Wall Street, new rules regarding short sales, and....

Discussion in 'Wall St. News' started by SouthAmerica, Apr 8, 2009.

  1. .

    April 8, 2009

    SouthAmerica: The US government is trying to do everything they can by artificial means to keep the US financial markets from falling into the Abyss.

    1) They are pumping trillions of US dollars (real money and US government guarantees) to keep assets in the US artificially higher than they would be under normal free market circumstances.

    2) They are changing accounting rules (mark to market) to keep massive losses from being booked into the P&L – and to keep investors who invested in banks and other financial institutions in the dark.

    3) Now they want to eliminate short sales to keep the price of stocks artificially higher than they would be otherwise.

    Here is a suggestion that might help financial companies show some profits and help deceive the American public even more – the politicians under the pressure from Wall Street should ask the FASB to create a new accounting rule to help Wall Street such as:

    Book only revenues, income and any form of gains in the profit and loss statement and eliminate from the P&L any expenses, charges, write offs, losses and so forth.

    By booking only revenues, income, and gains into the P&L statement American companies will be able to show better financial results.

    By getting rid of and eliminating any possibility of any costs, expenses, write offs, and so on that would help Wall Street get back in business and back into the world of illusion.


    “SEC is floating options to limit short sales”
    Regulators floating options to restrict short-selling amid pressure from companies, lawmakers
    Marcy Gordon, AP Business Writer
    Associated Press - Wednesday April 8, 2009, 12:05 am EDT

    WASHINGTON (AP) -- Federal regulators are floating several options for reining in the practice of short-selling stocks, as investors, corporations and lawmakers clamor for restrictions on moves they say gutted vulnerable companies and worsened the market's downward spiral.

    Members of the Securities and Exchange Commission are meeting Wednesday to vote on new rules restricting short-selling, in which traders try to profit from a stock's decline by selling borrowed shares.

    Several proposals are expected to be put forward for public comment.
    The agency could settle on one plan and formally approve it sometime after the comment period.

    It marks the second time in less than a week that financial relief measures pressed by Congress were taken up by overseers. Last Thursday, the independent Financial Accounting Standards Board gave companies more leeway in valuing assets and reporting losses.

    Both sets of changes would especially benefit banks and other financial institutions, whose balance sheets have been battered in the financial crisis and whose stocks have often been targeted by short sellers.

    The SEC's move is the first major initiative by the agency under Chairman Mary Schapiro, who was appointed by President Barack Obama and assumed the position in January.

    Short-selling is legal and widely in use on Wall Street. The practice involves borrowing a company's shares, selling them, then buying them back when the stock falls and returning them to the lender. The short seller pockets the difference in price.

    Proponents of short-selling say it can make markets more efficient, bring in more capital and raise warning signs about weak or badly managed companies. But companies and regulators maintain that the practice widened the scope of the financial crisis and contributed to the collapse in value last fall of a number of bank stocks -- as well as the demise of investment bank Lehman Brothers.

    As the market has plunged, pressure has been building from investors and Congress for the SEC to reinstate the so-called uptick rule, which it abolished in 2007. The rule was established in 1938 during the Depression that followed the 1929 market crash. Those pushing for its restoration say the absence of the rule has fanned volatility in the market, prompting bands of hedge funds and other investors to target weak companies with an avalanche of short-selling.

    Professional short sellers and some analysts, on the other hand, have warned of possible negative consequences of restricting short-selling, maintaining that such a move could actually distort -- not stabilize -- edgy markets.

    The uptick rule requires short sellers to wait to sell shares until a stock trades at a price at least slightly above its previous trading price. The idea is to install "a bit of a speed bump in a declining market," Schapiro told reporters on Monday.

    Schapiro confirmed that another option being considered, in addition to reinstating the uptick rule, is a sort of "circuit breaker" for stock prices. That approach would force short sellers to sell shares above the going market rate when they execute a short trade -- it would only go into effect after a stock price has had a sharp decline by a certain amount.

    Another option, known as an upbid rule, would allow short sellers to come in only at a price above the highest current bid for the stock.

    Whatever changes are adopted won't stifle short-selling in a blanket way, Schapiro said.

    The SEC repealed the uptick rule in July 2007, when the stock market was near its peak. A test by the SEC earlier that year, removing the uptick rule for one-third of the stocks in the Russell 3000 index, found it could be eliminated without causing significant harm.

    "Those studies were done in quite a different time," Schapiro said Monday.

    Last fall, the SEC adopted measures aimed at imposing protections against abusive "naked" short-selling. That refers to sellers selling shares they haven't even borrowed yet, and then looking to cover positions immediately after the sale.

    In addition, some Wall Street firms have cut back on lending stocks to short sellers, The Wall Street Journal reported Tuesday. As a result, the number of stocks in which large blocks of shares haven't been properly delivered to investors has dropped to a daily average of 79 in the first quarter from 529 in the first nine months of 2008, according to the newspaper's analysis of trading data from major stock exchanges.

  2. No where in the article you posted does it say they 'want to eliminate short selling'. Not even close.

    In addition to the usual cut and paste you might want to actually read what you post.
  3. .
    April 8, 2009

    SouthAmerica: Instead of nationalizing the Zombie banks immediately and cleaning up the balance sheet of these institutions of the toxic assets over a period of time at a considerable expense for the US taxpayer the Geithner plan is going to cost the taxpayer many times over the current losses since the hedge funds, private equity firms and other bottom feeders are going to take the US government for a ride and they are going to leverage the losses many times over and the US taxpayer is going to be left holding the bag for these scoundrels.

    The Geithner toxic assets plan is a plan to screw the US taxpayer to the tune of trillions of US dollars and the hedge funds, private equity firms and other bottom feeders are going to laugh all the way to the bank and they will make a ton of money at the expense of these fools who are running these US government money give way programs.

  4. April 8, 2009

    SouthAmerica: Reply to Red Ink Inc

    The point that I am trying to make is that what is left of Wall Street can't survive without a massive US government interference in the financial markets not only in pumping massive amounts of money every way they can, but by giving trillions of US dollars in US government guarantees, trillions in bailout money, changing accounting rules that were implemented because companies were fudging their books to show better results than the reality, and so on...

    And now they want to restrict even short selling to keep the price of worthless stocks artificially high.

    Wall Street is becoming a major fools paradise and the people who invest their money on these financial institutions deserve to lose their shirt because they are a bunch of fools.

  5. Even when the SEC banned shortselling outright on big financial institutions last year, these worthless stocks still tanked. I doubt the uptick rule will have any effect whatsoever on their already truncated longevity. In the end, banks with a strong balance sheet will ultimately survive while their garbage counterparts will fail. It's simple as that.

    Why do these people ask the shortsellers to abide by the rule when they themselves are constantly changing the rules in their favor? How inspiring!