Bloomberg on BSC Collapse - New

[Hydroblunt]

Quote from flytiger:

The guys a moron. Don't give him a second thought. What kind of creedance can you give someone who says things are crooked, so get over it?

Be thankful there are the few people out there who are honest are winning the battle.

You're the real moron and a laughing stock on the Street. Most ET members think you're quite the imbecile as well, only those who are naive, gullible or refuse to accept reality actually pay serious attention you.

What battle are you winning? Really, your naked shorting whining got what done? Shake out the weak players and grant the naked shorting priviliege officially to the big boys? Wow amazing, good job there, Mr. Clueless. Your sh*tty companies are still sh*tty and will be going Bankrupt anyway.

So STFU and go preach your nonsense & fairy tales somewhere else. You cry whether SEC does something or nothing, you cry when your Naked Shorting jihad gets attention while you cried before when it did not. At the end of the day, you're just a sad frustrated soul that can't bring himself to face reality and will, at any cost, try to hold on to this illussion of Wall Street being a happy playground where everyone is supernice, honorable, loyal, trustworthy and EVERYONE makes money in the markets.

 

[ByLoSellHi]

Quote from Hydroblunt:

Inside information is not hard to get, especially for those of us who have brains & are very resourceful. However, the SEC will come after you as the Big Boys Club wants that edge for themselves.

I don't touch US equity markets anymore, but if I chose to play them again, I would have no illussion about how the game is. While people like you want to play yet refuse to accept the reality, continue deluding themselves and get frustrated at the unfairness. It was never meant to be fair. If you can't stand the heat, get out of the kitchen. It is as simple as that.

Stop trying to change the character & mentality on which Wall Street was founded. If you don't like it, don't participate.

Really, what makes you believe that Wall Street owes you a leveled playing field? What makes you think this is possible considering the history of Wall Street and most stock exchanges? Wall Street, in general, rewards those who are ruthless and win at any costs, while penalizing those who try to be nice & fair and play by all the rules.

So:

1) You don't buy or sell U.S. equities?; and

2) You have no problem with fraud being committed and nothing being done about it?; and

3) You want to criticize me for expecting fraud to be investigated and acted against in U.S. equity markets?


What markets do you trade not having U.S. equities, and is there fraud there?

 

[nutmeg]

Quote from ByLoSellHi:


2) You have no problem with fraud being committed and nothing being done about it?

==============================

First, not all false statements are fraudulent. To be fraudulent, a false statement must relate to a material fact. It should also substantially affect a person's decision to enter into a contract or pursue a certain course of action. A false statement of fact that does not bear on the disputed transaction will not be considered fraudulent.

Second, the defendant must know that the statement is untrue. A statement of fact that is simply mistaken is not fraudulent. To be fraudulent, a false statement must be made with intent to deceive the victim. This is perhaps the easiest element to prove, once falsity and materiality are proved, because most material false statements are designed to mislead.

Third, the false statement must be made with the intent to deprive the victim of some legal right.

Fourth, the victim's reliance on the false statement must be reasonable. Reliance on a patently absurd false statement generally will not give rise to fraud; however, people who are especially gullible, superstitious, or ignorant or who are illiterate may recover damages for fraud if the defendant knew and took advantage of their condition.

Finally, the false statement must cause the victim some injury that leaves her or him in a worse position than she or he was in before the fraud.

http://legal-dictionary.thefreedictionary.com/fraud

 

[Hydroblunt]

Quote from ByLoSellHi:

So:

1) You don't buy or sell U.S. equities?; and

Not at the moment, and I may not touch them ever again.

2) You have no problem with fraud being committed and nothing being done about it?; and

It's not fraud, it's how they have always run the industry. It's only fraud in your sensitive little eyes, because you have been listening to the Tube & media for too long.
Before Wall Street was so open to the public, pre SEC, this was regular practice. They are there to make money, not to watch out for your feelings.

3) You want to criticize me for expecting fraud to be investigated and acted against in U.S. equity markets?

Yeah, cause you sound like a naive & gullible idiot. And the problem is that people like you start making a fuss, creating more regulations that always have loopholes for the Big Boys Club while creating additional costs & headaches for the public. This is the same pattern which has existed for decades.

What markets do you trade not having U.S. equities, and is there fraud there?

None, they don't exist. That's the game, either you accept it or you keep living in denial. The difference in less regulated or unregulated markets is that there are no illusions being created, except by the sales pitches of the brokers. In the USA, you have the SEC creating that illusion (exact purpose for which it was created), and then people keep wondering why so many criminals go on doing perpetuating "fraud" while SEC spends time going after small time guys who made $5k on some insider tip..

If you don't like it, don't participate. It's a simple as that. Noone forces you to invest in US equities, you choose to do it. If more people chose to swear off Wall Street & stocks because they got tired of the unfair level field, it would force Wall Street to change. Not crying about it, which only shows YOUR weakness & allows Wall Street to play their regulatory arm to screw you over even more. Just like it happened with NYSE & the specialists. It wasn't the complaining, the lawsuits, the newspaper articles which changed it, it was institutions & traders moving away from NYSE toward ECNs.

Really, what do you hope to accomplish with these outrages and complaints? You really think this is something new? It's old news, just check through headlines over the decades. It's their world, not yours.

 

[ByLoSellHi]

So if you don't trade any markets, what do you do?

I mean, you don't trade commodities, bonds, equities - anything?

 

[flytiger]

Quote from Hydroblunt:

You're the real moron and a laughing stock on the Street. Most ET members think you're quite the imbecile as well, only those who are naive, gullible or refuse to accept reality actually pay serious attention you.

What battle are you winning? Really, your naked shorting whining got what done? Shake out the weak players and grant the naked shorting priviliege officially to the big boys? Wow amazing, good job there, Mr. Clueless. Your sh*tty companies are still sh*tty and will be going Bankrupt anyway.

So STFU and go preach your nonsense & fairy tales somewhere else. You cry whether SEC does something or nothing, you cry when your Naked Shorting jihad gets attention while you cried before when it did not. At the end of the day, you're just a sad frustrated soul that can't bring himself to face reality and will, at any cost, try to hold on to this illussion of Wall Street being a happy playground where everyone is supernice, honorable, loyal, trustworthy and EVERYONE makes money in the markets.

What you're tellling me is, you know nothing, have nothing, are nothing. You do nothing but criticize with no facts - just you're usual diatribe. It is all the trademark of paid bashing. I don't need a million people for me. I have facts, data, contacts. The few that understand may choose to be silent. That's fine. We'll see when the perp wallks start.

 

[$preader]

Quote from Cutten:

As a comparable, why not look at options trading in LEH, which *didn't* go bust. What about FNM/FRE/WM etc? The "lottery tickets", which were traded on decent size last month, all expired totally worthless. Will we hear Bloomberg or any conspiracy theorists talking about how the hedge funds got it totally wrong on that one? No, because they are biased, don't do their research, and have no real clue about trading.

Interesting,and actually a good post.I've got to say when I first read the article I immediately thought it all sounded very dubious but if other similar trades go on that don't reap the windfall then it could have just been a good trade,maybe someone screwed on a massive long share position that wants to hedge in case of worst case scenario.If you were long $300 million worth of BSC and could 'insure' the whole amount for $1.7 million then it seems like a feasible thing to do.

 

[flytiger]

Let's take a look back. Here is my first post on the OSTK CEO board:

http://elitetrader.com/vb/showthread.php?s=&threadid=53995&perpage=6&highlight=ostk ceo&pagenumber=3

On Aug 12, 2005, Patrick Bryne gave his famous "Miscreant's Ball" presentation. Most of what he said came true. He was mercilessly skewed for the 'Sith Lord" comment. There is a Sith Lord. It is not Milken. It was made to look like Milken. Hence, Milken's Star War's fixation, etc. OK. I could put a million more things up here to prove how right we were. Who cares? But look at the paragraph about us calling the authorities - the REAL authorities. Now, they call us. July 15, Cox knows right where to go to stop Bear raids on financials. Stop the Naked Shorting. Duh?

I consider what we've accomplished a contribution. After the close, I shouldn't even have taken this time, I'm going to look at the contributions of Waterboy.

Whatever happened to Jeff Matthews????

 

[Cutten]

Quote from flytiger:

Good. Now, explain all the FTD's.

Puts don't have FTDs.

Do you think BSC would have survived if people had to get locates before shorting? It's not exactly hard to put on a synthetic.

Shorting isn't want vaporized BSC's liquidity in 3 days.

 

[flytiger]

Quote from Cutten:

Puts don't have FTDs.

Do you think BSC would have survived if people had to get locates before shorting? It's not exactly hard to put on a synthetic.

Shorting isn't want vaporized BSC's liquidity in 3 days.

Puts create FTD'
s w/ the MM exemption. Read (or Listen) to Najarian. It's the speed. The speed at which it happens. And if there is no limit on the shares..........


http://www.cnbc.com/id/15840232?video=821648767&play=1





Becky Quick: Welcome back. You know, the SEC’s emergency ruling tightening regulation against naked short selling in 19 major U.S. financial stocks expires tomorrow, but now comes that question about what effect the temporary prohibition actually had on the markets. Joining us right now is David Tice. He’s the Prudent Bear Funds portfolio manager and John Najarian who is OptionsMonster.com’s co-founder. Gentlemen, thank you for being here.



David, what effect did this ruling have?



David Tice: Well it really had very little effect on the longer term or intermediate term short sellers, Becky. We’ve always been required to have the stock borrowed as of the settlement date and we had to have the shares located as of the trade date.



The rule change required you to have actually borrowed or arranged to have borrowed by the trade date. Now the prime brokers, therefore, had to dot more I’s, cross more T’s by the trade date. They actually required some people to talk to a person rather than – and they actually discontinued some of the automated systems.



Therefore it impeded some of the very fast day traders I think in short selling, but not the typical hedge fund.



Becky Quick: Although, David, aren’t there cases in some stocks where it would have a significant effect? We’ve heard in the past there there were cases where there were more shares shorted than existed.



David Tice: Well, not in the 19 financials though, Becky, but it’s certainly if this is applied to other stocks down the road, it certainly could.



Becky Quick: And John, what about you? Do you think this is likely that this rule will be extended or brought against other stocks as well?



John Najarian: Well, I think David’s dead on, but in the longer term or even intermediate term it really has no effect, but short-term because of the repeal of the Uptick Rule July 6th last year and the algorithmic trading, the electronic trading that goes on. When you just change those two words, best efforts to secure and locate, you just took those two words out of the statement.



All of a sudden, people can aggressively short and push at an accelerated pace, like that book The Tipping Point. When you take all three of these and put them together, the speed and then the Uptick Rule being pushed aside, then you have actually a tipping point that caused the acceleration in selling and I think that was the problem.



It’s a very short-term phenomenon. You’ve seen that Freddie and Fannie are basically back down near the lows that they’ve been at for the last 52 weeks. So it didn’t stop people from getting in there, but it just stops those one day runs where you can see 30 or 40 percent of the stocks value evaporated.



Becky Quick: David, we’ve heard from other sources from other places that there are certainly – there are people who think that this is part of the reason the financials have done as well as they have since these rules were put in place so that if you took it out there’d be a huge drop in some of these financial stocks. Do you think that’s going to happen?



David Tice: It’s hard to say, Becky. I really think that market dynamics caused this increase and there’s certainly been huge rallies, but as John said, Fannie and Freddie are back close to their lows. I don’t think this going away tomorrow is going to necessarily cause these stocks to revisit. Their fundamentals are pretty bad by themselves.



Becky Quick: In that case are you saying you wouldn’t care if this was extended, if the rules themselves were brought and extended. The SEC has said in the past they wouldn’t do it, but what happens if tomorrow they change their minds?



David Tice: Well, we hear from the New York Post this morning that it’s likely new policies are going to be invoked, may be in effect at the end of the year or so for a lot of stocks. So I do think that’s coming. But I don’t think it’s going to make that much of an effect, but as John said, it has affected the short-term day traders.



Becky Quick: And John, real quickly, last word on this. You say the Uptick Rule is the most important thing.



John Najarian: Well, they either need something to slow down those very quick panics that they can create, Becky. The Uptick Rule did a little bit of that. This best efforts to secure and borrow does some of that. They have to do a mix of the two or one or the other or we’re going to go right back to where we were as far as being able to create a panic and then push on it.



Becky Quick: Alright; gentlemen, thank you very much for joining us. Appreciate it.



[End of Audio]




Attachment 1: 2008.08.12 (CNBC) SEC Short-Selling Rule Expires.pdf (application/pdf)