Naked Short Selling

Whether or not the assertions in one particular post will be immediately confirmed by what is revealed, is besides the point. If you were in the market, you would understand that. People who are in the market, know what is going on. There are still stocks that find their appropriate price levels relative to others via fundamentals, news and other factors that make sense. But if you happen to be in one of those stocks when the players come in and want to cause some volatility, if you are in it on the wrong side, you're going to get hammered, for no good reason other than an exaggerated response to some minor news that will have no real significant impact one way or other or some other artificial machination.

Because many of these moves are not driven by any discernible rationale, traders outside of the loop are getting bagged left and right. Why do you think people in the market follow certain players in or out of a stock blindly? It's because they know that these players always win except when they're doing a head fake and end up bagging them. Ulcers. If you think it's because these certain few are genius, you're wrong. No one is that right all the time, not billion dollar right.

These are powerful people who have gotten away with things others would never be able to, and some just wouldn't even if they could, because of how insanely destructive the effect.

Do you think that Congress held hearings because they had nothing better to do with their time? Do you think that the Fed's recent expressed concern over the influence of hedge funds comes out of nowhere? Do you think the many trials that are going on all lack foundation? There is a growing concern and interest, the collective consciousness is beginning to get a sense about what is going on here. On a macro level, hedge funds are creating an ever-widening chasm between the rich and everyone else. On a micro level, people are losing out trade by trade. Somewhere between the both, companies are losing the hard earned cash that they need to grow their companies, invest in research and development and pay their employees a decent wage. Some companies have just gotten wiped out entirely.

Those who are still managing to do well despite the chaos aren't going to start complaining, they're just going to keep on pushing blindly through all of this hoping that they won't get caught on the wrong side when things turn. And things will turn.

The sign of intelligence is to be able to recognize subtle variances and larger patterns that are complex. That you seem to be heavily invested in denying the overall preponderance of evidence in favor of petty arguments about one piece in a puzzle that may or may not be revealed as evidentiary, speaks of a very literal point of view and one that is not informed.

But we've gone over this territory before and still you rattle on.

 

You were the one berating me on my post saying that Greenberg is most likely innocent of flytiger's accusations. So you were the one who picked out one piece of the puzzle and highlighted it.

As I have stated numerous times, naked shorting is illegal and should not be allowed. However, there is no evidence that it is harming this country to the extent that you (and flytiger) say it is. My assertion that the market will take out the naked shorters if the company in question has good fundamentals has never been refuted (for example, flytiger continually hinted that DNDN was being naked shorted - well the naked shorters got hurt badly on that one). My assertion that there is probably an equally large problem of people hyping stocks has never even been touched by the naked shorting crowd. As long as the prices of companies stocks go up, then everything is great, right?

This whole argument comes down to prices of securities and it is very hard to argue that the price of a stock like OSTK is "incorrect." What is the correct price? What is the correct price of all the securities that are being naked shorted?

 

"You can't possibly be someone who works on the street, if you had, even for a day, you would have had that fierce sense of 'I know it all', knocked right out of you."

I love it. I know someone who has never worked on the street and knows it all - Pope Byrne.

 

When they train you knuckleheads at "Flunky Basher School", do you have little crib sheets???

"If they say, "Companies are hurt by naked shorters", you say:

"they're all shit companies"

"If they say, "naked shorting artificially depresses the price of stocks, hindering the companies to do business, and raise money at favorable terms" You say:

"they're all shit companies, and there's is no proof of that."

If they say anything you can't comprehend because it is above you intelligence level , you say...

"Byrne is crazy."

It's over pal. Mr. Big's Lear Jet is warming on the runway. He's gone and you have to answer the questions. Oh, they didn't tell you that? Oh, wait till the public catches on. Schumer won't even help you then.

Now, you'll have to excuse me, because I have to figure out how to wipe my ass with one piece of toilet paper. If Sheryl says it 's so, it's so. If it doesn't work, I'll have to resort to printing out Nutsack posts, and using those. And if guys don't start being nice, I won't visit you in prison. I make a mean Chocolate Cake with the rattail file filling.

 

" I make a mean Chocolate Cake with the rattail file filling."

Once upon a time I worked in a hardware store. This pretty good looking girl came in and asked for something to cut metal. I could tell she wasn't too sure of what she wanted so I sold her a bunch of hack saw blades.

About two weeks later on a Sunday, I was walking back home from a hike with my dog and there was a strange car in the driveway and I could see through the picture window two older men inside talking to my wife. Dah ta dah dah dum.... Joe Friday and partner arrested a girl with two hacksaw blades in her sneaker at the county jail.

She probably didn't know how to bake.

 

I think you should go back and read what I wrote again. I said no such thing as "Greenberg is most likely innocent of flytiger's accusations". My inference was that any one single fact is almost inconsequential at this point considering all that has been revealed.
Perhaps the fact that your cognitive abilities are so impaired, you can't comprehend what you read, you repeat yourself ad nauseum. I mean, if you can't read, how could you be relied upon to think? Oh, that's right, the thinking part is too hard so you're just going to drown out the facts with semantic satiation until everyone holds their ears.

 

Maybe they read the paper that started the thread, but forgot about it. Or, maybe they didn't read it at all, which is likely. I don't have the interest to go back and pick bits and pieces for the peanut gallery. I think it well documents the harm caused by this deception.

But, then again, that's just me.

 

Dr. Byrne delivered an address last nite in NYC for the Economist. The text answers most questions posed here for probably the thousanth time. You'll notice he does not talk about OSTK. As he has said many times, this is not about OSTK. Truth twisters, have at it. No harm to the markets, eh?

Are hedge funds evil? No, yet evil is being done. The New School’s great Hannah Arendt explored the banality of evil. She described how normal people lacking both monstrosity and malice but with ordinary human weakness can perform individual acts that, when combined with those of others and with institutional failures, sum to evil. The evil of which Arendt wrote was infinitely more egregious than tonight’s topic but her model of evil is right on the money.
A normal trade is an exchange of stock for money. You give me money, I give you stock. Suppose I take your money but don’t have the stock I sold you. Most of you would get in trouble for that, but for hedge funds and brokers a loophole exists allowing them to deliver IOU’s. I take your real money, but deliver a stock-IOU. You won’t even know it. The loophole was created so that a tiny clerical error would not seize up the system. But truckloads of IOU’s are now driving through the loophole while people’s real savings are extracted in return.
In a hearing last July SEC Chairman Christopher Cox said, "The Commission is particularly concerned about persistent failures to deliver in the market due to loopholes in the Regulation… intentionally failing to deliver stock …is market manipulation that is clearly violative of the federal securities laws." By the way, “Clearly violative of the federal securities laws” is lawyer-speak for, “It’s illegal,” and it has been, since 1934.
My concern is not legality, but that our system does not distinguish IOU’s from real shares, so the IOU’s take on lives of their own, circulating as "phantom shares” in our markets. They create three problems: small, medium and large.
First: phantom shares make a hoax of voting. Bloomberg Markets’ ran an exposé on “billions of borrowed shares that create multiple votes that corrupt corporate elections. Decisions hinge on millions of votes that shouldn’t be counted." An industry CEO says, "It is an abomination. we have no idea who’s entitled to vote and who isn’t. It’s nothing short of criminal." Says another, "There are votes cast twice on almost every matter of substance. It definitely affects …corporate elections." How often? The Securities Transfer Association looked at 341 elections: it found overvoting in 341. Bloomberg predicts "double and triple voting on one share will continue to make a mockery of shareholder democracy." Why care? After Enron, Sarbanes Oxley was crafted to fix corporate governance. But that’s built on corporate democracy, which is built on corporate voting, which is now, demonstrably, built on quicksand. That’s the small problem.
Second, selling things you don’t deliver warps prices (that’s why it’s “illegal”). One FOIA response revealed a stock with 40% of its volume failing to deliver some days. Accumulated phantom shares are sometimes a multiple of real stock. Clinton’s Undersecretary of Commerce for Economics, Robert Shapiro, wrote, "There is considerable evidence that market manipulation through naked short sales has been more common and widespread than anyone suspected." His initial work found 200 firms destroyed with a market loss of more than $105 billion, but says his recent work on “massive naked short sales": "this … manipulation has occurred in many hundreds and perhaps thousands of cases …. Illicit short sales on such a scale or anything approaching it point to grave inadequacies in the current regulatory regime." That is the medium problem.
The 3rd problem is there may be more IOU’s in the system than liquidity, in which case we’ll see a vapor-lock that makes 1929 look like a tea party. That’s the big problem. Is it true? I don’t know. A settlement executive under oath for confirmation as New Jersey Treasurer said: "failures to deliver of securities is endemic." SEC economist Leslie Boni writes FTD’s are pervasive, intentional, persist 56 trading days on average, and some, years. SEC FOIA responses reveal one nook of the system with 500 million unsettled shares. Other crannies remain unknown: hence, so is the sum of nooks and crannies. Deliberately failing has been illegal for 73 years, but 2 years ago SEC grandfathered FTD’s in the system. The SEC website explains, "The grandfathering provisions were adopted because the Commission was concerned about creating volatility where there were large pre-existing open positions" (those are the same "large pre-existing open positions" whose existence a year previously they denied).
Disquieting glimpses of a market warped by hundreds of millions of persistent unsettled trades ruining hundreds or thousands of companies. An SEC "concerned about creating volatility where there [are] large pre-existing open positions." Evil is done, but not by one pair of dirty hands. Specks of dirt taint hands at stock loan desks, option market makers, and (yes) hedge funds. Their minor individual transgressions create the collective result of hijacked corporate elections, ruined firms, a crack in our financial system draining the savings of the citizenry, and possibly, a latent derivative risk no one can measure until the day it generates volatility that is anything but banal. I commend The New School and The Economist and for assembling here some who can address these issues.

 

I wasn't saying that you said that. I said that Greenberg is most likely innocent. Maybe I should have wrote "You were the one berating me on my post that said Greenberg is most likely innocent..." instead of "You were the one berating me on my post saying that Greenberg is most likely innocent..."

However, you did attack me for my post on Greenberg. And then later you accuse me of highlighting this one angle (Greenberg) when flytiger and you were the ones highlighting it to begin with. So whatever, I don't agree with your assertion.

So I guess you are saying that I can't read because you falsely assumed that I wrote that you said that Greenberg was innocent? You are certainly grasping for straws here.

The fact that you bring nothing to this argument but put downs and no class is telling.

 

Does anyone suppose a company subjected to naked short selling and it would be to the companies benefit?

Suppose you had a co on reg sho list forever (the company prefers it). The company is profitable yet no shares available to lend. Institutions are buying the stock yet the price stays "depressed" or fails to go up. The institutions ( including management) are buying the stock to lend the shares @ 19%.

The co anonmysiosly feeds Greenberg et. al negative news, this action supports the hard to borrow and secondary effect keeps the vig high.

This is risk free money for institutions all the while the company keeps banging out the profits paying dividends and buying back their own stock, creating higher interest payments via less stock in market place.

Comments? fly and others.