If they fail, and they won't for a while, but they are so stupid, someday they will, you are covered up to SIPC levels and whatever insurance extras they have. Two things happen. SIPC will try and sell the business, which would be good, because you could liquidate and get money rather quickly. But, if SIPC has to come in and allocate the positions, you could be frozen for quite a while. I don't think, in this environment, that is going to happen. Spoke to a guy yesterday who owns a clearing firm, and he'd want to buy them if the price was right. I think you have to be cognizant the management is lousy, that it's a bad time and anything could happen at any time. But this situation was not a total surprise. They've done stupid stuff for years. What's going to hurt is the Correspondent firms. If the news gets bad, a lot of retail will transfer out. I would think that Penson is taking steps to shore up capital. But, naked shorts will come in and bash the stock, so forget about using equity. I'm wondering if the FINRA rule changes are going to slow down raids. I've seen a few over the past thirty years. There is NO mercy.
\ " But this situation was not a total surprise. They've done stupid stuff for years. " have u been short for years? if not why not?
http://www.sipc.org/pdf/SIPC_dt.PDF MJK failure and analysis. Notice the Amazon short. It was a big Elgindy target in 2000, 2001. So, those people who tell you naked shorting provide some service are full of shit. It is a subjugation of free markets. They impose their will on the natural order of things, but I digress. MJK was liquidated. You might search for a buyout, and it will give you a clue of what could happen. I 'm not forensic securities analysis. But I think Penson lasts a while longer. If the same pinheads stay in charge and climb in bed with scumbags, the aforementioned natural order of things will eventually lead them to their demise. Sorta like Congress and the US, if you know what I mean.
I knew guys short taht stock a week before the news, knowing there was a problem How can you and I compete with that? I don't bother trying. I'm not willing to prostitute myself for money. Never have been.
"I knew guys short taht stock a week before the news, knowing there was a problem How can you and I compete with that? I don't bother trying. I'm not willing to prostitute myself for money. Never have been." "I think you have to be cognizant the management is lousy, that it's a bad time and anything could happen at any time. But this situation was not a total surprise. They've done stupid stuff for years" flytiger ______ http://finance.yahoo.com/echarts?s=...=on;ohlcvalues=0;logscale=on;source=undefined you could have been short a long time ago without knowledge of announcements and made good money. the only privy info was when the announcement was going to be made.
The head of Penson & other top insiders bought a lot of stock yesterday. Check out the SEC filings from just before the market close yesterday. They're putting their own money where their mouth is when they say the company's viability won't be effected even with a total loss taken on those bonds.
Well, i will tell you how much that is worth -- just about nothing. I remember well when I bought Wachovia, and lots of it, when their CEO stepped up to the plate and bought $16MM of his own stock http://www2.journalnow.com/business...-ceo-buys-16m-worth-of-banks-stock-ar-107692/ And you know how that ended....in the crapper. To this day i don't understand how the man just threw away that much money, but its a good example of where insider buying can lead to inaccurate conclusions.
thanks for a very insightful post. it is not quite a black swan event on ET but unusual nevertheless.