Page 1 of 2 12 LastLast
Results 1 to 10 of 17

Thread: Bloomberg Report on naked shorting

  1. #1
    Brandon Matthews is offline
    Banned
    Brandon Matthews's Avatar
    Joined: Aug 2008 Location: Northeast Posts: 721

    Bloomberg Report on naked shorting

    http://www.bloomberg.com/apps/news?p...TCA&refer=home

    This is a must read! Very long, so grab that cup of coffee first!

  2. #2
    Rook is offline
    Junior Member
    Rook's Avatar
    Joined: Mar 2009 Posts: 25
    I'm glad to see this thing getting some wheels.

  3. #3
    vaporgold is offline
    Member
    vaporgold's Avatar
    Joined: Oct 2008 Posts: 57
    People have been writing to the SEC long before the financial melt down regarding naked short selling.Overstock.com was another example of naked short selling and the SEC does nothing.
    Until enforcement is put under the Dept of Justice nothing will change.Once people go to jail, others get the point.
    imho
    vaporgold

  4. #4
    JohnnyIrishXM is offline
    Mentor
    JohnnyIrishXM's Avatar
    Joined: Feb 2009 Location: Valley Forge ,PA Posts: 1,583
    Brandon,good morning to byou and all..excellent report,but i doubt as you can see in their conclusions itis known,talked about and reaction is So WHAT!!
    The Gaul of the bastards........Good start for shining light for retail investors
    to see what the Stock market really is,LEGAL BOOKIES !!!!!!!

  5. #5
    relmor2003 is offline
    Mentor
    relmor2003's Avatar
    Joined: Oct 2008 Posts: 1,937
    Quote Originally Posted by Brandon Matthews View Post
    http://www.bloomberg.com/apps/news?p...TCA&refer=home

    This is a must read! Very long, so grab that cup of coffee first!
    Bloomberg has always been better than most media agencies. They still have a lot of negatives, but its good to see this article written at least. I definately think you cant do worse than Cox, and they might be looking to find some "villians" in the mess when its all said and done. Look for one big naked short selling case to come to light in the near future. This of course will be well after the market has rebounded. As will the uptick rule reinstatement. RIght when its the least effective. But who knows. I guess anything is better than nothing. More importantly we need to adjust the laws that allow hedge funds to operate outside of public SEC knowledge and filings. They are a company that makes money. Investors enter into it. Money is used to literally manipulate the market.
    If they were forced to track their transactions, even if we see them once a month, I think you would force them to become more of an investment company, or institutional investment company, as opposed to just a large block of money trying to cheat to make gains.

    Hedge funds dont invest, do you think they really invest? (Generalized "you", not you Brandon.) They could care less about fundamentals. There only concern is a guaranteed quick buck, by overloading some poor stock with sell or buy orders, and a million other tactics, mostly covered in deep capture. Looks like email complaints might actually hold some merit now, as I still then encourage daily reports to the SEC from hundreds of investors, everyday it happens, until they stop it. What else can the common investor do? At least you feel you have done all you could. And if something comes of it, maybe Malone and Mel are working right now with politicians to uncover their corruption in how their stock has been traded. You never know whats going on. If its happening, be sure Liberty is now involved in becoming aware of this problem.
    Last edited by relmor2003; 03-22-2009 at 11:12 AM.

  6. #6
    sl62 is offline
    Addict
    sl62's Avatar
    Joined: Jan 2009 Location: Windy C. Posts: 644
    Quote Originally Posted by Brandon Matthews View Post
    http://www.bloomberg.com/apps/news?p...TCA&refer=home

    This is a must read! Very long, so grab that cup of coffee first!
    Good article Brandon.

    The Good:
    >>SEC Chairman Mary Schapiro, who took office in January, has vowed to reinvigorate the enforcement unit after it drew fire from lawmakers and investors for failing to follow up on tips that New York money manager Bernard Madoff’s business was a Ponzi scheme. She has “initiated a process that will help us more effectively identify valuable leads for potential enforcement action,”<<


    The Bad:
    >>The way the SEC processes complaints hinders its ability to respond, the report said.<<


    The Ugly:
    >>While naked short sales resulting from errors aren’t illegal, using them to boost profits or manipulate share prices breaks exchange and SEC rules and violators are subject to penalties. If investigators determine that traders engaged in the practice to try to influence markets, the Department of Justice can file criminal charges.

    Market makers, who serve as go-betweens for buyers and sellers, are allowed to short stock without borrowing it first to maintain a constant flow of trading. <<

    My opinion: Not much will change anytime soon. When passed uptick will help...a little but not much in given exteme cases.

    All in all remember. Yes naked shorting helped take down LEH, BSC, FNM, FRE etc.. but let's face it. The word was out on those and you also had major players plain jumping out their 40th floor windows as well. When the word gets out the ship is sinking it's every man for his or her self.. no uptick rule would have saved those SPs from crashing..people just wanted out..and fast.

  7. #7
    cos1000 is offline
    Senior Member
    cos1000's Avatar
    Joined: Mar 2008 Posts: 402
    Quote Originally Posted by vaporgold View Post
    People have been writing to the SEC long before the financial melt down regarding naked short selling.Overstock.com was another example of naked short selling and the SEC does nothing.
    Until enforcement is put under the Dept of Justice nothing will change.Once people go to jail, others get the point.
    imho
    vaporgold
    If you combine naked short selling with false rumors associated with the company your shorting, as was outlined in Brandon's referenced article regarding Lehman Brothers, then outright fraud is the case for prosecution... I completely agree that the Division of Enforcement located within the SEC needs to be moved to the DOJ. The SEC punitive measures are primarily CIVIL in nature and not Criminal.... In General Law the process usually works the other way when damages are a result of laws being violated... Criminal Prosecution first then Civil Action after Conviction or in many cases even without Criminal Conviction. The OJ case is the most prominent of these in recent times... Civil action resulted was prosecuted even after Criminal Conviction failed.... Currently the SEC does not have either the will or resources to conduct proper investigations or to generate criminal indictments for law breaking activities....IMO..

  8. #8
    relmor2003 is offline
    Mentor
    relmor2003's Avatar
    Joined: Oct 2008 Posts: 1,937
    Quote Originally Posted by cos1000 View Post
    If you combine naked short selling with false rumors associated with the company your shorting, as was outlined in Brandon's referenced article regarding Lehman Brothers, then outright fraud is the case for prosecution... I completely agree that the Division of Enforcement located within the SEC needs to be moved to the DOJ. The SEC punitive measures are primarily CIVIL in nature and not Criminal.... In General Law the process usually works the other way when damages are a result of laws being violated... Criminal Prosecution first then Civil Action after Conviction or in many cases even without Criminal Conviction. The OJ case is the most prominent of these in recent times... Civil action resulted was prosecuted even after Criminal Conviction failed.... Currently the SEC does not have either the will or resources to conduct proper investigations or to generate criminal indictments for law breaking activities....IMO..
    No but there are tons of easy things they could do tomorrow to help stop it.
    1. Require all transactions to be resolved in 3 days. Any Market Maker in violation, or a client using their platform is in violation, will be immediately fined 1 million dollars a day until shares are settled. With computers, this is open and shut, and I will never be convinced this isnt possible immediately.
    2. Require all short sales to be recorded and reported every quarter by funds, institutions, banks, etc... Since they must report share ownership, they must also report shares shorted.(Exposing these short sellers would end the practice immeditately if you found out JP Morgan was shorting Bear Sterns stock, or companies or funds in relation to them, etc..
    3. When level 2 shows suspicious trading activity, that MM is given a warning to locate the client doing it and stopping it. 2nd warning results in a "continued monitering status".
    3rd warning results in the MM losing the ability to trade for one day.
    4th warning... Complete shut down of that MM for one week.(this would of course destroy their reputation, and would hurt their business, so they would never let it get to this point.)
    The problem, with computers now, is correctible tomorrow, if the SEC wanted too. They dont have to "proof" anything, until the MM or client of the MM sues the SEC, then forcing them to take the case to court. If the MM wants to open up their books, and go to court, then they will lose again, even more embarrassingly. So the SEC will have their enforcement, without ever needing to take these issues public. It would all be behind the scenes to avoid the MM's having to be embarrassed.

  9. #9
    relmor2003 is offline
    Mentor
    relmor2003's Avatar
    Joined: Oct 2008 Posts: 1,937
    Interesting video to go with my full disclosure arguement. Interesting they mention Ergen and Apollo group, was about to make a longer, fascinating point, and watch him be interrupted by the fat, angry, jerk of an SOB.
    http://www.cnbc.com/id/15840232?video=1066940681&play=1

  10. #10
    cos1000 is offline
    Senior Member
    cos1000's Avatar
    Joined: Mar 2008 Posts: 402
    relmor, in my statement of the SEC not having the Will or Resources I mean that they won't do what is necessary... They are a highly politicized division of government that was put into effect during the last depression to create the Illusion of transparency, and to have investors beleive the government was leveling the playing field.... Their hasn't been any major reform since then. All of the suggestions in the world won't get them to enforce existing laws, let alone generate new ones, not to mention that any changes will go to their rules committee and never come out.

    Even reinstating an already once existing Uptick Rule will not be meaningful unless accompanied by some % or set Uptick Value, such as a 1/8, .125 cents, or even 1/16, .0625 cents. Without some value assigned, the uptick will be a joke especially for those stocks that trade to 4 decimal places. Keeping the SEC as the responsible agency for enforcement, while trying to maintain the guidelines for reporting of publicly traded companies, monitoring exchanges for proper trade executions, and educating the public and businesses on how to report, is just not realistic. They need to be able to pass off and support the DOJ and FBI in their investigations and eventual procecutions of wrong doers, while maintaining their status as a Commision that establishies the rules and educates the public and businesses on how to comply, and then monitors compliance passing off violators to the DOJ or other Law Enforcement agency as necessary.

  11. Ad Fairy Senior Member
Page 1 of 2 12 LastLast

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •