Posted on 11/24/2007 8:31:57 AM PST by spacejunkie
http://www.petitiononline.com/mrktrfrm/petition.html
If you care about the HONESTY of the stock market AND/OR our troops, please sign this petition to stop the process of naked shorting stocks in the market. Force Protection (FRPT) builds the best armored vehicles in the world that protect our troops. They have been on the Reg SHO list for a LONG time with 17m shares naked shorted.
This is counterfeiting stock. Just like counterfitting money. Should be equally illegal, but it's not apparently, as the SEC will not enforce the rules.
One wonders if the powers behind this have ulterior motives past driving a company into the ground. Like making it easier to kill our troops.
You’ve got my vote....If the SEC (clintonista) lawyers don’t fix the naked shorting scam, the dozen new Short and Ultrashort ETFs popping up weekly will give AlQieda a new WMD!
“However, naked shorting to drive down share prices violates the law. [3]
On American exchanges, under Regulation SHO, “a broker or dealer may not accept a short sale order” without having first borrowed or identified the stock being sold. [4] However, this rule is exempted under these circumstances:
1. Broker or dealer accepting a short sale order from another registered broker or dealer
2. Bona-fide market making
3. Broker-dealer effecting a sale on behalf of a customer that is deemed to own the security pursuant to Rule 200[5] through no fault of the customer or the broker-dealer.[6]
The SEC contends that naked short selling has been falsely blamed on share price declines by stock promoters and corporate insiders, but can be used as a tool for illegal market manipulation.”
That would apparently allow someone to sue the SEC if it was abused by them.
Nice idea but the SEC is “enforcement” in name only.
“This is counterfeiting stock. Just like counterfitting money. Should be equally illegal, but it’s not apparently, as the SEC will not enforce the rules.”
Naked shorting is illegal but I have found time and time again that there are naked short in every stock. I bet there are billions of shares that do not exist but are shorted.
I found one stock that sold more in naked shorts than existed on the market; WEL.
Could you please enlighten me how "legitimate" (non-counterfeit) US dollars are increased in number?
Naked shorting is the illegal practice of short selling shares that have not been affirmatively determined to exist. Ordinarily, traders must borrow a stock, or determine that it can be borrowed, before they sell it short. However, some professional investors and hedge funds take advantage of loopholes in the rules to sell shares without making any attempt to borrow the stock.
Thanks! :-)
I don't know, maybe some kind of contest?
I think scandals surrounding the company are driving the stock down. The CEO has been funneling consulting contracts to companies he owns. This conflict of interest is raising huge questions about his leadership. The naked shorting is a result of his leadership and the downward trend in the stock. Good product, but the market is not too friendly towards companies with scandals.
Naked short selling was supposed to be officially clamped down on, on October 15th of this year. I guess they decided that they could continue to ignore it:
You are wrong about that and this is a prime example of Jim Cramer’s hedge fund putting out MIS information on a company (via The Street writer Melissa DAvis) because he is SHORT the company.
I don’t know much about it, but couldn’t FRPT CEOs do a little inside buying and put a sqeeze on so that we can buy at 12 and reedem a little back - gaining from a short squeeze? (Is that how it can work?)
(I bought FRPT at 18)
The problem for all of us is that the broker/dealer people have no incentive to follow the regulations. They can usually break the rules with impunity, and in the rare, rare event that they get caught, the fines are nothing compared to the money they make by cheating.
The naked shorting that occurs in US markets is a scandal that dwarfs Enron.
The scandal has its roots in the Depository Trust and Clearing Corporation (DTCC). The reason the lid has not been blown off this scandal is because it would cause a collapse in US markets; that’s how big and bad it is.
And yes it amounts to counterfeiting stock, it is exactly that.
The SEC and Justice approach to naked shorting is to pin prick the regulations to curb abuses. But the pin pricks (such as Reg SHO) so far have been ineffective. Those that short phantom shares go about their business without any consequences.
Many of the phantom share shorts are market makers who have a certain time (about 13 days) to find real shares to cover their phantom shares. But they often ignore the 13 day restriction and there is no fine or penalty for them.
Shorting using phantom shares allows a market make to do just that, make the market, control the price of a stock, up or down. Take that capability away from them and many of them would be wiped out because thay have in most cases no real talent, they have power through naked shorting.
For those market makers that could survive without naked shorting it would be at the expense of reduced liquidity; orders would not get filled, trading volume would plummet.
And when trading volume falls, so do market makers commissions, so do exchange transaction fees and government surcharges. The markets and governments lose when naked shorting is not allowed.
And who loses? Stockholders, especially those on margin. And by stockholders I don’t mean necessarily individuals but large firms such as pension funds, mutual funds, insurance funds, etc. The value of stock sinks when phantom shares are traded, just as the act of dilution or inflating the money supply. But these latter two acts are legal. Naked shorting is illegal and so it is more accurate to describe it as counterfeiting because that is exactly what it is.
And how did we get in this mess? Two words, ‘electronic trading’. With the advent of electronic digital computerized trading that took place not so long ago, the exchange system has become so dependent on the synthetic volumes created by behaviors such as naked shorting that to now write the regulations that should have been written many years back would be like blowing a hole in a big hot air balloon that is a thousand feet in the air. Picture the Hindenburg.
Would you enlighten? You seem to know something about stock repo desks. How can anything be naked shorted without borrowing? Doesn’t the buyer want something for his money?
The prime broker is supposed to located the stock before it can be shorted. If they can't, they aren't supposed to accept the sell order. Some do and fail to deliver, over and over and over.
It gets very annoying. They should be forced to buy in these shares, but rarely are (from what I saw when I was more involved).
Some specialists do it, as they are allowed, to keep a liquid market. I know one who did it to the point where he was short several times the float. He was (still is) an a-hole, but after he was sued by the exchange, not only won the case, but also won legal fees.
I think he made 8 figures on that one.
It is an issue and the Feds need to do more, but some of the people complaining about it are a bit shady too.
Doesn’t the buyer want something for his money?
Until the stock is delivered, the seller doesn't get any cash.
So the short can sell at will and buy back at will? Then deliver whenever he covers? What a deal.
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