The damage is being caused by the thieves that don't have to account for themselves. All the SEC's measure did was to penalize innocent traders by making it difficult for them to short these stocks and allowing unscrupulous brokers to add to their revenues by charging extra fees in exchange for locating and finding these so called 'hard to borrow' securities.
SEC Extends Order Limiting Naked Short Selling Through August 12
- Thread starter EricP
- Start date
The damage is being caused by the thieves that don't have to account for themselves. All the SEC's measure did was to penalize innocent traders by making it difficult for them to short these stocks and allowing unscrupulous brokers to add to their revenues by charging extra fees in exchange for locating and finding these so called 'hard to borrow' securities.
So how do you explain the huge SHO list? Meanwhile, I agree with myself, and I agree with ak15.
Obviously the naked shorting is done by the x you mention, because nobody else (or about nobody else) can do it.
First, the legit borrows are finite. The fakes are not. They are infinite. Remember a little more than a year ago Chanos raising hell because he knew the locates he was getting were fake locates, and he had to pay for them? That is part of what this is about. How would you like to have 10 widgets for rent at 100 bucks a piece. When you've rented out all ten, you keep renting, and keep getting paid. I mean, you say the UBS news. They knew they were illegally aiding tax evasion. If there is a buck in it, they do it, regardless.
Second. We will all get punished. That's what I've been saying. I've learned enough about politics to have seen this coming. It's going to be gruesome.
And thanks for the chart there, Poindexter!!!
<b>Option Trader: I believe what happened to financials today is to a significant part a product of naked shorting.
RM: I highly doubt that, since all of their shares can easily be borrowed legitimately.
Option Trader: So how do you explain the huge SHO list?</b>
That's a pretty confused non-sequitur.
At first you commented that financial stocks dropped today because of naked shorting, right? I replied to let you know that naked shorting isn't all that relevant to GS, C, FNM, MER, JPM, etc., because there's no need at all to commit fraud in order to get these shares short- They're all very easy to borrow. Do any of the above mentioned names appear on the reg SHO list? I don't think so.
I'm not saying that NSS doesn't cause some stocks to plunge. Indeed, NSS does plenty of harm to specific targeted companies.... but today's drop in the big financial names just isn't relevant to any of that. (Please correct me if I'm wrong.)
RM: I highly doubt that, since all of their shares can easily be borrowed legitimately.
Option Trader: So how do you explain the huge SHO list?</b>
That's a pretty confused non-sequitur.
At first you commented that financial stocks dropped today because of naked shorting, right? I replied to let you know that naked shorting isn't all that relevant to GS, C, FNM, MER, JPM, etc., because there's no need at all to commit fraud in order to get these shares short- They're all very easy to borrow. Do any of the above mentioned names appear on the reg SHO list? I don't think so.
I'm not saying that NSS doesn't cause some stocks to plunge. Indeed, NSS does plenty of harm to specific targeted companies.... but today's drop in the big financial names just isn't relevant to any of that. (Please correct me if I'm wrong.)
We don't know how many fails there are in the financials, because the DTCC and SEC do not even let the companies know. We can surmise that since they aren't on Sho, they are below the threshold limits, however, OSTK has dropped off twice, and reappeared within days. That means, they can float the stock x clearing and hide many sins.
My thesis is, Paulson went to Cox back in July and said, "we're going to lose these financials, fix it." Cox knew exactly where to go, so he's seeing Beaucoup fails in those stocks, whether we do or not.
The sad part is, these people have proven over and over how corrupt and incompetant they are, and still no transparency. Who knows how it ends. I'm thinking Cramer isn't too far off. A huge burden will soon befall FDIC.
Settle thetrades.
Campos is an ex SEC Commissioner who probably did zip until he landed his new big dollar gig at some prestigious ambulance chaser. But SEC commissioners are like Marines. They are always part of the commission in some way shape form. What he's telling you here is what I've been saying. More regulation. They've got themselves in a corner, and they will legislate themselves to the point of least pain - for them. Screw you and me.
Interviewer: Now for more on the trading that preceded Bear Stearns demise and what the SEC might be looking for here, we turn to former SEC Commissioner Roel Campos. Now a partner at Cooley, Godward, Kronish here in Washington. Thanks for the time. Good to see you.
Roel Campos: My pleasure to be here.
Interviewer: What do you make of this story and in particular this one option trade that apparently took place -- $1.7 million bet that Bear Stearns would go down. Is it the sort of thing that would grab the SECâs attention?
Roel Campos: Most definitely. But what we should say on the onset is that we donât know the whole story. Any isolated element of evidence can be misleading. So letâs just make that caveat from the get-go.
However, this does appear to be not only betting the farm, but betting all your relativesâ farms on one particular bet. It would lead an objective person to wonder whether there isnât some inside information.
So, most definitely Iâm sure that the SEC and its enforcement group will be looking at that to see where it leads.
Interviewer: Some people have suggested that options trading, whether itâs Bear Stearns or other instances of perhaps manipulation, options trading provide clues to investigators, to regulators like those at the SEC. Is it a place where the SEC spends a lot of its time?
Roel Campos: Well, I donât know about a lot of its time. I think recently it certainly has been looking at the trails regarding options and option making because essentially whatâs occurred is that there have been a lot of interesting or puzzling trades with respect to several of the major investment banks; Lehman recently, Merrill, others.
And it does appear that you are having more puts and more other types of betting short thatâs occurring. Now maybe thatâs perfectly legitimate. We have to say that from the very beginning.
But the SEC is obligated to look there to see if there isnât some inside information thatâs being used, if there isnât some sort of manipulation going on. It has to look there and maybe youâll find other evidence.
Interviewer: Itâs been months of course since these trades took place since the rescue of Bear Stearns. Should we draw much conclusion from that? These investigations take time. The SEC could be on this trail; yet, we just donât know.
Roel Campos: Thatâs exactly right. The SEC in particular in securities, trading type cases, manipulation cases and cases like this that would be done by â if there is wrong doing, itâs done by sophisticated people. It would take awhile to put together the evidence, to make sure it wasnât legitimate trading.
And remember, shorting can be legitimate. Naked shorting is not legitimate. So you have to differentiate. So it is quite natural that it would take awhile to put these kinds of cases together to be able for the agency to go forward or for a criminal investigation to go forward. Thereâs a high standard of proof.
Interviewer: Yeah; you mentioned the naked shorting and tomorrow is the day when these emergency restrictions placed on short selling of 19 specific stocks, financial firms by and large imposed by â announced by the SEC chairman just a few weeks back.
They expire, but itâs pretty clear from the SEC the message is there are more limits on short selling coming in the future. Do you support that move? Is it the right decision for the SEC at this time to consider that?
Roel Campos: I very much support it. I think the SEC having now issued this emergency order and apparently letting it expire, I think acknowledged that naked shorting and/or manipulation can hurt large firms.
It didnât say that it necessarily was occurring, but it was instead prophylactic in terms of protection. Once it acknowledged that, the rest of the market, smaller companies, even large companies but that are not of the 19 quite rightly asked well, what about us. Are we chopped liver or whatâs wrong with the rest of the marketplace.
I think the SEC is duty bound to go on now and examine whether regulations show, which is a specific shorting rule whether it needs to be fixed.
Many people in the marketplace believe that it is broken and indeed when you have companies on the so-called threshold list, which means that they continuously have fails to deliver, theyâre the victims or the objects of shorting and then the deliveries for those shorts are never delivered and many, many companies keep on these lists for hundreds of days.
It would seem that the existing rule is broken.
Interviewer: Alright. Roel Campos, thanks very much for your time, your insights on the SEC and this investigation with Bear Stearns. Weâll have to wait and see what comes out of that invest â
[
Interviewer: Now for more on the trading that preceded Bear Stearns demise and what the SEC might be looking for here, we turn to former SEC Commissioner Roel Campos. Now a partner at Cooley, Godward, Kronish here in Washington. Thanks for the time. Good to see you.
Roel Campos: My pleasure to be here.
Interviewer: What do you make of this story and in particular this one option trade that apparently took place -- $1.7 million bet that Bear Stearns would go down. Is it the sort of thing that would grab the SECâs attention?
Roel Campos: Most definitely. But what we should say on the onset is that we donât know the whole story. Any isolated element of evidence can be misleading. So letâs just make that caveat from the get-go.
However, this does appear to be not only betting the farm, but betting all your relativesâ farms on one particular bet. It would lead an objective person to wonder whether there isnât some inside information.
So, most definitely Iâm sure that the SEC and its enforcement group will be looking at that to see where it leads.
Interviewer: Some people have suggested that options trading, whether itâs Bear Stearns or other instances of perhaps manipulation, options trading provide clues to investigators, to regulators like those at the SEC. Is it a place where the SEC spends a lot of its time?
Roel Campos: Well, I donât know about a lot of its time. I think recently it certainly has been looking at the trails regarding options and option making because essentially whatâs occurred is that there have been a lot of interesting or puzzling trades with respect to several of the major investment banks; Lehman recently, Merrill, others.
And it does appear that you are having more puts and more other types of betting short thatâs occurring. Now maybe thatâs perfectly legitimate. We have to say that from the very beginning.
But the SEC is obligated to look there to see if there isnât some inside information thatâs being used, if there isnât some sort of manipulation going on. It has to look there and maybe youâll find other evidence.
Interviewer: Itâs been months of course since these trades took place since the rescue of Bear Stearns. Should we draw much conclusion from that? These investigations take time. The SEC could be on this trail; yet, we just donât know.
Roel Campos: Thatâs exactly right. The SEC in particular in securities, trading type cases, manipulation cases and cases like this that would be done by â if there is wrong doing, itâs done by sophisticated people. It would take awhile to put together the evidence, to make sure it wasnât legitimate trading.
And remember, shorting can be legitimate. Naked shorting is not legitimate. So you have to differentiate. So it is quite natural that it would take awhile to put these kinds of cases together to be able for the agency to go forward or for a criminal investigation to go forward. Thereâs a high standard of proof.
Interviewer: Yeah; you mentioned the naked shorting and tomorrow is the day when these emergency restrictions placed on short selling of 19 specific stocks, financial firms by and large imposed by â announced by the SEC chairman just a few weeks back.
They expire, but itâs pretty clear from the SEC the message is there are more limits on short selling coming in the future. Do you support that move? Is it the right decision for the SEC at this time to consider that?
Roel Campos: I very much support it. I think the SEC having now issued this emergency order and apparently letting it expire, I think acknowledged that naked shorting and/or manipulation can hurt large firms.
It didnât say that it necessarily was occurring, but it was instead prophylactic in terms of protection. Once it acknowledged that, the rest of the market, smaller companies, even large companies but that are not of the 19 quite rightly asked well, what about us. Are we chopped liver or whatâs wrong with the rest of the marketplace.
I think the SEC is duty bound to go on now and examine whether regulations show, which is a specific shorting rule whether it needs to be fixed.
Many people in the marketplace believe that it is broken and indeed when you have companies on the so-called threshold list, which means that they continuously have fails to deliver, theyâre the victims or the objects of shorting and then the deliveries for those shorts are never delivered and many, many companies keep on these lists for hundreds of days.
It would seem that the existing rule is broken.
Interviewer: Alright. Roel Campos, thanks very much for your time, your insights on the SEC and this investigation with Bear Stearns. Weâll have to wait and see what comes out of that invest â
[