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Part 4 — Naked Shorts — $75,000 For Cracking the Wall Street Cover-up REDUX
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by RoryKearney | July 23, 2008 at 06:05 am
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Part 5 — Naked Shorts — $75,000 For Cracking the Wall Street Cover-up REDUX
by RoryKearney | July 24, 2008 at 10:37 am | 23 views | add comment
http://www.nowpublic.com/world/part-5-naked-shorts-75-000-cracking-wall-street-cover-reduxPart
BITS & PIECES
Scroll down for updates (right before comment section)
Come on all you bloggers, journalists, filmmakers, youtubers, wannabes and dreamers out there. $30,000 first prize! $30,000! $20,000 dollar second prize! And lots of other money prizes too! I am not going to enter this blog in the contest. I would rather help move the story forward. Paste your entry links in the comment section so we can see them here too. The public will do the voting. Scroll down for rules. Help spread the word either way folks. Mail DeepCapture to a friend. Here's the pdf and the link to the contest. Pleeeeeease!
http://www.deepcapture.com/wp-content/uploads/2008/06/deepcapture-the-story-v1.pdf
http://www.deepcapture.com/the-story-of-deep-capture-by-mark-mitchell/
It's all true. A Cover-Up. The Easter Bunny told Patrick about it. The Greedy Boys were targeting Overstock to destroy it. The Greedy Boys are a clan of colluders, who are comprised of many tentacles that make up the whole rotten bunch of them. The good news is that they will eat their own when hungry. Some are hedgefunds, some are investments banks, some are independents or corporate raiders. Only the best survive on Wall Street. Or at least that used to be the case. I heard someone say that if microsoft came on the market today, Wall Street would have crushed them. Practically no little guys have a chance. They will pummel your company's stock, and if they can't put you out of business, lock, stock and barrel, so they pay no taxes, they will at least chop you down low enough and sell you off to possibly a predetermined suiter, and there won't be a damn thing you can do to stop it.
Colluding to destroy Overstock, as they have done to thousands of other "Little Companies" since the bubble, a bubble which they also helped create, and profit off of nicely, while they lied about everything, and stole your money while your weren't looking, and then claimed they called it right all along.
Here's how it works. Some little company comes to the capital stock market to use cash to grow their innovation. Their new drug or treatment. Their enterprise. Their piece of the American dream. Then Wall Street takes the money and makes turns it into your nightmare.
Patrick Byrne stepped forward to sound the alarm and they nicknamed him Whacky Patty. O'Reilly refuses to cover it, Patrick's got your back. Help him, help you. Email Deep Capture to help spread the word. Thanks. Rory
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As always, all herein is my opinion. I welcome you to prove me wrong.
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Part 1 — Naked Shorts — $75,000 For Cracking the Wall Street Cover-up
by RoryKearney | July 11, 2008 at 07:13 am | 3795 views | 32
http://www.nowpublic.com/world/naked-shorts-75-000-cracking-wall-street-cover
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Build a Better Mousetrap and the Mob will Beat a Path to Your Door
Why are crooks who are looking to profit off of failure allowed to decide which companies will succeed and which will die, and who will takeover whom?
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If you watch only one movie this year, watch this one, the validation of Patrick.
Patrick Byrne Overstock CEO Validation Interview: click on ‑ Short Selling Debate
You can watch it here or link below.
http://www.investorvillage.com/smbd.asp?mb=971&mn=206511&pt=msg&mid=5244414
Patrick Byrne video and 2 don't miss systemic risk videos of Treasury Secretary Henry Paulson.
http://www.foxbusiness.com/video/index.html
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Systemic Risk! I remember hearing Patrick and The Easter Bunny use these words over the years, warning of impending economic meltdown in a Wall Street system run by a very sneaky group who aided and abetted and most likely profited handsomely off of the system they corrupted. I am hearing "systemic risk" more and more frequently. This time the words are coming out of the mouths of big shots in expensive suits. They are very nonchalant when they utter "systemic risk", which translated, equals catastrophic economic meltdown. Systemic Risk just rolls off the lips of Secretary of the Treasury, Henry Paulson, as if it is just another, ho hum, day in the markets.
Paulson came on TV and said what we need is more “transparency”. Nor did he want to give us any more transparency himself. I think he was pretty much saying that he is not going to tell us what is going on, he will shoulder the blow for us. I'd feel better if I could shoulder it on a yacht. We are not adult enough to handle the truth. Trust him. I didn't hear from him the whole time Rome was burning, and now he is going to tell us how to clear up the mess, although he won't even tell us exactly what the mess is. Trust him. Trust him? I wouldn't buy a used car from him. I bet I know the bottom line though. I've been to this movie before. Every 20 years, whether we need it or not, the crooks loot all the money from the banks. Wasn't Neal Bush in on the Savings and Loan Debacle. I never hear from him anymore. I wonder if he is abroad. As one friend described it to me, there are certain banks in this country, that if you shoot off a canon ball in their vault, you won't hit a nickle. Here's the bottom line. Taxes must increase to continue funding the crooks as we assist them from having to give back the money, as they fumble around in the dark and reach for their clothing, one hand gripped over their wallets. Nobody wants to give back a dime of billions stolen.
Paulson mumbled some explanation about risk management techniques were lacking and firms using quantitative programs, ratings companies, and lack of diversification led to this mess. He lost me when he got to "quantitative". WTF is that about? He did say he believes in mark to market, which is a good thing, but somebody way more knowledgeable than me will have to try to explain it. In a nutshell, I think it means only allowing actual shares that can be located to trade, and to disallow the creation of “naked short” positions, where no shares actually exist, kind of like the story, The Emperors New Clothes, and the retirees finally realize what that story that they read as children meant that the leaders are ruling naked all along.
Who better than Henry Paulson to try to shore up the money supply. Henry Paulson was CEO of Goldman Sachs the past eight years prior to becoming Treasury Secretary in May 2006. Having been CEO of Goldman Sachs for so many years, he probably knows as much as anybody about how manipulating markets works.
Paulson made it clear, he wants to finish his year and a half, and be gone. It's just no fun being Secretary of the Treasury in 2008. And if you already have enough cash stashed for a few lifetimes, and are guaranteed the world's finest everything, why work. Most of the miscreants do nothing. They create nothing, invent nothing, produce nothing, and they are and should have nothing. Now, if we take back the money they stole and put their bank books down to nothing, it would be a great start to America's healing process. I know. You never missed it. They sucked it right out of your paycheck before you ever got to see it. New talks of stimulus checks again. Let's have em, now that you have reduced people to paupers. Shame on you. You know who you are. Governors visiting $4000 dollar a night hookers, protecting hedge fund thuggery and friends enmeshed in fraud, and sending the taxpayers the bill. WOW!
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90 banks are perched on the precipice.
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Alan Tonelson came on CNBC yesterday to tell us the entire economy is a bubble.
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Excerpts
An order from the Securities and Exchange Commission aimed at protecting some of the country's largest financial companies against a form of short selling took effect yesterday, provoking complaints from smaller firms that they have been left vulnerable to the practice.
Shares of the 19 large companies in the SEC's order have been rising since the commission announced last week that it would shelter them from the practice, known as naked short selling, while organizations representing banks and investment firms excluded from the list have been pressing to have the protection extended to them.
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Naked and abusive short selling are not new. Robert J. Shapiro, a former undersecretary of commerce for economic affairs, testified before the SEC's rules committee in 2003 about the then-growing problem. He noted that one form of manipulative short selling that was widespread in the 1990s, called death-spiral financing, created "strong incentives for large-scale naked short sales focused on small and medium-size public companies." His research found that a sample of 200 companies victimized by the technique posted a combined market loss of more than $105 billion.
Shapiro, who is chairman of Sonecon, a District economic advisory firm, said in an interview yesterday that the troubled financial market had made it possible for naked short sellers to affect much larger companies than before, including the major firms covered by the SEC order.
"Finally, the real concern has arisen because the target of it is a financial institution whose failure could pose a systemic risk to the capital markets," Shapiro said. "That's why they're concerned. But the phenomenon has been around in significant scale, and cost thousands, maybe millions, of investors money, who have been in stocks that have been driven down by naked short sellers for years now."
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Lenders used to make sure they could get back whatever money they loaned out. This time we had “loan origninators” ( a new cottage industry sprang up) many of them convicted crimnals, preying on people who had houses and little cash flow. The Government was warned about these “loan originators”, but they did nothing to stop them. So the loan originators sold the loans to the mortgage companies who resold them to the banks who resold the worthless paper to the shareholders, pension funds and foreign countries etc, who were deceived into buying the worthless paper in the first place. Now the taxpayers will have to make the brunt of it solvent, since the Government said we can't let the banks fail, so we are going to try to prop up this worthless paper, and keep the banks and brokerages, and thugs who stole from you from losing their companies and their yearly bonuses. I heard bonuses will be down 25% this year. Hedge funds get up to 50% of the profits they can exact from manipulating the stock prices. What a scam. Somebody once said that a hedge fund is really a compensation scheme disguised as an investment vehicle. These crooks all enjoyed their billions of dollars in bonuses for themselves last year (not counting the exhorbitant hedge fund bonuses) as they failed in their fiduciary duty to protect the banks and its customers, and the citizens of our once great nation, along with the good people from the rest of the world, from fraud.
And Credit Cards jacking up interest rates as high as 31% on money originally lent free, and never a late payment or default, just jack the interest rate up to 31%. Why? Bank of America says that is what they charge. Too bad if you don't like it. They never disclosed they would do it, and they don't have to. They spent millions of dollars lobbying Capitol Hill for the right to become loan sharks and predators. How about our government allowing companies to start offering payday loans to prey on the poorest members of society and try to turn them into indentured servants. Unconscionable. Where are our leaders? Where does the money spent on the Lobbyists go to? It seems like one big rat hole. It's as if they stuck a gun in the ribs of all the citizens of America and held them up at once. Can you smell the stench of bail out in the air. Unconscionable! Who is minding the store!
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America's Plan – Keep burning the midnight oil.
Bush's Energy Plan — Turn off the air conditioner.
Obama — Change you can believe in. I believe, I believe!
McCain — Nuclear Energy & Drill. Let's Go!
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Paulson was on TV yesterday pleading his case to get the “Naked Nineteen” (See Part 3) Exemption passed. The Naked Nineteen are the companies, many who contribute some serious money lobbying Capitol Hill, trying to push their manipulation, big bonuses for selves, to the tune of over 100 billion dollars in bonuses at the top, (they throw the little fish back in the big pond with a teaser bonus of a box of crumbs), in order to buy off the law enforcers, so they could transfer your wealth into their pockets. While you were off youtubing, trillions were being sucked down the tube with the solution being the lowly worker in the chain would have to do another bailout, as they continue siphoning the money right out of our pay. Some of it we sign up for them to scoop it up for themselves, through our 401K funds. Ask the fund managers if they eat their own cooking. Most of them are probably selling what they are buying for us. This one is overbought, this one is oversold, time to take profits. They do kick you a little pittance every now and again, but nothing like the billions they stashed away for themselves. The money is there to be made, just, guess what, you ain't on the short list. Shame on the gatekeepers.
But don't worry. They'll tell you what's good for you. Haven't they always. After all, Capitol Hill is in charge of this mess. Every 10 years they revote their exemption to trade the market on inside information is okay, so they can buy and sell based on their “connections”, with impunity. It's a nice job if you can get it. A free pass on insider trading for every Senator and Representative. I assume that includes their ability to share that information with their den of friends. It's a very nice job if you can get it. I was just following orders, what could I do, this whole system is corrupt.
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There was a vote in Congress about whether conflicts of interest will still be allowed within the FDA, when testing and evaluating that basket of drug cocktails, which they decide whether to approve for us. Guess how they voted. Conflicts OK. They did make them tone it down a little, but the game is still rigged. They can't seem to find enough people to evaluate these drugs who don't have financial interests in the outcome. The FDA is wagged by big pharmaceutical companies, and big corporate food conglomerates. The government grandstands about it for a while and then does little to curb the abuses. They all feed at the same trough.
Oh, you gotta see that FDA links again. I am sickened every day by the FDA's delay of a non invasive, non toxic treatment for late stage prostate cancer, the immunotherapy Provenge, manufactured by Dendreon. Several members of a group I helped found, CareToLive.com have passed away during the last year, and so many of our members are waiting for access which is being denied by the corrupt and omnipotent FDA, and their cronies, aka Wall Street, Big Pharma, who look out for each other. Can something be done. Our CareToLive appeal will be heard on July 29, 2008. Our attorney, Kerry Donahue, one of America's finest, is pleading our case, although the system is so corrupt, they may not even hear it. We are enmeshed in the court system's government protection Catch 22, that the Provenge license is still pending at the FDA so they can't hear the case or worry about the 30,000 American men who will die this year of prostate cancer without the option of a safe and effective immunotherapy which could prolong their lives for years. More brick walls while they delay, under the guise of protecting men from a safe immune boosting treatment that has added years on to some men's lives. Cancer is big business. This is not about the best treatment. This is about keeping the cash register ringing.
You can see the story here.
http://www.nowpublic.com/health/just-say-yes-fda-ties-bind-saturday-morning-rant
http://caretolive.com/2007-11-18/michael-milken-and-the-prostate-cancer-foundations-foul-balls/
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I heard Cramer refer to himself as insane last night. Insane didn't save Eddie Antar and it won't save Cramer, should law enforcement decide they want him bad enough. He is insane to think we will fall for his scam and that he can just reinvent himself, and pretend it never happened. Sad indeed that he pretends he knows up to the minute information on thousands of stocks, an impossible task, even for a blowhard like himself. Sad indeed for all the people who fell for his act and lost their savings. Sad because he often touts stocks he is handed a piece of paper to tout, stocks that he knows little about. Sad because he screens his calls, and uses his platform to promote his agenda. Yeah, he's crazy all right. Crazy like a fox.
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Former SEC head wants broader short-selling rules
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Reuters
Monday, July 21, 2008; 11:43 AM
NEW YORK (Reuters) - Emergency action by regulators to rein in abusive short-selling in some large financial firms should be expanded to include the stocks of all public companies, a former top markets watchdog said on Monday.
Former Securities and Exchange Chairman Harvey Pitt said the SEC's emergency order that went into effect on Monday would help in "restoring legitimacy" to short-selling activity but should go even further.
"It's something that is very good of the SEC to have done," he told Reuters in an interview. "They can't do it across the board without going through formal rule making, but I do believe that they need to expedite that."
The SEC last week announced an emergency measure applying to stocks of 17 Wall Street firms, as well as U.S. housing finance companies Fannie Mae (FNM.N) and Freddie Mac (FRE.N) as a way to curb manipulative short selling. The emergency action can last up to 30 days.
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Dave Patch: Jim Chanos and MFA Admit to Naked Short Selling
http://www.investigatethesec.com/drupal-5.5/node/341
The president and CEO of Hedge Fund Lobbyist Managed Fund Associations is Richard Baker. Richard Baker is a former US Congressman and a Chairman of the House Financial Services Committee on Capital Markets. When it came to illegal short selling, Baker was a Committee chair serving a deaf ear as he denied his Louisiana constituents a right to protected markets.
Baker left Congress and joined MFA as president and CEO. MFA however was the brainchild of short selling fund manager James Chanos. The Mission statement for the MFA even reads “The objective of MFA is to enhance the image and understanding of the alternative investments industry through media relations initiatives.”
Alternative investment industry is a political way of saying short seller.
Well Jim Chanos and Richard Baker teamed up and drafted a joint memo to the Securities and Exchange Commission requesting the Commission provide no further extensions on the emergency short sale provisions outlined earlier this week. In fact, if you read the memo carefully you will understand that Chanos and Baker have requested that the Commission also continue to fail to enforce the settlement provisions of any short sales executed into the markets.
The emergency order drafted by the Commission created a mandate that all short sales were accompanied by a pre-borrow to insure that the short sale would settle and would not fall into the “naked short” category. That was all. Chanos and Baker claim such restrictions on short sales “distort the fundamentals that drive fair market prices and are, in the long run, counter-productive because they remove the liquidity and healthy skepticism from the marketplace.”
Chanos and Baker are from the short first and deal with settlement later camp despite the fact that settlement is a major component of fair market practices. In fact, intent of 3-day settlement of the trade is a pre-requisite of the trade execution as defined by SEC Rules 15c3-3 and 15c6-1.
“Under the Emergency Order, before undertaking a short selling strategy, a market participant must consider in advance the costs and risks of ensuring with 100% certainty that enough shares will be available to cover the maximum number of shares that may be sold short throughout the duration of the strategy.”
I am sorry, did the securities laws change whereby short sellers only had to make good on 40, 50, 60% of the short position traded?
Jim Chanos has publicly claimed that he does not even know how to naked short and yet, by this very admission, he counts on being able to sell short for an investment strategy without risk that shares may not be available for him to deliver. To Mr. Chanos and the MFA the investment strategy of the fund takes precedent over our national securities laws.
We have come to understand the greed that is wall Street and most notably the greed that has become hedge fund managers. We are beginning to see how captured our US Congress has become as a former Congressman responsible for maintaining the integrity of the US Capital Markets left his post mid-term in order to lobby for the greed and corruption that continues to suck the wind out of middel-class America.
The former Chair of the House Financial Services Committee just lobbied the SEC to forgive the responsibility of trade settlement when it pertains to a select group of investors. He lobbied the SEC for the ability to manipulate our markets through the sale of counterfeit securities because to sell such shares legally would carry too much financial burden to these wealthy funds and billionare fund managers.
Below is a copy of the memo drafted to the Commission. I suggest everyone read this memo and draft your own comment to the SEC and to your Congressman asking for an immediate investigation into the allegations presented within this document. This document contains an admission that the larger funds in the short selling camp willfully short for an investment strategy without the intent on meeting 3-day settlement for 100% of the trade. That is a violation of the laws and is the very premise behind the illegal short sale manipulation that has destroyed so many public companies over the decades.
CPIC and MFA Letter to SEC on Short Sale Order 7.18.08.pdf
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America has implemented a caste system.
You either have easypass or you don't. The problem is, we still have to get to the other side regardless. "The rich are different than you and me." F Scotts Fitzgerald, The Great Gatsby.
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Police arrest man accused of taking 42 cents from mall fountain
Do you believe someone should be arrested for stealing 42 cents from a shopping center fountain? http://www.naplesnews.com/news/2008/jul/22/bonita-man-arrested-after-allegedly-stealing-42-ce/
With sky-high gas prices, 42 cents won’t get you very far nowadays.
However, it will get you a trip to jail.
A 43-year-old Bonita Springs man was arrested Monday morning after Naples police say he stole 42 cents from a mall fountain.
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Laslo Mujzer, 43, 26801 Silverado East Drive, was charged with petty theft under $100, a misdemeanor.
http://biz.yahoo.com/ap/080722/fannie_freddie_cost.html?.v=2
Rescue of mortgage giants could hit $25 billion
Tuesday July 22, 6:30 pm ET
By Julie Hirschfeld Davis, Associate Press Writer
Cost of propping up Fannie Mae and Freddie Mac pegged as high as $25b, part of housing rescue WASHINGTON (AP) -- A federal rescue of Fannie Mae and Freddie Mac could cost taxpayers $25 billion, congressional budget experts said Tuesday, as lawmakers put finishing touches on legislation that would tap the troubled mortgage giants' profits to help save homeowners from foreclosure.Looks like another deep capture video contender for the prize money!
http://www.getthemessage.net/index.php?id=MzE2OTI2
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As always, all herein is my opinion. I welcome you to prove me wrong.
Part 1 — Naked Shorts — $75,000 For Cracking the Wall Street Cover-up
by RoryKearney | July 11, 2008 at 07:13 am | 3795 views | 32 comments
http://www.nowpublic.com/world/naked-shorts-75-000-cracking-wall-street-cover
Part 2 — Naked Shorts — $75,000 For Cracking the Wall Street Cover-up REDUX
by RoryKearney | July 18, 2008 at 08:43 am | 332 views | 1 comment http://www.nowpublic.com/world/part-2-naked-shorts-75-000-cracking-wall-street-cover-redux
Part 3 — Naked Shorts — $75,000 For Cracking the Wall Street Cover-up REDUX
by RoryKearney | July 19, 2008 at 06:32 am | 418 views | 3 comments
http://www.nowpublic.com/world/part-3-naked-shorts-75-000-cracking-wall-street-cover-redux
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A few great videos for the $75,000 For Cracking the Wall Street Cover-up Contest
Keep 'Em Coming Folks!!!!
DeepCapture on youtube An enterprising fellow has it up. Three segments so far.
DeepCapture pt. 1: "Naked Shorts Exposed" http://youtube.com/watch?v=zB40pZ4JaC4&feature=related
DeepCapture pt. 2: "Getting Deep" http://youtube.com/watch?v=PI1dmdkDOCo&feature=related
DeepCapture pt. 3: "Continued (Mid-2002's) Naked Short Selling"
http://youtube.com/watch?v=iesq7FOTsRI&feature=related
DeepCapture pt. 4: "Continued (Mid-2002's) Naked Short Selling"
http://www.youtube.com/watch?v=ifg3-Q6QLgo
Crazy Eddie commercial. For those who aren't familiar with the bashfest that is the yahoo Overstock (OSTK) message board, Sam Antar, convicted felon, posts there all day long (I think, I stay out of there except for an occasional peak. Sam Antar was kicked off of InvestorVillage Ostk board), any way he trash talks the company, as his insane way of saying how much he hates it.
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Crack the Wall Street Cover-Up Contest!
You, the Community, decide who wins
1st place = $30,000
2nd place = $20,000
3rd place = $10,000
4th place = $6,000
5th place = $4,000
6th - 10th place = $1,000 each
Total = $75,000
From “The Story of DeepCapture” you understand the crime and cover-up. Now you can win up to $30,000 for thinking of a clever way to crack the cover-up. Here’s how:
1) Crack the cover-up: do something to help the public discover DeepCapture’s exposé of Wall Street and the financial journalists who “tried to be players but became pawns.”
2) What you do is your choice: you may simply write newspapers and politicians (here is a page providing ways to do that quickly and easily), and get others to do the same. Maybe you’ll do some PR stunt (such as this). Maybe you’ll write letters to the editor, or do Youtube videos, or think of something entirely new and original (we hope you do).
3) Whatever you do must be legal. Click here for full contest rules.
4) Use the widget below to tell us what you did. That becomes your entry. Your entry can and should link to blogs, videos, audio files, letters to the editors, newspaper articles, etc. that document your efforts to crack the cover-up.
5) Multiple entries are allowed.
6) To crack the cover-up you may find it useful to learn more about this issue. The links within Mitchell’s piece are a good starting point. More detailed pieces appear on DeepCapture.
7) The community will determine the winners by continuously voting entries up and down.
8 ) At midnight, October 1, 2008, entries will be frozen and prizes awarded.
Good luck, and remember to tell your friends to come vote for your entry!
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Add links to your entries in the comments section. GLTA!
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This is so time consuming and I could edit and add to it forever, so for the sake of getting it out there before it is sooo yesterday, here is is. I will have to tweak it as I go along. Everything herein is my opinion only although I do hope you agree.
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July 23, 2008 11:25 AM Updated
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Alexis Glick, of Fox News, received a letter from the Depository Trust Clearing Corporation (DTCC), correcting some information she provided in her recent blog on naked short selling. The thieves at the DTCC (of course they do not keep records that would ever allow this to be proven), but they are the ones in charge of settling the trades, yet they are unable to, since they only have access to older equipment, or does that only apply to their cousins, the SEC, anyway they seem to have misplaced a few quadrillion shares of stock so they can't settle the trades and match up the buys and sells for literally years, anyway, in part this is what the DTCC letter to Alexis said.
"Last year, we settled $1.86 quadrillion in securities transactions."
Can somebody define $1.86 quadrillion, or is it already a whole number?
http://glickreport.blogs.foxbusiness.com/2008/07/23/the-sec-battle-round-2/
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July 23, 2008 12 Noon Updated
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Here is an great video interview with Patrick Byrne Overstock CEO last night on Business News Network (BNN)
http://watch.bnn.ca/#clip68528
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July 23, 2008 1:20 PM Updated
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WASHINGTON (Reuters) - President George W. Bush has an explanation for the housing market meltdown that has thrown the global economy into turmoil: Wall Street got drunk.
"There's no question about it. Wall Street got drunk," Bush said at a private event in Houston on Friday. "It got drunk and now it's got a hangover. The question is, how long will it sober up and not try to do all these fancy financial instruments?"
Bush's comments were recorded on a cellular telephone camera and posted to the YouTube Internet site on Tuesday.
Bush off the record (OOPS!)
"WALL STREET GOT DRUNK"
http://uk.reuters.com/article/businessNews/idUKN2330503720080723
youtube links
http://www.youtube.com/watch?v=eXj4-PFuMLc
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July 23. 2008 9:15 PM Updated
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http://www.forbes.com/business/2008/07/23/sec-shorting-funds-biz-cx_lm_0723short.html
Liz Moyers
The Whiners
Excerpt
Now, no less than James Chanos, founder of short-selling hedge fund Kynikos Associates, is pleading with the SEC to end the order July 29 and not extend its reach beyond the 19 major financial companies.
Here's shocking news: Hedge fund operators that do a lot of short-selling are complaining to the Securities and Exchange Commission that recently imposed restrictions are making it tough to do business.
Are we surprised? The SEC put in a rule last week requiring short-sellers to secure borrowed shares before shorting them, preventing "naked" short-selling, in which a trader doesn't necessarily have the shares in hand to borrow. Such shorting can add extra downward pressure on a stock, since without being forced to borrow the shares first, traders can short a limitless amount of stock.
Following complaints from Wall Street trading firms and stock and option exchanges, the SEC caved and made an exception for market makers, who are now back doing business as usual. Others have urged that the rule should be extended to all stocks. The SEC's Web site has more than three dozen comments so far on its new policy, mostly from individual investors.
Now, no less than James Chanos, founder of short-selling hedge fund Kynikos Associates, is pleading with the SEC to end the order July 29 and not extend its reach beyond the 19 major financial companies.
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You may recall, that Jim Chanos had Ashley Dupree, Eliot Spitzer's paid companion who toppled his Governorship, living at his beach house in the hamptons in the summer. Just one big happy family.
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OMG Don't Miss This
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Systemic Risk and the Financial Markets |
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Thursday, July 24, 2008, 10:00 a.m., 2128 Rayburn House Office Building |
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Washington, DC—House Financial Services Committee Chairman Barney Frank (D-MA) today announced the second in a series of hearings on the policy implications of the transformation of domestic and international financial markets, with a primary focus on the rise of potential systemic risk associated with the dramatic growth in the share of assets held outside the commercial banking system, the complex arrangements that link firms that are regulated differently (or not at all) and the increasing amount of leverage. Witnesses for this hearing will be New York Federal Reserve President Timothy Geithner, S.E.C. Chairman Christopher Cox. The committee will explore the adequacy of current oversight and regulatory tools, and the extent to which existing structures are adequate to respond to future problems. Specifically, the hearings will examine:
Treasury Secretary Henry Paulson and Federal Reserve Board Chairman Ben Bernanke will appeared at the first of this series of hearings on July 10th. For more information on that hearing, please visit: http://www.house.gov/apps/list/hearing/financialsvcs_dem/hr071008.shtml |
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Witness List & Prepared Testimony: To be announced Available Member Statements:Printed Hearing: |
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http://www.house.gov/apps/list/hearing/financialsvcs_dem/hr072408.shtml * * * * *
July 24, 2008 7 AM Updated
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http://www.businessweek.com/bwdaily/dnflash/content/jul2008/db20080723_593585.htm
House Helps Fannie and FreddieIn passing a rescue bill for Fannie Mae and Freddie Mac, the House left out the conditions that critics had sought
Excerpts
The House accepted Treasury Secretary Henry Paulson's request to let his department extend unlimited amounts of credit to Fannie and Freddie if need be. It also authorized Treasury to buy shares in the companies to bolster their capital bases. Paulson had argued forcefully that making the line of credit unlimited and having authorization to buy their shares would discourage short sellers from mounting attacks on the companies. He likened it to a bazooka that scares off enemies even if it's never used.
On July 22, the Congressional Budget Office gave a rough estimate of $25 billion as the potential cost to taxpayers of the support effort for Fannie and Freddie. It said costs could be zero if markets stabilize and the two institutions do not have to draw on the federal support, but noted there is a small chance the two institutions could lose $100 billion.
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Send in your comments to the SEC on the emergency naked short order
http://sec.gov/cgi-bin/ruling-comments?ruling=s72008&rule_path=/comments/s7-20-08&file_num=S7-20-08&action=Show_Form&title=Emergency%20Order%20Short%20Sales
Send comments here
| 34-58190 | Jul. 18, 2008 | Amendment to Emergency Order Pursuant to Section 12(K)(2) of the Securities Exchange Act of 1934 Taking Temporary Action to Respond to Market Developments File No.: S7-20-08 See also: Guidance Regarding Emergency Order Comments received are available for this notice.  Submit comments on S7-20-08 |
http://www.sec.gov/divisions/marketreg/emordershortsalesfaq.htm
Division of Trading and Markets:
Guidance Regarding the Commission's Emergency Order Concerning Short Selling I. Introduction
Pursuant to Section 12(k)(2) of the Securities Exchange Act of 1934, on July 15, 2008, the Securities and Exchange Commission ("Commission") issued an Emergency Order (the "Order") related to short selling securities of the companies identified in Appendix A of the Order. Also pursuant to Section 12(k)(2), on July 18, 2008, the Commission issued an amendment to the Order. The following questions and answers regarding the Order as amended have been prepared by and represent the views of the Staff of the Division of Trading and Markets ("Staff") to assist in the understanding and application of the Order. They are not rules, regulations, or statements of the Commission. Further, the Commission has neither approved nor disapproved these interpretive answers and is not bound by them.
II. Responses to Questions Regarding the Order
Question 1: What securities are covered by the Order?
Answer: The Order applies to the publicly traded securities traded under the ticker symbols listed in Appendix A to the Order.
Question 2: Is an "arrangement to borrow" the equivalent of having reasonable grounds to believe that the security can be borrowed so that it can be delivered on the date delivery is due as required in Rule 203(b)(1) of Regulation SHO?
Answer: No. An arrangement to borrow requires more than a reasonable grounds to believe that the security can be borrowed. An arrangement to borrow means a bona fide agreement to borrow the security such that the security being borrowed is set aside at the time of the arrangement solely for the person requesting the security.
Question 3: May a person effecting a short sale on behalf of a customer rely on a customer's representation that the customer has arranged to borrow the security from another source?
Answer: Yes. As permitted under Regulation SHO, a person effecting a short sale may obtain an assurance from a customer that such party has borrowed or arranged to borrow the security being sold short from another identified source provided the person effecting the short sale documents that it is relying on a customer's assurance and that the person effecting the short sale has reasonable grounds to believe that the customer has borrowed or arranged to borrow the security. Customers are reminded, however, that they are also subject to the requirements of the Order.
Question 4: How does the requirement to borrow or arrange to borrow securities apply to options exercises and assignments?
Answer: Footnote 3 of the Order states that "[s]hort sales to be effected as a result of a put options exercise are subject to the Order." Accordingly, any person that sells a security short pursuant to the exercise of a put option (including automatic exercises), where the exercise is not in connection with hedging activities by an options market maker, must comply with all the requirements of the Order. The exercise of a put option in a market maker account is exempt from the borrow or arrangement-to-borrow requirement but not from the delivery requirement.
A person will not have violated the Order if it sells short pursuant to the assignment of a call option and does not borrow or arrange to borrow the security prior to effecting such short sale. Such person, however, must deliver the security by settlement date.
Question 5: May a person effecting a short sale re-apply a borrow or arrangement to borrow for intra-day buy-to-cover trades?
Answer: Yes. A person effecting a short sale in a security of a company listed in Appendix A to the Order that has borrowed or arranged to borrow the security prior to effecting the short sale in compliance with the Order may re-apply the borrow or arrangement to borrow for an intra-day buy-to-cover trade as illustrated in the following scenario:
Prior to a customer's short sale of 100 shares of XYZ stock, at 10 a.m., the broker-dealer effecting the short sale arranges to borrow the shares. The short sale is then executed. Later that same day, at 11 a.m., the broker-dealer purchases 100 shares of XYZ stock for the same customer. As a result, the customer's net trading position becomes flat.
If the same customer wants to then sell short another 100 shares of XYZ stock that day, at 3 p.m., the broker-dealer effecting the short sale may apply the original arrangement to borrow shares to that later sale, provided that such subsequent short sale is for an amount of securities that is no greater than the amount of securities obtained in the original arrangement to borrow shares (thus, in the above example, the second short sale at 3 p.m. cannot exceed 100 shares unless the broker-dealer makes another arrangement to borrow additional shares prior to effecting the short sale).
Question 6: How does the Order apply to overseas transactions?
Answer: The Order provides that no person may effect a short sale in the securities of companies identified in Appendix A to the Order using the means or instrumentalities of interstate commerce unless the person or its agent has borrowed or arranged to borrow the security or otherwise has the security available to borrow in its inventory prior to effecting such short sale and delivers the security on settlement date. Accordingly, the Order applies to any short sale transaction in the publicly traded securities traded under the ticker symbols listed in Appendix A to the Order if the trade is agreed to in the United States, even if the trade is booked overseas. In addition, the Order applies to any short sale transaction involving a customer located in the United States and to any broker-dealer (regardless of whether the broker-dealer is registered with the Commission or relying on an exemption from registration) using the means or instrumentalities of interstate commerce in the United States to effect short sales in the publicly traded securities traded under the ticker symbols listed in Appendix A to the Order.
Question 7: How does the Order apply if a broker-dealer that has a delivery obligation with respect to a short sale of a security subject to this Order has a deficit in its possession-and-control obligation for that security under Exchange Act Rule 15c3-3(b)?
Answer: The broker-dealer must comply with the applicable provisions of Rule 15c3-3(b). Generally, a delivery of securities that are in a possession-and-control deficit is prohibited if it would create or increase a deficiency in the quantity of securities by class and issuer required to be in possession and control. The Commission staff has issued no-action relief from certain possession and control provisions of Rule 15c3-3 to broker-dealers that conduct a securities-borrowed-and-loan-"conduit" business. That relief also applies to the publicly traded securities traded under the ticker symbols listed in Appendix A to the Order.
Question 8: How can I comment on the Commission's emergency orders, or any potential rulemaking the Commission may undertake to expand the duration of the naked short sale protections or the number of companies covered?
Answer: The Commission welcomes such comments, which will be considered in any action the Commission may take with respect to naked short sales.
People wishing to submit such comments can use any of the following methods:
Electronic Comments:
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Use the Commission's Internet comment form (http://www.sec.gov/cgi-bin/ruling-comments?ruling=s72008&rule_path=/comments/s7-20-08&file_num=S7-20-08&action=Show_Form&title=Emergency%20Order%20Short%20Sales); or
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Send an e-mail to rule-comments@sec.gov. Please include File Number S7-20-08 on the subject line; or
Paper Comments:
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Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549-1090. All submissions should refer to File Number S7-20-08. This file number should be included on the subject line if e-mail is used. To help us process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site (http://www.sec.gov/). Comments are also available for public inspection and copying in the Commission's Public Reference Room, 100 F Street, NE, Washington, DC 20549 on official business days between the hours of 10:00 a.m. and 3:00 p.m. All comments received will be posted without change; we do not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly.
http://www.sec.gov/divisions/marketreg/emordershortsalesfaq.htm
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