http://www.cultureproject.org/index.php?option=com_content&task=view&id=49 http://cultureproject.org/video2/archivepages/hedge2.html Are HedgeFunds evil????
A criminal probe by the feds may reveal some of the mysteries of short sellers by Matthew Goldstein It may not have the cachet of mergers and acquisitions or leveraged buyouts, but the little-known business of securities lending is one of Wall Street's most lucrative. Investment banks rake in roughly $10 billion a year on the fees they collect for lending stocks and bonds to so-called short sellersâintensely secretive hedge funds and other professional traders who bet on falling prices. Now a long-running criminal investigation may reveal some of what actually goes on among the traders, Wall Street investment firms, and independent intermediaries who help make the mysterious deals happen. BusinessWeek has learned that federal prosecutors in Brooklyn, N.Y., may be close to charging a number of current and former employees of several Wall Street firms with taking part in a complex kickback scheme that may have collectively cost the financial houses and short sellers millions of dollars in higher and unnecessary fees. Already, at least three people have taken pleas in exchange for cooperating with prosecutors, according to some people close to the nearly 18-month-long probe. Drawing the most scrutiny from investigators are current and former employees at the stock loan desks of Bear Stearns (BSC) and Morgan Stanley (MS), say sources close to the investigation. Former and current employees of Goldman Sachs (GS), Janney Montgomery Scott, Merrill Lynch (MER), and Nomura Securities are also being investigated. Officials at all of the financial firms and a spokesman for Roslynn Mauskopf, U.S. Attorney for the Eastern District of New York, declined to comment. Sources say authorities from the U.S. Attorney's office are looking into allegations that some employees on the stock loan desks received kickbacks or other improper cash payments from so-called stock-loan finders, independent middlemen who sometimes track down shares for Wall Street firms to lend to investors. It is anticipated that the prosecutors will likely claim that some employees on the stock loan desk unnecessarily referred work to the finders, who did little to justify their fees and only added to the cost of arranging a stock loan. A Word of Warning In a classic short sale, a trader borrows shares from an investment firm and sells them. If the stock falls as expected, the short seller can pay back the loan and make a profit by repurchasing the shares at a lower price. When the investment firms don't have enough shares on hand in their inventory, they sometimes seek out independent finders, who work the phones, calling friends, relatives, and buddies at other stock loan desks to make up the difference. This chummy relationship between finders and stock loan employees, say people familiar with the investigation, is what first piqued the interest of prosecutors, who may worry that the finders aren't providing a legitimate service. This isn't the first time that the business has come under fire. Two years ago the New York Stock Exchange (NYX) issued an advisory opinion, cautioning Wall Street firms about continuing to do business with finders, saying: "We have seen only limited instances where a finder is actually providing services that an effective [in-house] stock loan department could not provide." The NYSE then began cracking down on abuses, fining two firms with paying "unjustified" and "sham" finders' fees to arrange stock loans. But regulators at the NYSE, along with the Securities & Exchange Commission, put much of their investigation on hold as the criminal inquiry into the alleged kickback scheme began heating up. Michael Bachner, a New York criminal defense attorney who represents two individuals involved in the current investigation, says he's still hoping prosecutors will determine that what they've found amounts to nothing more than regulatory infractions. John Tabacco Jr., chief executive officer of Locatestock.com, a company whose software program helps brokers and hedge funds track down shares of hard-to-borrow stocks that traders are interested in shorting, says that until recently securities lending was "loosely regulated." He says he fears prosecutors "are going too far in pursuit of criminal charges." Matthew Goldstein is an associate editor at BusinessWeek, covering hedge funds and finance.
http://www.cnbc.com/id/15840232?video=306843899 This is the most powerful piece I've seen that indicates the end is near. Monitor the SHO list, and make yourselves some serious cash.
This article on DNDN from seeking alpha asks these questions. ⢠Who is buying in the aftermath of a negative FDA outcome and all analysts downgrading the stock? ⢠There were 33.9 million shares short as of April 10, 2007â¦or was it more? ⢠Why are they buying these shares? ⢠Where are these SHARES coming from? If you own Dendreon shares in your brokerage account, how do you know if they are real? (Just because your account shows 1,000 shares, do they exist?) I know they took your money, but are those shares real? How do you know if one brokerage has sent the other real shares in return? If you owned a house can it be sold to many buyers? (Except as time shares) How many first mortgages can you get on your house? If you got several mortgages, is it okay as long as you pay them back? All these lead to my last question: exactly how many shares can be shorted in Dendreon? ****************************************** A fool can keep a thousand wisemen busy. ****************
In these companies, neither the DTCC nor the SEC will tell even the Company officials how many shares are short. However, there are "workers" at these places who know the game is fixed and in the past they have leaked staggering numbers in at least two situations I am aware of. It is not uncommon for tiny companies to have two, three four or more times the float naked. These companies are targeted for destruction. It is really the only option for the Black Guard, as Patrick would call them. At zero, no taxes, no companies. return? If you short five times the float and make all, 100% or 500%? And don't think it's just little companies. I have heard one Fortune 500 company CEO at one time believed there are more fake shares than real. He chose to ignore it. Other mid and small caps can't. Think about it logically. The hayday of Elgindy was 1999 - 2001. What happened then? Think, if you had the abliltiy to naked short Dell, AMZN, EBAY, CSCO, etc, you could have made a buck? How about the guys on his site, who were some of the biggest names in the biz? I really, really can't wait for the Perp walk. Man,it's going to be a who's who, that will soon be the who usetobes.