Naked Short Selling: The Truth Is Much Worse Than You Have Been Told
By James Stafford – Feb 02, 2021, 3:20 PM CST, OilPrice.com
There is a massive threat to our capital markets, the free market in general, and fair dealings overall. And no, it’s not China. It’s a homegrown threat that everyone has been afraid to talk about.
Until now. That fear has now turned into rage.
The naked truth is this: Investors stand no chance in the face of naked short sellers. It’s a game rigged in the favor of a sophisticated short cartel and Wall Street giants.
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Cormark Securities Inc. and ITG Canada Corp. to pay $1 million to settle SEC charges
The Canadian Press, 24 December 2020
TORONTO — The U.S. Securities and Exchange Commission says Canadian broker-dealers Cormark Securities Inc. and ITG Canada Corp. have agreed to pay a total of US$1 million to settle charges of improper trading procedures. According to the regulator, the two firms provided incorrect order-marking information in a period from August 2016 through October 2017 that caused more than 200 sale orders from a single hedge fund, representing total sales of more than US$660 million, to be mismarked as “long” in violation of SEC regulations. By definition, “long” means the seller actually owns the stock they are selling, as opposed to a “short” if the seller is borrowing stock to sell.
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SEC VS. CORMARK SECURITIES INC.,
21 December 2020
These proceedings concern Cormark’s role in repeatedly causing a U.S. executing broker (the “Executing Broker”) to violate the order-marking and locate requirements of Regulation SHO of the Exchange Act.
From August 2016 to October 2017 (the “relevant period”), Cormark entered more than 200 sale orders for a hedge fund customer (the “Hedge Fund”) into an intermediary broker’s execution management system as “long” orders.2 At the time these orders were entered, the Hedge Fund was not “deemed to own” the stock being sold and did not have a net long position in the stock. Thus, the orders should have been marked as “short” sales under Regulation SHO. The intermediary broker, ITG Canada Corp. (“ITG Canada”), routed the sale orders, with the incorrect order-marking information provided by Cormark, to the Executing Broker, which in turn executed the orders as “long” sales on U.S. exchanges. As a result, Cormark caused the Executing Broker to mismark sale orders as “long,” in violation of Rule 200(g) of Regulation SHO.
PDF (8 pages): SEC VS. CORMARK SECURITIES INC.,