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Article: Hedge Fund Hell

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Hedge Fund Hell

Liz Moyer

Forbes cited by RGM Communications via Wayback, 28 July 2006

Toronto-based Fairfax Financial Holdings filed a $5 billion lawsuit against SAC Capital, Rocker Partners and a number of other hedge funds, claiming they manipulated the insurance company’s stock, shearing its market cap by one-third.

Earlier this week, the regulatory arm of NYSE Group, fined Daiwa Securities America, Goldman Sachs Execution & Clearing, Credit Suisse Securities, and Citigroup Global Markets $1.25 million for violations of Regulation SHO–a rule put in place in January 2005 to clamp down on abuses–related to how they handle and monitor short-sale transactions by hedge funds and other clients.

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Article: Lawsuits Accuse “Prime Brokers” of Securities Fraud

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Lawsuits Accuse “Prime Brokers” of Securities Fraud

Wayne Jett

San Gabriel Valley Tribune cited by RGM Communications via Wayback, 19 July 2006

Two class-action lawsuits filed in Manhattan federal court in April allege fraud by the world’s largest “prime brokers” in securities lending practices.

Goldman Sachs, Bear Stearns, Lehman Brothers, Morgan Stanley, Merrill Lynch, Citigroup, Banc of America Securities, Credit Suisse, Deutsche Bank Securities, UBS Financial and Bank of New York allegedly charge high fees to lend securities for short selling, but fail to deliver the securities sold short by hedge funds.

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Memorandum: Short Sales on the New York Stock Exchange: Their Share of All Trades and the Types of Companies Most Likely to be Sold Short

Memorandum

Short Sales on the New York Stock Exchange: Their Share of All Trades and the Types of Companies Most Likely to be Sold Short

Robert J. Shapiro

Sonecon, July 2006

We analyzed the extent and focus of short sales of New York Stock Exchange (NYSE) companies over a six-month period, February – July 2006.

    • More than one-fourth of all NYSE shares traded are sold short, or about 330 million shares out of 1.3 billion shares traded daily.

    • The proportion of shares traded that are sold short is inversely related to a company’s share price: Among NYSE companies selling for $20 or less per share, short sales account for about 30 percent of all shares traded, compared to about 23 percent of all shares traded in companies selling for $40 or more per share.

    • The proportion of shares traded that are sold short is inversely related to a company’s total market capitalization: Among NYSE companies with market caps of $3 billion or less, short sales account for more than 29 percent of all shares traded, compared to 23 percent of the shares traded in companies with market caps of over $10 billion.

    • The proportion of shares traded that are sold short varies by industry. Short sales account for nearly 29 percent of all shares traded in companies that produce discretionary consumer goods and services, including automobiles, appliances, textiles and apparel, hotels and restaurants – compared to less than 23 percent of all shares traded in companies in health care and consumer staples, including food, beverages, tobacco and household products.

PDF (3 pages): Short Sales on the New York Stock Exchange: Their Share of All Trades and the Types of Companies Most Likely to be Sold Short

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Notice: Speech by SEC Chairman Cox on Proposed Amendments to Regulation SHO

Notice

Speech by SEC Chairman Cox on Proposed Amendments to Regulation SHO

12 July 2006

The next item on our agenda is the serious problem of abusive naked short sales, which can be used as a tool to drive down a company’s stock price to the detriment of all of its investors. The Commission is particularly concerned about persistent failures to deliver in the market for some securities that may be due to loopholes in the Commission’s Regulation SHO, adopted just two years ago.

Read full transcript.

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Article: Covering Up Naked Shorts

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Covering Up Naked Shorts

Harvey Pitt

Forbes, 11 July 2006

As crisis after crisis afflicts the business community and our capital markets, all too often the response is a form of reverse laissez faire. Business waits for government to tell it three things: if it has done something wrong, why it’s wrong and how to fix it. The ineluctable result is that, like Rick’s crooked police pal, Captain Renault, in the movie Casablanca, we’re “shocked, shocked to discover” we don’t like the government’s responses.

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Video Series (1 + 9): Dark Side of the Looking Glass

Video

Judd Bagley: This presentation, created in 2006, launched the popular market reform movement. Overstock.com CEO Dr. Patrick Byrne explains illegal naked short selling, its roots and risks, in terms anybody can understand. It consists of short illustrated videos and then a final uncut full audio.

Robert Steele: This website is dedicated  to PB.

Continue reading “Video Series (1 + 9): Dark Side of the Looking Glass”

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Article: Dismantle the SEC

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Dismantle the SEC

Christopher Byron

New York Post cited by RGM Communications via Wayback, 3 July 2006

It looks like the Securities and Exchange Commission has finally come up with a plan for dealing with the devastating Court of Appeals decision two weeks ago that nullified the SEC’s efforts to regulate the hedge fund industry.

The strategy: Do nothing – except perhaps pout a bit and blame everything on the media.

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Article: Deutsche Bank Settles Fraud Case

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Deutsche Bank Settles Fraud Case

Sheryl Jean

St. Paul Pioneer Press, 29 June 2006

Deutsche Bank has settled a lawsuit filed against it by Stockwalk Group to recover losses incurred as part of a massive securities fraud allegedly orchestrated by the German financial giant, a fugitive Saudi arms dealer and other individuals that bankrupted the Minneapolis-based securities firm.

Terms of the settlement, reached last week, are confidential. Local industry insiders estimated the settlement was for tens of millions of dollars.

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Article: Hedge Hogs

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Hedge Hogs

Liz Moyer

Forbes, 28 June 2006

So who should be overseeing the $1.2 trillion hedge fund industry? Apparently no one is now. But the U.S. Senate Judiciary Committee has two ideas.

Either the nation needs new legislation to tackle allegations of widespread trading abuses by the hedge funds, or law enforcement officials should simply be encouraged to do the right thing with laws they already have at their disposal?

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Article: Investigator claims he was Fired for Hedge Fund Inquiry

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Investigator claims he was Fired for Hedge Fund Inquiry

Andrew Clark

The Guardian cited by RGM Communications via Wayback, 24 June 2006

The low-profile, high-earning world of hedge funds suffered a jolt yesterday as allegations surfaced of political influence and insider dealing at one of America’s most prominent players, Pequot Capital Management.

A former investigator at the Securities and Exchange Commission has disclosed that the authority has been examining suspicious trades at Pequot – a Connecticut-based fund which has $7bn (£3.8bn) under management and operates from offices in both the US and Britain.

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Article: ‘Naked’ short selling is center of looming legal battle

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‘Naked’ short selling is center of looming legal battle

Companies on the defensive seize upon an aggressive form of shorting

Alistair Barr

MarketWatch, 14 June 2006

By one contentious estimate, it’s a big problem plaguing more than 10% of stocks on the New York Stock Exchange and Nasdaq. An NYSE probe into whether naked shorting was used to force down shares of Vonage Holdings Corp. VG, +3.53% lower during the Internet phone company’s May initial public offering has added fuel to the fire. See full story.

Continue reading “Article: ‘Naked’ short selling is center of looming legal battle”

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Article: Overstock.com dukes it out with short sellers

Article - Media, Publications

Overstock.com dukes it out with short sellers

The Associated Press, 12 June 2006

Most people buy stock hoping the price goes up, but hedge fund manager David Rocker was “shorting” shares of Utah-based Internet retailer Overstock.com Inc., betting the share price would decline.

Rocker’s fund was making a legal bet that Overstock shares in 2004 were overvalued and due for a correction. Overstock.com CEO Patrick Byrne, however, sued, accusing New York-based Rocker Partners of collaborating on disparaging reports with the stock-research firm Gradient Analytics of Scottsdale, Ariz., while Rocker was shorting the shares. Continue reading “Article: Overstock.com dukes it out with short sellers”

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Article: Byrne caring and generous

Article - Media, Publications

Byrne caring and generous

Deseret News, 29 May 2006

I read Lee Davidson’s annual article on the top political contributors in Utah. What should be written is a companion piece on how much money to charity and research these men and women give annually. The amount surpasses political donations by millions.

Mr. Davidson goes in great detail about Dr. Patrick Byrne of Overstock.com. The people of Utah should know about another side of Dr. Byrne’s generosity. Patrick gave $100,000 to the Boys & Girls Clubs of South Valley this year without us asking. Nor did he seek any acclaim or recognition. He did it because he cares about kids and the potential of every child. Continue reading “Article: Byrne caring and generous”

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Article: Brokers in an Uproar over Utah Law Cracking Down on “Naked Short Selling”

Article - Media

Brokers in an Uproar over Utah Law Cracking Down on “Naked Short Selling”

Lincoln Journal Star cited by RGM Communications via Wayback, 28 May 2006

A bill approved by the Utah Legislature is causing an angry revolt among Wall Street firms with Utah operations.

The measure cracks down on a stock trading practice defended by some as necessary for orderly markets and assailed by others as easily exploited for stock manipulation.

At issue is short selling, the investors’ practice of borrowing stock and selling it, hoping the share price declines so they can buy cheaper shares, return them to the lender and pocket the difference.

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