Oh yeah it will. He said it, so I don't have to . He's almost right, but he underestimates the vitriole and scope of the bureau. The reporters are all gearing up for the Perp Walk. A little booze, cameras, mikes......... Couldn't happen to a nicer bunch. Jim Cramer Blog Shorts, Be Prepared to Defend in Court By Jim Cramer RealMoney.com Columnist 9/25/2008 6:02 PM EDT URL: http://www.thestreet.com/p/rmoney/jimcramerblog/10439426.html Notice how no shorts rose to the occasion today? Nobody put anything out to speak of? Perhaps it is the spreads on the puts. Perhaps it's the short-selling exposure, not just to the market but to the record-keeping. Or perhaps it is justice, or more likely Justice, as I believe the hedge funds fear what's about to happen in this country. And you can't blame them. We are already seeing something big happening against the fallen firms; the FBI's making the calls. When the FBI gets involved, the matter is not civil, it's criminal, and that's the Justice Department, not the SEC. That, of course, means SHOW TRIALS! You can see it coming. There will be big trials of the people who ran AIG (AIG) and Lehman for allegedly not being honest about the financials. Same with Fannie Mae (FNM) and Freddie Mac (FRE) . But the show trials that will rock Wall Street are the ones coming against the short-sellers. I foresee show trials of people who "got it right." Just like we had to have show trials of those behind Enron and Worldcom and those behind the IPO boom, we for certain are going to see trials of the people who profited from this crisis. It will be wrong. It will be horrible. It will be a nightmare for people who did homework and figured out the worthlessness of a Lehman or an AIG. But I know the government. The pressure to bring prosecutions against those who made money will be too great. That's what I believe is initially behind the SEC rule to disclose your shorts. If they force you to disclose your short positions, they can then look back to see what you have done right. They will then ask for email correspondence, get the tapes of your comments to the trading desks and they will depose fired employees to try to nail you. This is what they do. It is how they get their job done, and their job is not to find out who is innocent or guilty. That's an abstraction. An irrelevance. Their job is to bring in scalps and to make cases against people who may have been "in on it." No, I am not saying destroy records. You will be found guilty immediately. I am not saying that you necessarily have to be worried because they are not going to go after everyone, just the biggest and the most vocal. But I have, in my 25 years on the Street, seen it all. I smell these trials. I smell the need for them. And I just want to let people know how it works. Because I have been there -- read Confessions of a Street Addict, and it is all Kafka and very little truth. But it will certainly end shorting much more quickly than any actual ban on shorting or paperwork on shorting, or larger spreads or a return of the uptick rule and the end of naked-short abuse. Rough times lie ahead, shorts. Again, it is an abomination about what will occur. But if you believe they are going to call you in to give you the Congressional Medal of Short-Selling, it ain't going to happen. Random musings: Senator Shelby is not to be trusted. He does seem intent on killing things. He has no idea what he could unleash here, and I can only hope his petulance can be contained. At the time of publication, Cramer had no positions in stocks mentioned.
Alan Farley The Hunt For Witches 9/25/2008 7:16 PM EDT In line with JJC's latest about criminal investigations of short sale activities, I've been thinking about an even darker aspect. What are the chances for involvement of the anti-terrorism statues, Patriot Act and/or RICO? Not saying there is a evil mastermind hiding in the bushes. But here's a theory: a cadre of big boys sees a huge market inefficiency, i.e. CDS/common/rating agencies/rumors and realizes they can make billions bringing down the financial system. In whole, it's an attack against USA institutions. Therefore an attack against the USA. Conspiratorial but not that far fetched. Position: n.m.
What because Cramer says something you believe it? He's an idiot and you have called him that in the past. Uptick rule still blows no matter what you say.
Here's a remarkable article. We've wondered for years why mutual funds and pensions, slaughtered like the rest of us, never spoke up. I'm starting to think that the markets will look like 1915 when this is done. LEHMAN LOSSES THREATEN LOANS RISKS MOUNTING ON SHORT SELLING Comments: 0 Read Comments Leave a Comment By KAJA WHITEHOUSE Posted: 3:42 am September 26, 2008 The squeeze on short sellers could continue even after the Securities and Exchange Commission's ban on short selling is lifted - and this time, it will have nothing to do with government intervention. At issue is a behind-the-scenes discussion about a little-known practice that fuels short selling known as security lending. The concern is that the entities that engage in this business, primarily mutual funds and pensions, may have lost money when Lehman Brothers went bankrupt. Now the industry is debating whether the returns generated from lending is worth the risk. "I think every fund is reviewing that exact calculation to ensure their shareholders are not damaged," said Susan Wyderko, executive director of the Mutual Fund Directors Forum, who declined to comment on fund losses. In return for lending securities to banks like Lehman, funds get a small fee. The loans are also backed by collateral, often cash, in case of problems like bankruptcy. Seems safe enough, but there are risks. One is that funds like to invest the collateral in interest-bearing funds to further boost profits. But with the credit markets in shambles, even cash funds have lost money. Now, the fear is that some funds lost both their securities on loan to Lehman as well as some of the cash collateral backing the loans. "When this comes out, I think the mutual fund trustees are going to be under such pressure en masse to stop lending their securities," said one hedge-fund manager. The manager said some mutual fund firms lost more money in the week that Lehman went under than they generate on security lending in an entire year. Indeed, a mutual fund firm might generate $100 million to $200 million a quarter by lending securities worth tens of billions of dollars. "Index funds especially are saying, 'Why in the world are we doing this?" said one industry insider. Officials from Vanguard and Bank of America's Columbia funds declined to comment. Both firms halted their lending programs in light of recent market volatility, but say they will likely resume when things settle. The $222.7 billion California Public Employees' Retirement System lost no money lending to Lehman, and it has no plans to curtail its program, said a Calpers spokesman. Calpers has also temporarily banned lending to a handful of firms in light of the Lehman bankruptcy. kaja.whitehouse@nypost.com
And Thain blames ratings agencies and short sellers.......... http://www.investmentnews.com/apps/...20080922/REG/309229943/1042&template=printart Isn't it odd, that firms who made a ton of money off Prime Brokerage and short sellers were brought down by such, in their opinion of course, and now complain. This is going to be interesting to watch. The not so richa nd powerful are still somewhat rich and somewhat powerful, and will exact revenge. They always do.
07:29 Cuomo probes swaps trading - WSJ WSJ reports New York state's attorney general, Andrew Cuomo, has expanded his investigation into short selling of stocks to encompass trading activity in the credit-default swap market, according to a person familiar with the investigation. Mr. Cuomo's office Thursday subpoenaed data from market-data providers. It believes the contracts may have been abused in schemes by short-sellers to spread rumors about a company and profit from their negative bet in the stock market, says the person familiar with the probe. Are you starting to understand now? It will become more apparent as the days wear on. Cuomo has criminal powers. A few of you have blamed me for bringing this to your attention before even the media. Now, you can see it doesn't matter. You're all pyriahs to the public. Thank SAC, 3rd Point, Ackman, Einhorn. They've got theirs. How are you doin'?
This shocks even me. Remember, all this is coordinated w/i Western nations. http://www.isfmagazine.com/includes/news/PRINT.asp?SID=711619&ISS=24957 ISF MAGAZINE - DAILY NEWS DAILY NEWS - 25 September 2008 Short selling restrictions could become permanent, says Gordon Brown The UK Prime Minister, Gordon Brown has said that he is considering making restrictions on short selling permanent once the current regulations expire in January. Speaking on the BBC's Radio 4 Today programme, Brown said he would be reviewing the rules over the next four months. "I think you'll find new rules for the future," he said. He also said: "Short-selling is something that has existed in the markets for years, but when groups of people are exploiting a difficult economic situation it is right to stop the short-selling." The current rules will be reviewed by the FSA after four months. All material subject to strictly enforced copyright laws. © 2008 Euromoney Institutional Investor PLC.
Cuomo can believe anything he wants to, it doesn't make it true. If these companies are so damn cheap, then everyone should be buying them hand over fist. But they aren't. That should tell you something. I bet you Cuomo sold all of his shares awhile ago.
I agree. Also Cuomo can subpoena all the data he wants, the results will prove inconclusive. Academics request and receive data to conduct studies and I don't recall any indictments as a result.