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Vanity Fair on BSC Collapse........
- Thread starter flytiger
- Start date
See how the naked short sellers tarnish the whole practice. I said that would happen. And the fact they spit right in the eye of the warnings from March tell you who THEY think is in charge. Say what you want, this is the same MO as Bear Stearns. Now, let's see if the Regs have the guts to stand up to this. Otherwise, we bail another out.
Lehman speculation blamed on short-sellers
By Ben White
Published: July 1 2008 22:20 | Last updated: July 1 2008 22:20
Shares in Lehman Brothers, battered in recent days by rumours of an emergency sale, stabilised on Tuesday after several analysts said what Lehman executives have been saying privately for days: that the rumours are completely bogus.
The problem for Lehman is that similar rumours circulated about Bear Stearns in the weeks leading to the investment bankâs collapse and emergency sale to JPMorgan Chase. Those rumours, mainly that the bank had run out of cash, were also untrue until they became a self-fulfilling prophecy.
People close to Lehman say the bank is now convinced that it is the target of an orchestrated campaign by short-sellers attempting to force it into sharing the same fate as befell Bear.
And executives at the bank are deeply frustrated that regulators have not moved more aggressively â and publicly â to investigate who is behind the latest rumours and make clear that those who are will be punished severely.
On Monday the main rumour was that Lehman was about to be sold at a steep discount, perhaps $15 per share, to Barclays. The rumour gained so much traction that it appeared in several prominent media reports and drove Lehman shares down 11 per cent to $19.81, a level not seen since 1998 when rumours spread that Lehman might fail following the collapse of Long Term Capital Management, the highly leveraged hedge fund. Those rumours led Dick Fuld, Lehman chief executive, to mount a long-term effort to diversify Lehmanâs businesses and funding base.
The Barclays rumour had absolutely no basis in fact. Neither bank would comment because to even address the suggestion could lend it credence. But people close to both banks said there would be no deal.
Lehman would make little sense for Barclays as the banks would have enormous overlap in their fixed-income departments and other areas. Barclays is also in the middle of a £4.5bn ($9bn) capital-raising and would have had to disclose any talks with Lehman in filings associated with the effort.
Both the prominence and implausibility of the Barclays rumour have further convinced Lehman that it is the target of a short-selling conspiracy. âThis rumour is so relentless and so ridiculous that it suggests serious manipulation,â said one person close to the bank.
Another suggested regulators should say publicly that they are conducting sweeps of hedge funds to determine if they are spreading Lehman rumours. This person acknowledged that the Securities and Exchange Commission has been investigating possible abusive trading in Lehman and Bear but said these probes would not do much good if they are completed after Lehman had suffered the same fate as Bear.
The SEC said it could not comment on any specific rumour or investigation. It noted that Christopher Cox, SEC chairman, had said in April that the commission would âvigorously investigate and prosecute those who manipulate markets with this witchâs brew of damaging rumours and short sales.â
Lehman shares, down nearly 70 per cent this year, rose slightly in midday trading to $19.97 after Morgan Stanley said a sale of the bank at below book value was âimprobableâ. The note said Lehmanâs âability to weather near-term market headwinds and return to respectable [return on equity] generation should help the shares trade closer to book valueâ.
Dick Bove, analyst at Ladenburg Thalmann, said the Barclays rumour âranks right up there with the moon is made of green cheeseâ. However, Mr Bove noted, âin a financial market characterised by panic and hysteria, no one checks anything. Rather sell and ask questions later.â
Copyright The Financial Times Limited 2008
Lehman speculation blamed on short-sellers
By Ben White
Published: July 1 2008 22:20 | Last updated: July 1 2008 22:20
Shares in Lehman Brothers, battered in recent days by rumours of an emergency sale, stabilised on Tuesday after several analysts said what Lehman executives have been saying privately for days: that the rumours are completely bogus.
The problem for Lehman is that similar rumours circulated about Bear Stearns in the weeks leading to the investment bankâs collapse and emergency sale to JPMorgan Chase. Those rumours, mainly that the bank had run out of cash, were also untrue until they became a self-fulfilling prophecy.
People close to Lehman say the bank is now convinced that it is the target of an orchestrated campaign by short-sellers attempting to force it into sharing the same fate as befell Bear.
And executives at the bank are deeply frustrated that regulators have not moved more aggressively â and publicly â to investigate who is behind the latest rumours and make clear that those who are will be punished severely.
On Monday the main rumour was that Lehman was about to be sold at a steep discount, perhaps $15 per share, to Barclays. The rumour gained so much traction that it appeared in several prominent media reports and drove Lehman shares down 11 per cent to $19.81, a level not seen since 1998 when rumours spread that Lehman might fail following the collapse of Long Term Capital Management, the highly leveraged hedge fund. Those rumours led Dick Fuld, Lehman chief executive, to mount a long-term effort to diversify Lehmanâs businesses and funding base.
The Barclays rumour had absolutely no basis in fact. Neither bank would comment because to even address the suggestion could lend it credence. But people close to both banks said there would be no deal.
Lehman would make little sense for Barclays as the banks would have enormous overlap in their fixed-income departments and other areas. Barclays is also in the middle of a £4.5bn ($9bn) capital-raising and would have had to disclose any talks with Lehman in filings associated with the effort.
Both the prominence and implausibility of the Barclays rumour have further convinced Lehman that it is the target of a short-selling conspiracy. âThis rumour is so relentless and so ridiculous that it suggests serious manipulation,â said one person close to the bank.
Another suggested regulators should say publicly that they are conducting sweeps of hedge funds to determine if they are spreading Lehman rumours. This person acknowledged that the Securities and Exchange Commission has been investigating possible abusive trading in Lehman and Bear but said these probes would not do much good if they are completed after Lehman had suffered the same fate as Bear.
The SEC said it could not comment on any specific rumour or investigation. It noted that Christopher Cox, SEC chairman, had said in April that the commission would âvigorously investigate and prosecute those who manipulate markets with this witchâs brew of damaging rumours and short sales.â
Lehman shares, down nearly 70 per cent this year, rose slightly in midday trading to $19.97 after Morgan Stanley said a sale of the bank at below book value was âimprobableâ. The note said Lehmanâs âability to weather near-term market headwinds and return to respectable [return on equity] generation should help the shares trade closer to book valueâ.
Dick Bove, analyst at Ladenburg Thalmann, said the Barclays rumour âranks right up there with the moon is made of green cheeseâ. However, Mr Bove noted, âin a financial market characterised by panic and hysteria, no one checks anything. Rather sell and ask questions later.â
Copyright The Financial Times Limited 2008
Everyone is barking up the wrong tree. Short sellers in stock for sure did not cause Bear to fail. It was counterparty credit risk and CDS. What kind of message do you think it says when 3 major banks announce to their traders they can no longer face Bear Stearns on any CDS trades? And the rest of the street informing their traders to call senior risk managers before doing any trades that would face Bear. All of these banks had counterparty exposure to Bear and the only way to hedge that was either to buy Bear protection or unwind trades. It didn't take long for risk managers to see that they couldn't do either and effectively shut business down with Bear. Repo lines were pulled simultaneously and prime brokerage clients unable to hadge their exposure just pulled their cash and securities. I hate bailouts and it would certainly have been interesting to see the fallout if the Fed didn't step in but ultimately, the Fed needs to keep up the charade and they did it. For how much longer who knows.
Quote from simpleton:
It was counterparty credit risk and CDS.
That was always a possiblility. It was the bear raid that forced everyones' hands, and made the puts fly into the money so quickly.
That, regardless of how lousy Bear Stearns was, and they were scum, is against the law. And that had better be investigated and prosecuted. Or the wild west continues.
LEH looks like a trading long again. Paulson is out talking policy. Feds are asking questions. I don't think they let those rumors from yesterday go uninvestigated.
I know some guys who play this rumor game, and they are scared to death.
Just like I said on the overstock thread. If I am the ceo of company which makes money. I would enjoy seeing naked shorting on my stock. I would wait for shares to get low enough and then buy in as much of the float as ti could.
They I would call the stock in to issue new stock.
The naked shorts would be crushed.
Of course your business needs to be profitable.
They I would call the stock in to issue new stock.
The naked shorts would be crushed.
Of course your business needs to be profitable.
Quote from flytiger:
Show me where I said competition is against the law.
I know this is a VERY tough concept for you to understand. What happened to Bear Stearns is nothing more than Wall Street competition. On the trading floors & the pits, the same thing happens. Things got a bit sour, as the subprime crisis was unfolding, the sharks don't have enough easy prey and move on each other. Bear Stearns was the weakest.
Stop your crying & bitching already. Stick to complaining about naked shorters which attack sh*tty companies. At least there you have half a leg to stand on. In this case, you just sound like a complete ignoramus. In fact, whoever you are behind the ET nickname, Im sure you are a laughing stock on the Street.
Instead of praising yourself over your academic degrees, do some real research & learning. The way Bear was taken down via rumors and spreading information to the media is exactly how it is done. Bear Stearns was "tested" and they failed.
Quote from jem:
Just like I said on the overstock thread. If I am the ceo of company which makes money. I would enjoy seeing naked shorting on my stock. I would wait for shares to get low enough and then buy in as much of the float as ti could.
They I would call the stock in to issue new stock.
The naked shorts would be crushed.
Of course your business needs to be profitable.
Doesn't work that way. Although they appear they are losing their power, it is not the way it works. i showed you CALM. Hundreds of others. They even will lend out legended stock. When we counsel companies, it 's the first thing we tell them. Get your legended stock out.
there are several ways they work. An offering could be coming, like NYX two years ago. Or, they could get something on a corporate officer, and feed that out. They can also get the SEC to investigate. All these things, and many more are tools of the naked shorters. You are naive to think otherwise. We've all been there. But you don't stay there for long.
Quote from Hydroblunt:
I know this is a VERY tough concept for you to understand. What happened to Bear Stearns is nothing more than Wall Street competition. On the trading floors & the pits, the same thing happens. Things got a bit sour, as the subprime crisis was unfolding, the sharks don't have enough easy prey and move on each other. Bear Stearns was the weakest.
Stop your crying & bitching already. Stick to complaining about naked shorters which attack sh*tty companies. At least there you have half a leg to stand on. In this case, you just sound like a complete ignoramus. In fact, whoever you are behind the ET nickname, Im sure you are a laughing stock on the Street.
Instead of praising yourself over your academic degrees, do some real research & learning. The way Bear was taken down via rumors and spreading information to the media is exactly how it is done. Bear Stearns was "tested" and they failed.
Hydroblunts may be a mean little fucker but he speaks the truth.