"Those changes introduced by the Commission included the elimination of the controversial grandfather clause used almost extensively by market makers and member firms to sell these unlimited naked shorts into the public markets, doing so with great financial advantage." Re this quote. Question. This reads to me like naked shorts results from market making. essentially, the naked short is a by-product of MM activity (something is left over, in a sense). Then, the MM, basically is selling the by-product of his operation (the naked short). When in reality, he has nothing to sell, (but if one has a buyer you can sell anything, ie derivative) but to the MM he does have something he can sell even though in reality it is nothing and just because he can he shouldn't, or it wasn't meant to sell and it is illegal to sell. ************************* This being said, I don't understand how this court action will end naked shorting, because naked shorting did not begin with OSTK or computers or as a modern phenomena (according to the prior article, when paper certs were still traded. The focus appears to be on MM activity as the source, it well may be one, but I'm sure there are others.
It won't end naked short selling. Ted Weisberg was on Bloomberg today and said the elimination of the uptick rule was not well thought out and would lead to excessive volatility. But it went through immediately. Of course! It benefits the industry. The NSS grandfathering elimination does nothing of the kind. All it says is , if you are on the threshold list, your grandfathers must be covered. No one but them knows the actual number of fails in stocks NOT on the Threshold list. To keep off the list, the brokers simply need to kite like they do now. Also, it is not even in theFederal Register yet. Their excuse is, they are refining the language. Then, it's sixty or ninty days from then. In the meantime, look at a chart of TASR. What a joke. The above is why you are about to witness a remarkable chapter in the financial history of the United States. The only thing they will understand are handcuffs and a prison sentence.
the thought just occurred to me that naked short selling could also be seen as anti-coprorate activism. is george soros a white devil? and besides, come on let's face it, corporations reaching naked short nirvana are more than likely not about to discover a cure for AIDS or anything else remotely as useful. start-ups are like lawyers these days, too many around that aren't really contributing positively to society.
I can think of three just off the top of my head.... Omniferon.. a natural mulitiferon. Head neck and shoulder cancer a procedure to shunt Chemo around the liver to allow patients to accept higher doses w/o killing them. None ever had a chance. All so some bald headed prick can get a new Ferrari. Think what you want. I know better.
"the thought just occurred to me that naked short selling could also be seen as anti-coprorate activism. is george soros a white devil?" Refreshing point of view. There is a very large segment of our society that hates capitalism and anything corporate. what better way to reek vegence on a corporation. Naked shorting exists for the benefit of pinko liberal socialist commies?
You will find guys with guns heavily involved. They are not liberal or socialists. They are thugs. And Wall St. helped them for the money. Just look at all at the computer hacks on the firms. Where did they come from? (wink wink).
Article too long to post, so hence the link. Nice simple review on the path of the short sale. http://www.cross-currents.net/commentary.htm
Finally , some Teeth. I'll tell you from experience, the AMEX are no angels. Maybe they smell the Feds coming. Check this out!!! www.amex.com American Stock Exchange News Release Exchange Release Media Contact: Mary Chung American Stock Exchange 212-306-1641/ mary.chung@amex.com AMERICAN STOCK EXCHANGE ANNOUNCES TWO DISCIPLINARY ACTIONS FOR VIOLATIONS OF REGULATION SHO SHORT SALE RULES NEW YORK, July 31, 2007 - The American Stock Exchange® (Amex®) today announced two final disciplinary actions for violations of Securities and Exchange Commission (SEC) Regulation SHO short sale rules in connection with trading activity in threshold securities, which occurred on various options and equity exchanges. In the first action, Scott H. Arenstein and his firm SBA Trading, agreed to a fine of $3.6 million, disgorgement of $1.4 million in trading profits, a censure and a five-year suspension from Amex membership in any capacity, including employment or association with an Amex member or member organization during such period. In the second action, Brian A. Arenstein and his firm ALA Trading, LLC agreed to a fine of $1.2 million, disgorgement of $1.8 million in trading profits, a censure and a five-year suspension from Amex membership in any capacity, including employment or association with an Amex member or member organization during such period. SEC Regulation SHO generally requires market participants to locate shares to borrow prior to effecting a short sale transaction. However, options market makers receive a limited exemption from this requirement when selling an underlying equity security short to hedge options positions established during the course of bona fide options market making activity. Despite the fact that neither respondent was acting as a bona fide options market maker in the particular securities in question, each of them improperly utilized this market maker exemption to impermissibly engage in naked short selling by failing to locate securities to borrow and then engaged in a series of close out transactions designed to circumvent his Regulation SHO delivery obligations in such securities by creating the appearance of a bona fide repurchase of the securities he initially sold short. As a result of this violative trading activity, they were able to maintain impermissible naked short positions in a number of Regulation SHO threshold securities for a virtually unlimited period of time. âRegulation SHO is a critically important framework of regulatory requirements designed to prevent and deter abusive short selling and reduce persistent fails to deliver. The respondentsâ circumvention of these requirements was egregious and improperly contributed to persistent fails to deliver in certain Regulation SHO threshold securities,â said Claudia Crowley, Senior Vice President and Chief Regulatory Officer of the Amex. âThis settlement should send a strong message to other market participants that trading which involves the improper use of the Regulation SHO market maker locate exemption and circumvention of the requisite delivery obligations are unacceptable and will result in serious sanctions.â Scott H. Arenstein, SBA Trading, Brian A. Arenstein and ALA Trading consented to findings that they violated SEC Rule 203, Article V, Sections 4(h) and (i) of the Amex Constitution and Amex Rule 958 â ANTE. In settling these matters the respondents neither admitted nor denied the charges. This violative activity was detected and investigated by the Financial Industry Regulatory Authority (FINRA), formerly the NASD, acting on behalf of the Amexâs Regulatory Division. The Decisions and related Stipulations of Facts and Consent to Penalty can be viewed at the following link: http://www.amex.com/?href=/atamex/regulation/discipline/at_regdiscipline.html -------------------------------------------------------------------------------- About American Stock Exchange The American Stock Exchange® (Amex®) offers trading across a full range of equities, options and exchange traded funds (ETFs), including structured products and HOLDRSSM. In addition to its role as a national equities market, the Amex is the pioneer of the ETF, responsible for bringing the first domestic product to market in 1993. Leading the industry in ETF listings, the Amex lists 336 ETFs to date. 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