Tag: DTCC

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Article: Naked Short Selling – How Exposed Are Investors?

Article - Academic

Naked Short Selling: How Exposed are Investors?

James W. Christian, Robert Shapiro, John-Paul Whalen

The Houston Law Review, 10 November 2006

Regulation SHO is a start, but in order to guarantee a fair market place, the SEC must close the loopholes in Regulation SHO and institute comprehensive reforms to the clearing and settlement system. Until the SEC makes these necessary reforms and addresses the DTCC’s mismanagement of the Stock Borrow Program, investors will continue to be exposed to the manipulative potential of naked short selling.

PDF (58 Pages):  HLR Naked Short Selling 2006-11-10

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Letter: NASAA Letter to SEC on Proposed Amendments to Regulation SHO

Letter

NASAA Letter to SEC on Proposed Amendments to Regulation SHO

Joseph P. Borg

NASAA, 4 October 2006

NASAA offers its support of the proposed amendments to Regulation SHO. While we are encouraged that the Commission is adopting a more proactive stance in this area, we believe that much more is necessary in order to regain public confidence in the integrity of U.S. capital markets and protect both the investing public and our nation’s small business interests. NASAA strongly urges the Commission to take all necessary steps to eliminate abusive short selling, and the corrosive practices that surround it, consistent with the Commission’s mission to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.

PDF (22 pages): NASAA Letter to SEC on Proposed Amendments to Regulation SHO

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Testimony: Rule Number S7-12-06 Comments on Proposed Amendments to Regulation SHO

Testimony

Rule Number S7-12-06: Comments on Proposed Amendments to Regulation SHO

Robert Shapiro

14 September 2006

I am Robert J. Shapiro, chairman of Sonecon, LLC, an economic analysis and advisory firm in Washington, D.C. From 1998 to 2001, I was Under Secretary of Commerce for Economic Affairs. Prior to that, I was Vice President and co-founder of the Progressive Policy Institute and Vice President of the Progressive Foundation and continue to be a Senior Fellow of the Progressive Policy Institute. I also served as the principal economic advisor to Governor William J. Clinton in his 1991-1992 presidential campaign, senior economic advisor to Vice President Albert Gore, Jr. in his presidential campaign, Legislative Director and Economic Counsel for Senator Daniel Patrick Moynihan, and Associate Editor of U.S. News & World Report. I have been a fellow of Harvard University, the National Bureau of Economic Research, and the Brookings Institution. I hold a Ph.D. and M.A. from Harvard University, a M.Sc. from the London School of Economics and Political Science, and an A.B. from the University of Chicago.

PDF (16 pages): Rule Number S7-12-06: Comments on Proposed Amendments to Regulation SHO

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Article: Naked Fines

Article - Media

Naked Fines

Liz Moyer

Forbes, 13 September 2006

The U.S. Securities and Exchange Commission has received a deluge of requests to amend short-selling rules it enacted just two years ago as the New York Stock Exchange continues its efforts to enforce existing regulations.

JPMorgan Chase has become the fifth bank to be censured and fined by the NYSE’s regulatory division for violations of trading rules meant to curb abusive short-selling.

Read full article.

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Letter: National Coalition Against Naked Short Selling – Failing to Deliver Securities

Letter

National Coalition Against Naked Short Selling – Failing to Deliver Securities

NCANS

Letter to SEC, 5 September 2006

NCANS is a grassroots organization born of necessity. We are supported by and composed of investors on the receiving end of the negative consequences of naked short selling, long-term unsettled trades, and failed securities entitlements.

In addition to investors and participants, our members include corporate executives concerned about the deleterious effect these practices have on their companies, employees and investors, and their negative impact on corporate governance issues like shareholder votes.

Read full letter.

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Letter: Susanne Trimbath to SEC on Proposed Amendments to Regulation SHO

Letter

Susanne Trimbath to SEC on Proposed Amendments to Regulation SHO

Susanne Trimbath

STP Advisory Services, LLC, 29 August 2006

I am a Ph.D. economist doing research and consulting in finance and economics. I am formerly Director of Transfer Agent Services for Depository Trust Company in New York, and Operations Manager for Pacific Depository Trust Company and Pacific Securities Clearing Corporation in San Francisco. I also was Senior Advisor for KPMG on the USAID Capital Markets Project to design and implement trade clearing and settlement operations during privatization in Russia. Over the last three years I have been a paid advisor to companies, investors and law firms on the issues addressed by Regulation SHO. My comments will reflect my expertise in economic analysis of law and market efficiency, plus securities processing operations.

PDF (14 pages): Susanne Trimbath to SEC on Proposed Amendments to Regulation SHO

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Article: Naked [Short Selling] Horror

Uncategorized

Naked Horror

Liz Moyer

Forbes, 25 August 2006

Suspicious trading last year in shares of Global Links, a small Nevada real estate holding company, was far more intense than previously thought.

Data released to Patch earlier this month had shown trade fails of 10 million shares starting in mid-April, a time when 4 million shares of Global Links were issued and outstanding.

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Article: Lawsuits Accuse “Prime Brokers” of Securities Fraud

Article - Media

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

Uncategorized

‘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: 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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Web: Criminals, Prosecutors, Financial Manipulators, and Their Incestuous Relationships

Web

Criminals, Prosecutors, Financial Manipulators, and Their Incestuous Relationships.

Bud Burrell

Sanity Check via Wayback, 3 April 2006

After the great hoopla of the the Bermuda Short Sting Case, which produced a conviction rate of about 88% of indictees, the silence from the Government on related collateral indictments in pending cases, some more than four years old, is literally deafening.

The Government’s various agencies really have an “NIH” (Not Invented Here) attitude towards grass root developed cases coming up to them not as a direct result of their own investigative initiative. I am aware of case after case taken to various agencies of the Government with substantive evidence attached, which were ignored, black-holed, or thrown back at the victims.

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Web: Comprehensive and Controversial Summary of the History of Central Banking Globally

Web

Comprehensive and Controversial Summary of the History of Central Banking Globally

Bud Burrell, Rodney E. Young

Sanity Check via Wayback, 20 March 2006

The success of the central banking scheme developed into a far-reaching plan described by President Clinton’s mentor, Georgetown Professor Carroll Quigley, “to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the system was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world’s central banks which were themselves private corporations. Each central bank….sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the levels of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world.”

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Web: How Have Brokers, Custodians and Some Exchanges Decided to Compete with their Clients for Investment Returns?

Web

How Have Brokers, Custodians and Some Exchanges Decided to Compete with their Clients for Investment Returns?

Bud Burrell

Sanity Check via Wayback, 20 March 2006

In the original concept of our brokerage, exchange, custody and settlement systems, there was never any confusion about whose assets were the basis of their activities as agents. The assets were those of the clients, who came to the broker and related parties necessary to the transaction to act as an “honest agent” in the purchase and sale of securities. Today, this entire relationship is blurred by conflicts of interest, and outright conversion of assets.

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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

Paper

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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Article: Naked Shorting Targeted

Article - Media

Naked Shorting Targeted

Roddy Boyd

New York Post cited by RGM Communications via Wayback, 16 February 2006

Two state securities regulators have issued subpoenas to get at the trading records of Wall Street’s largest firms in a quest to stamp out the controversial practice of naked short-selling, sources said.

Naked shorting — the tactic of selling shares short without properly borrowing them first in order to bet on a stock’s fall — has been a concern of state securities regulators during the past year.

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