Phantom Shares - Bloombergs award winning documentary blows the whistle on this scandal. BTW, the documentary was originally slated to be 2 hours long but was cut down to 25 minutes. (You can interpret that any way you like....) http://video.google.com/videoplay?d...hort+selling+&ei=bbh7SIWpNYmA-gGXkOHKDQ&hl=en
I never intended to insult Mav. He alleged I was green (not a big deal), while not acknowledging that this regulation and the activities of 'market makers' that also arbitrage, are very complicated and often nefarious. My frustration is born from the fact that these market makers that are not affected by this reg can theoretically still short naked the same securities other traders can't. That creates an arbitrage opportunity for them. They can write puts and calls, and actually short these 19 securities at the same time - the modeling is complex, but does anyone here really think they won't somehow profit from this? I didn't just fall off the turnip truck and am not about to accept the reality of the headlines that the SEC promulgating.
nice discussion, but I'm lost. I've red that naked short selling is legal only for MM. that they don't have to borrow shares. it's true, that I don't know exactly what MM does, how he works, how broker make money and how "locate" is done. but it is nice topic which bring me the question. is there any book that is explaining "these things"? it will not makes me better trader, bud it is interesting. thank you
We know, and the data is readily available, that the bad short sellers are using the mm exemption to kill us. No big deal. The SEC is captured: it will be the FEDs that end this. Then, a trader won't be able to hit the head without getting a hall pass from Harry Reid. Think I'm kidding? Wait. I suggest that you look at OSTK, down 5 on hitting EPS estimates and beating revenues. They have to do it. A stock with 14 mm in the float owned 83% by insiders shouldn't act like this. It is disgusting that people who represent the US Government are so corrupt. And btw, I said about two weeks ago money laundering was the new focus. Nice hearings yesteday, with Levin saying UBS should be shut down - a sentiment with which I readily agree. The MM exemption is a sell out to the industry by the Cox brigade. Simple. SSETTLE THE TRADES. End of Story.
My frustration is born from the fact that these market makers that are not affected by this reg can theoretically still short naked the same securities other traders can't. That creates an arbitrage opportunity for them. They can write puts and calls, and actually short these 19 securities at the same time - the modeling is complex, but does anyone here really think they won't somehow profit from this? =================================== Re: modeling is complex. Page 7. Reverse conversion. http://www.amex.com/atamex/regulation/discipline/2007/SArensteinSBA_Decision_072007.pdf
Ya, I have a big problem. It's absurd for Market makers to ask to be exempt from curbs on naked shorting when they are an important contributor to the problem. Of course you've got to have an effective and simple mechanism for keeping track of borrowed shares, and on that count the SEC has been even more absurd. First they ignore naked shorting in spite of many, many complaints, then they suddenly get religion but have no mechanism in place to enforce their new found religion. I think it may be time to move to Finland!
man - mav gave you are hard time an you backed off the argument I made the other day. Naked Short selling is not illegal... if we are talking about against the law in a manner which could put you in jail. It may be a violation of a regulation but that regulation is vague, difficult to enforce and has no teeth. So far no one has shown me a statute making naked short the subject of a a criminal penalty. (thus not illegal) Be careful when you read this stuff... a lot of times you will read that naked short selling is illegal when combined with illegal stock manipulation. It seems to me it is the illegal stock manipulation which exposes you to the penalty - not the short selling.
Plain and simple: The SEC's measure will not have any bearing on what is actually taking place. Who do you think has been shorting the hell out of all these stocks? The investment banks aka MMs. On the contrary, this measure allows unscrupulous brokers to make an extra buck by charging fees for shorting these securities to traders who are being penalized for no fault of ther own and whose effect on these securities is well nigh non-existent. If the SEC really wants to curb such illegal activities, then let them concentrate on these investment banks and ask them to account for their short selling figures. As things stand, to nobody's surprise and everybody's chagrin, these thieves can short as much as they want from their inventory and don't have to account for it. Let things settle down before it will be back to 'business as usual' for the scum.