Foreign Collusion, Naked Shorting (Counterfeiting) & Money Laundering — All Illicit Wealth
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.
Deutsche Bank Unit Hit With Record Short-Sale Fine
Law360, 10 September 2008
According to NYSE Regulation, NYSE Euronext’s enforcement arm, Deutsche Bank Securities made a significant but unquantified number of short sales without borrowing the stocks, entering an agreement to borrow the stocks or even being reasonably sure that the stocks were available to borrow. Deutsche Bank Securities also agreed to be censured.
Complaint Over Auction Rate Securities Market Details Brokers’ Greed
Courthouse News Service, 5 September 2008
In a federal filing replete with lurid examples of document destruction, inside trading, naked greed, lies and market manipulation, the City of Baltimore joins the long list of plaintiffs demanding treble damages from Citigroup, UBS, Merrill Lynch, Morgan Stanley, Bank of America, Lehman Bros., Wachovia and other banks that conspired to prop up the auction rate securities market, until it collapsed in a $300 billion rubble heap from which investors are still digging out.
The Economist, 17 August 2008
For much of this financial crisis, America’s Securities and Exchange Commission (SEC) has cut a pathetic figure, relegated to the sidelines as a hyperactive Federal Reserve tried a variety of creative measures to keep the system afloat. When the market watchdog finally did get in on the act, it was highly controversial: a temporary order restricting short-selling the shares of 19 financial firms deemed systemically important, including Fannie Mae and Freddie Mac, the two troubled mortgage agencies.
SEC’s ban on short-selling Fannie, Freddie ends
Marcy Gordon
New York Times, 13 August 2008
A government order expires Tuesday that temporarily banned a certain kind of short-selling of the stocks of mortgage finance companies Fannie Mae (FNM) and Freddie Mac (FRE) and 17 large investment banks.
The companies’ shares have stabilized since the ban took effect July 21. The Securities and Exchange Commission says its order helped prevent stock manipulation, and that regulators will be able to analyze data to gauge its effectiveness. But some experts say that may be difficult to determine.
Did It Help to Curb Short Sales?
Floyd Norris
The New York Times, 12 August 2008
A rule that made it harder to short some financial stocks and that may have helped raise prices and reduce the volume of shorting in those stocks expired Tuesday, as the Securities and Exchange Commission considers whether to tighten the rules on all short selling.
It may be a coincidence, but the announcement of the rule on July 15 coincided with the bottom of the bear market for financial stocks, which leaped that day and are now well above where they were. And the final day proved to be a very bad day for those shares.
Bringing Down Bear Began as $1.7 Million of Options
Gary Matsumoto
Bloomberg cited by RGM Communications via Wayback, 11 August 2008
On March 11, the day the Federal Reserve attempted to shore up confidence in the credit markets with a $200 billion lending program that for the first time monetized Wall Street’s devalued collateral, somebody else decided Bear Stearns Cos. was going to collapse.
In a gambit with such low odds of success that traders question its legitimacy, someone wagered $1.7 million that Bear Stearns shares would suffer an unprecedented decline within days. Options specialists are convinced that the buyer, or buyers, made a concerted effort to drive the fifth-biggest U.S. securities firm out of business and, in the process, reap a profit of more than $270 million.
How Big is the Failure to Deliver/Naked Shorting Problem? Yet More Information
Bob O’Brien
Sanity Check via Wayback, 8 August 2008
How big is the problem? I mean, we hear the now famous $6 billion delivery failure number tossed around from the DTCC, but how accurate is that, really? Is it a complete answer? Is there more information that is knowable?
The answer is, yes, more is knowable.
Why The DTCC Is A Prime Mover In Securities Fraud and Naked Shorting
Bob O’Brien
Sanity Check via Wayback, 5 August 2008
To hear them tell it, they are powerless to deal with NSS, acting more as a vessel through which stock flows. They ignore that they are an SRO, chartered with regulating the business conduct of their owner/members. They pretend that they don’t become the intermediary, and thus the contra-party to the trade to both buyer and seller, and thus in full control of buying in failed trades (if they wanted). They pass self-serving rules that declare they can’t force a failing member to buy in the fail, even though they are chartered with ensuring timely clearance and settlement. And for years they have been claiming that NSS is basically a non-issue, while their press geeks and counsel employ mind-numbing doubletalk.
SEC extends limits on naked short selling
MarketWatch, 30 July 2008
The Securities and Exchange Commission has extended an order designed to prevent so-called naked short selling in stocks of major financial companies, including mortgage giants Freddie Mac and Fannie Mae, for another two weeks.
Thomas G. Donlan
Barrons, 28 July 2008
The stock market was a safer place last week and the financial system was somewhat less endangered. How do we know? The Securities and Exchange Commission ordained it.
“The SEC’s mission to protect investors, maintain orderly markets and promote capital formation is more important now than it has ever been,” Chairman Christopher Cox declared on July 15, as the commission took action to “stop unlawful manipulation through ‘naked’ short-selling that threatens the stability of financial institutions.”
Jim Cramer on the Short-Selling Effect
Dealbook, 22 July 2008
James Cramer, the hedge fund manager turned “Mad Money” host, has proposed a solution to the raging controversy over short-selling. Unfortunately, it mostly involves the troubled financial sector getting its act together — and thus making itself immune to the “carpet bombs” that he says hedge funds have been raining down on vulnerable firms like Lehman Brothers.
Continue reading “Article: Jim Cramer on the Short-Selling Effect”
Public Statement by SEC Chairman:
Naked Short Selling Is One Problem a Slumping Market Shouldn’t Have
Chairman Christopher Cox
SEC.gov, 18 July 2008
The demise of IndyMac, coming on the heels of Bear Stearns’ desperate sale to JPMorgan Chase, is a sure sign of the fragility of today’s markets. What’s needed now, more than ever, is reliable information for investors and confidence that trading can be conducted without the illegal influence of manipulation.
THE DOLLAR HAS NO INTRINSIC VALUE : DO YOUR ASSETS?
