http://www.ft.com/cms/s/0/cb535b34-9406-11dd-b277-0000779fd18c.html?nclick_check=1
There's more to this "financial emergency" than subprime mortgages and escalating risk in the derivatives market. The watchdogs of these big brats have been very lenient and indulgent over the years. Naked short selling played a big part in the cause of the last Great Depression. Naked short selling is a bet that the stock will diminish in value, but unlike short selling the naked short seller doesn't deliver the stock that was promised when the short sale was transacted. It's an incomplete transaction, a breach of contract. The result is a "phantom stock" not too different from counterfeit money and with much the same result. According to some investigators it could cost over one trillion dollars to clean up the phantom stocks that are in the system.
Even though the SEC has admitted that phantom stock can collapse the financial system, it has not moved to stop the sale of phantom stock and naked short selling. They have only placed affected stocks on a list so that investors can see who is being victimized..and the stock falls faster and farther. A large portion of the stock in these 300 companies is bogus. It might show up on a computer that you own it, but you really don't. On September 17, the SEC declared that it was serious about enforcing its regulations, but they have been warned and informed about the practice for years and no investigations were pursued.
More than $1.5 quadrillion in stock trades is processed every year through the Depository Trust and Clearing Corporation (DTCC), headquartered in New York City. A very difficult organization to investigate, the DTCC is owned by its users and it's not transparent to the SEC. Every short sale is processed through it and therefore the DTCC would know which brokers have hedging clients selling stock but not delivering. The government knows where the counterfeiters work but never bothers to stop them.
You probably have not heard much of naked short selling or phantom stocks because influential people in the media have been pooh-poohing the complaints of CEOs and investors alike. The money gurus are part of the problem. It's a very sophisticated sting: first the target company gets glowing publicity from one or more money gurus in the media. A corrupt law firm tells its clients to purchase some of the stock so that they can later be named as plaintiffs in a class-action suit against the company. A corrupt hedge fund takes a short position on the stock by borrowing from an investor who holds the stock, then sells the stock and waits for its inevitable fall in price. Fraudulent "research" that alleges problems within the company is revealed on one or more of the mainstream money shows. For weeks the money gurus allege wrongdoing at the company as the value of the stock drops. The SEC places the company on the list of companies affected by phantom stock, driving the value of the stock still lower. The SEC might even begin an investigation of the company with even greater effect. The shyster lawyer files suit against the company for defrauding his clients and the stock continues to plummet. A stock position opens on foreign exchanges against the wishes of the company because this makes it even easier to flood the market with phantom stock. The short sale is repaid with phantom stock diluting the value of the company's real stock. If the company can be driven out of business, that is the most lucrative outcome for the naked short sale. It's devastating to the investors, employees, related businesses and to the economy as a whole.
So now our Congress Critters are trying to scam you and me by telling us that these shenanigans must be taken upon OUR shoulders. If they don't investigate and prosecute the perpetrators, the criminals will be coming back for more..and more..
http://www.real-debt-elimination.com/real_money/crimes_of_the_economy/naked_short_selling_and_phantom_stocks.htm
"Naked short selling is stealing candy from a baby for many hedge funds as they could sit and effectively attack smaller companies day after day for as long as they want. The investment brokers, serving as prime brokers for the hedgies, of course were laughing it up too - more profits for all of us!... until the day the tables turned on them and the i-banks became the targets. Then the last two i-banks standing ran to Washington D.C. and screamed to CHANGE THE RULES since naked shorting is UNFAIR and the Frankensteins they helped create had turned on them. It is the height of hypocrisy. But without naked shorting, the "easy trade" has been taken away from some of these hedge funds. Gaming the system is not really showing any investing acumen - it is simply skirting the rules - I hope this becomes a permanent change and we allow smaller companies to actually enjoy an existence in the stock market."
http://seekingalpha.com/article/98458-what-the-hedge-funds-bad-september-could-mean-for-markets
US equity market - Fails to deliver: The naked truth /Euromoney magazine
http://www.euromoney.com/Article/2060049/US-equity-marketFails-to-deliver-The-naked-truth.html
Forbes.com columnist and former BusinessWeek reporter named Gary Weiss hiding behind various anonymous accounts spent years controlling the relevant articles on Wikipedia. But emails shared with Byrne and The Register show that Weiss has in fact edited the encyclopedia's article on naked shorting. A single Wikipedia edit also links the account to a PC inside the Depository Trust & Clearing Corporation (DTCC). Owned by Wall Street investment banks that may have benefited from naked shorting schemes, the DTCC oversees the delivery of stocks on Wall Street.
http://www.theregister.co.uk/2008/10/01/wikipedia_and_naked_shorting/
“Credit default swaps, potentially the next domino to fall in the ongoing financial crisis, are the debt equivalent of naked shorts on stocks, according to the chairman of the Securities and Exchange Commission.”
http://www.cfo.com/article.cfm/12286366/c_12285332?f=home_todayinfinance
Illegal Naked Short Selling Links:
- http://www.deepcapture.com/
- http://stopphantomshortselling.org/
- http://www.deepcapturethemovie.com/
- http://www.thesanitycheck.com/
- http://www.investigatethesec.com/drupal-5.5/ArchivedStockgateToday
- http://www.rgm.com/shortselling.html
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