Posted on 09/19/2008 12:08:11 PM PDT by Danae
The up tick rule stated that you cannot put out a short call buy on a stock unless its for MORE than the stock is currently selling for. What the Naked Short sellers were doing was using phony made up stocks with LOWER prices. The Stock never existed. Here is a metaphor.
Company A has 50,000 shares of company stock. Split into different areas from employee benefit packages to stocks openly traded on the Stock market. In comes a hedge fund, Now, because there is a 3 day grace period, the time which the hedge fund has to make their order and DELIVER either the Stock or the cash, they have 3 days to make it happen. Only problem is, the friggin SEC has not been ENFORCING the rule. For YEARS in some cases. So here is all these stock buy purchases floating out there in the form of IOU’s. When you press the hedge fund for the CASH they owe you in a computer balance sheet, they hem and haw and then ultimately give you another IOU for it. Rinse and repeat. All made possible by the SEC refusal to ENFORCE the laws. That practice is utterly illegal. Here is the way you KNOW its happening -— Remember Company A, with the 50,000 shares? Well if that company trades their stock on a volume in the Millions on a given day, when they only have 50K.... it means SOMEONE has devalued the stock. That someone is the Hedge fund. That Hedge fund has sold thousands of shares of Company A’s stock at a percentage of what the REAL stock is worth, and then paid for it with IOU’s.
Yea, CRAZY. The SEC has been ALLOWING it, they have not been stopping it. They COULD have! Here is where the up tick rule comes in. The Democrat controlled Congress abolished it making this all possible. Because with the Up-Tick rule, you cannot buy stocks on Iou’s for LESS than the company’s real stock was worth. Technically you can’t do either one if you do not pony up either the cash OR the Real Stock in 3 days. And the Up-Tick rule was part of a real check on those illegal trades happening. The Democrat congress abolished it. I say again, you can point a finger RIGHT at the Democrat party, Democrats in congress primarily. Obama is very guilty of turning his head when he knew there was a problem, he knew in 05 with the rest of congress because McCain was yelling about it then! Why did Obama do that? Easy to get loans for his constituents from Fannie Mae and Freddie Mac, plus 126,000$ of Political contributions to his own Campaign for President directly from Fannie Mae.
Its been going on for years now, and the momentum of all that fake stock is huge, perhaps as much as 2/3rds of the GLOBAL GDP is FAKE stocks, put into the system by Hedge funds, completely unfettered by Congress with the SEC not enforcing the Law. How do I know that 2/3rds term? Because a very shadowy entity called DTCC, The Depository Trust & Clearing Corporation http://www.dtcc.com/ tracks ALL of it. They process 3 times the WORLD GDP! That is not possible unless there is a huge, mind boggling, amount of fake stock in world financial markets. The world banks, when these hedge funds started selling the stocks really short (meaning undervalued, or for less than the real stock of the company was worth) could do nothing as their values literally dropped overnight. No one would listen to them when they would say, but we don’t even HAVE that much stock in the company!!! The rest is FAKE, a Forgery, a robbery of monumental scale. No one wanted to hear that because the consequences of it being real are exactly what we saw happen today. Damn near a total PANIC of world financial markets and a global Great depression WORSE than 1929 could have ever dreamed of.
All made possible by the loss of the Up-Tick Rule and the SEC not enforcing the laws. This is why its an important term.
It’s not a wild goose chase. The DTCC knows how many FTDs there are.
The chain of investigation proceeds thus:
Circumstantial evidence indicates an anomalously huge amount of FTDs exist that have never settled. This circumstantial evidence permits issuance of a warrant for inspection of all DTCC records for confirmation.
A confirmation from DTCC records of a huge anomalous amount of FTDs is evidence of criminal malfeasance, i.e. naked shorting. This evidence allows issuance of warrants on all DTCC members.
That’s why I posted earlier that DTCC must be brought out of the shadows (inspect records) and prosecute the entities behind them (e.g. IBanks).
Of course the SEC has never heretofore subpoenaed DTCC records because the top echelon knew it would lead to investigating the biggest players on the street. And in fact, the SEC executive board is known to be complicit with the top executives at the IBanks (revolving door). For proof of this last statement, one need look no further than the case of Gary Aguirre:
http://www.whistleblower.org/template/page.cfm?page_id=179
I do not disagree with you at all. You know more than I about it I am sure. What I am suggesting is to come at it from a different direction. Trace it up from the companies that CLEARLY got nailed by the Naked Short Siders illegally. Through the day time and VOLUME of the stock traded, correlating that data with transactions recorded by DTCC should eventually show a pattern, its just correlating data. Its should lead to the Hedge Funds that have been doing this to such ruin. Just through the sheer number of times those Hedge funds line up with huge volumes done on Companies like... overstock.com
Bingo. You can find who was doing what. IF you can get the DTCC records. The FULL records. Good coders mine data like this frequently. Its more than possible to do, its possible to do it today. If you can get the records.
Good Lord....
I'm a bank, or I'm a brokerage house.
I hold half a million shares of Stock X for any given number of owners.
What I do, instead of registering the entry at DTC for each of these owners, is to have a single entry under a street name which my own internal accounting system allocates among the various accounts to which pieces of this big block of stock gets allocated.
Methinks what you really want is either the stock exchange records or the records of the trading firm.
But now that you mention it, since I mentioned it specifically earlier, The Stock Exchange records and the Brokerage records along with the DTCC Records will out who is doing this. Its just a matter of mining the data. Add in the individual company records, who surely wondered why their stock was trading in BELGIUM when they did NOT set that up... yea, there are a LOT of companies who are well aware that they were attacked like this. Its NOT something that goes un noticed, losing half your value in a week for no reason, coupled with sudden BAD press all of which is incorrect or misleading... this is systemic. You have to look at it that way. And when you do, you can easily see that the information is THERE, we just have to get ACCESS to it. THAT is the hard part.
OK ,, you’re Merrill ... you have 20,000,000 shares of IBM in street name in thousands of accounts and 5 million of them are in margin accounts,, it doesn’t take a genius in compliance to see that you can’t allow a short sale of 17 million shares to go through... and they do allow it EVERY DAY and NEVER CLEAR because they can’t... it has gone on for years and the SEC is 100% to blame for not cracking down.
Now you just described the big picture in terms of investigation.
Congratulations.
However, like Mena, it’ll never see the light of day because both parties are involved in it up to their eyeballs, IHMO.
Media heads should be ROLLING for this too, Mad Money on CNBC comes to mind instantly. They were part of all of this, part of the smear campaign launched against innocent companies in the effort in the Main stream media to further LOWER the stock price of a given company. They were PART of it. That needs to be screamed about. In any hearings that develop, the role of the Media in the downfall of literally hundreds of companies must be investigated as well, because that was just as big an abuse of power. IMHO we got lots of work to do yet. So many targets, so little time. Lets Nail the Media that did all this, CNBC, Mad Money, David Rocker. Then there is the whole Russian Connection. You see, this started in Russia about 4 days before it crunched Wall Street Monday. Russia went down first you see. Russia is WAY in the middle of this cesspool. How? Why? Why did Russian Banks collapse first??? Thats a really DAMN good question to get an answer to I think.
We can't give up now. Its time to really be loud and demanding as conservatives. At the very least, we should be just HAMMERING the Dim’s for removing things like the Up-Tick rule. For making all this possible for their buddies Fannie Mae and Freddie Mac, because they removed those rules to benefit their campaign cash cow, a Pseudo Government financial institution that was funneling back millions to the lawmakers that were supposed to be keeping an eye on them, not taking MONEY from them to look the other way. Democrats did this so they could personally benefit from it, and they didn't give a crap about what that could do the the people that sent them there, or what it could do to the world economy. They just do not stop to think (or worse yet, if the do stop to think, they are deliberately making immoral and unethical decisions that are best for them instead of the people they are there to do a job FOR. In reality I think they do that far more often then they act in our best interest. That is horrible.) about the consequences of their actions. That has GOT to be stopped.
You are correct. THe SEC did nothing at all. They looked at it then went right back to looking busy. But with the Loss of the Up-Tick rule... yea. What they were doing wasn’t illegal, until that 3rd day passed. Where the SEC failed, was in the fact they did not ENSURE and or punish when the promised stock never showed up, they allowed the floating of IOU’s for in some cases YEARS... instead of just three days. Between the Loss of the Up-tick rule and lack of enforcment from SEC, yea, the world got screwed. There are just a few people at the top of all this, and I for one want a lot of JAIL TIME for those responsible.
Because Russia has no rule of law and the Russian Mafia and those who once were the "nomenklatura" are fighting it out to see how much of everything each side can get.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.