorting is already banned in the US, Hong Kong, Australia and Brazil, but the idea of a complete European-wide ban is likely to provoke controversy in some quarters.
