Tag: NYSE

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Testimony: Robert Shapiro’s Comments on Proposed Naked Short Selling Anti-Fraud Rule, 10b-21

Testimony

File No. S7-08-08: Comments on Proposed Naked Short Selling Anti-Fraud Rule, 10b-21

Dr. Robert J. Shapiro

19 May 2008

I am Dr. Robert J. Shapiro, the chairman of Sonecon, LLC, an economic analysis and advisory firm in Washington, D.C. I am also currently a Senior Fellow of the Georgetown University School of Business, Director of the NDN Project on Globalization and a Fellow of the Progressive Policy Institute. From 1998 to 2001, I was the U.S. Under Secretary of Commerce for Economic Affairs. Prior to that, I was the Vice President and co-founder of the Progressive Policy Institute, Vice President of the Progressive Foundation, and Legislative Director and Economic Counsel for Senator Daniel Patrick Moynihan. I have advised numerous public officials, including President Bill Clinton, Prime Minister Tony Blair, Vice President Al Gore, and Senators Joseph Lieberman, Hillary Clinton, John Kerry and Evan Bayh, as well as many large U.S. and foreign corporations and financial institutions. I hold a Ph.D. and M.A. from Harvard University, as well as a M.Sc. from the London School of Economics and Political Science, and an A.B. from the University of Chicago. I also have been a fellow of Harvard University, the National Bureau of Economic Research, and the Brookings Institution, and I have conducted extensive research and analysis involving U.S. financial markets.

PDF (6 pages): File No. S7-08-08: Comments on Proposed Naked Short Selling Anti-Fraud Rule, 10b-21

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Article: The ‘Phantom Shares’ Menace

Article - Media

The ‘Phantom Shares’ Menace

John W. Welborn

Securities & Exchange,  24 April 2008

In 1985, the National Association of Securities Dealers (nasd) commissioned Irving M. Pollack, a securities law expert and former Securities and Exchange commissioner, to conduct a comprehensive review of short selling in nasdaq securities. The nasd sought to determine what, if any, additional short selling regulation was needed for the nasdaq market. The result was the now-famous “Pollack Study,” which described the short selling landscape of the day and made important recommendations regarding the disclosure, reporting, and settlement of short sales.

PDF (10 pages): The ‘Phantom Shares’ Menace

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Article: SEC Will Be Investigated in Probe Sought by Senate’s Grassley

Article - Media

SEC Will Be Investigated in Probe Sought by Senate’s Grassley

Otis Bilodeau

Bloomberg via Wayback, 26 October 2006

The U.S. Securities and Exchange Commission, already under scrutiny for its handling of a trading probe that entangled Morgan Stanley Chief Executive Officer John Mack, now faces a broad review by government auditors of its management and methods for policing the financial markets.

The Government Accountability Office agreed last week to investigate the SEC’s enforcement division and compliance department after requests by Senator Charles Grassley, an Iowa Republican who questioned whether the agency gave Mack special treatment. Grassley asked the GAO to examine the SEC’s “planning, oversight, control and other management processes” and gauge whether the agency does enough to oversee regulators at the New York Stock Exchange and NASD.

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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.

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Article: NYSE fines five firms for rule violations

Article - Media

NYSE fines five firms for rule violations

James Langton

Investment Executive, 13 September 2006

NYSE Regulation announced that it has disciplined five firms for a variety of rule violations.

J.P. Morgan Securities Inc. was disciplined for violation of SEC rules on short sales, NYSE order rules and supervisory violations. It consented without admitting or denying guilt to findings of operational deficiencies concerning Regulation SHO, violating NYSE order rules, and books and records and supervisory violations.

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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: Hedge Fund Hell

Article - Media

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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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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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: Stockgate Report – Investrend Article on Targeting of DTCC by NASAA members for Subpoenas

Web

Stockgate Report: Investrend Article on Targeting of DTCC by NASAA members for Subpoenas

Bud Burrell

FinancialWire cited by Sanity Check via Wayback, 14 February 2006

FinancialWire has learned from a highly-placed informed source that the Depository Trust and Clearing Corp. appears to be a target of an enforcement action by the multi-state task force formed by the North American Securities Administrators Association.

If so, this would explain a recent flurry of posts and press releases by the DTCC denying any complicity in the exploding national illegal manipulative trading scandal known as StockGate, embroiling Netflix (NASDAQ: NFLX), Overstock (NASDAQ: OSTK), Krispy Kreme Donuts (NYSE: KKD) and Martha Stewart OmniLiving (NYSE: MSO), as well as provide a measure of validation to rampant rumors that the clearing house, jointly owned by the NASD and the New York Stock Exchange has received subpoenas.

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Article: Strategic Delivery Failures in U.S. Equity Markets

Academic

Strategic Delivery Failures in U.S. Equity Markets

Leslie Boni

Journal of Financial Markets, 1 February 2006

Sellers of U.S. equities who have not provided shares by the third day after the transaction are said to have “failed-to-deliver” shares. Using a unique data set of the entire cross-section of U.S. equities, we document the pervasiveness of delivery failures and evidence consistent with the hypothesis that market makers strategically fail to deliver shares when borrowing costs are high. We then show that many firms that allow others to fail to deliver to them are themselves responsible for fails-to-deliver in other stocks. Finally, we discuss the implications of these findings for short-sale constraints, short interest, liquidity, and options listings in the context of the recently adopted SEC Regulation SHO.

PDF (40 pages): Strategic Delivery Failures in U.S. Equity Markets

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Article: Foul Play Among the UAL Shorts?

Article - Media

Foul Play Among the UAL Shorts?

Gene Marcial

Bloomberg, 8 October 2002

The shorts have crowded in on UAL in a big way, helping to push the parent of financially troubled United Airlines much closer to bankruptcy. The stock has nosedived from $20 a year ago to $2 on Oct. 8. Right after US Airways filed for bankruptcy protection on Aug. 11, UAL (UAL ) announced that it, too, might have to resort to Chapter 11 bankruptcy protection. UAL shares were then trading at $4.

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