When Wallstreet computerized the stock market in the 90's, a loophole in the clearing and settlement system was created that is directly responsible for many of your losses in the stock market. When you thought you were losing money because of a bad investment decision, the truth may have been a thief had reached into your pocket and emptied your wallet.It's a perfect crime as it is hard for some investors to understand how they are being robbed and how criminals have gamed the system. When you make a purchase, criminals at large brokerages and hedge funds can take your money without delivering the shares you purchased. They effectively sell you an IOU instead of a real share. This extra phantom stock supply creates a situation where they can't lose. Its called Naked Short Selling. They take buyers' money in a targeted stock until any upward momentum runs out of steam due in large part by paid media bashing and the price begins to inevitably fall.
When you finally accept your loss and sell your shares, they return the remainder of your money keeping the difference as profit in a bet that was impossible for you to win and impossible for them to lose. They no longer owe you anything and your loss is their profit. The bet costs them next to nothing as they can make deals with clearing organizations to only fractionally back the value of their bet and their collateral requirements plummet as your investment goes down in value. It's like a license for them to print money off your back.It would be as if you were sitting at a poker table, not realizing that the reason you were losing was because one of the other players was cheating. These criminal terrorists have fixed the system, so they can cheat and take your money in bets that you can't win and they can't lose on. However the public outcry has finally caused the SEC to admit that the issue of Naked Short Selling is real and address it by making rule changes to Reg SHO that come into effect sometime before the end of this year. That will severely hamper the illegal activity as will the decision by NFI to pay the div in the form of Series E Pfd shares rather than cash.
whenever a company melts down, an industry melts down, or the whole frigging market turns bear, the great unwashed whine in unison: "its the short interest!".
the short interest pumps money into the system by the bushel, and contributes to the inefficiency that i make my money on. nothing i like better than short sellers.
that was a nice post, and in most cases it's those hedge funds that do business on a DVP(or delivery vs purchase basis) using a prime broker. I used to work at a bucket shop so to speak covering a few smaller funds and they would naked short sell stocks all day long, no borrow needed, in those stocks that the general public could in no way short.
Naked Short Selling is defined on the SEC website and controls are in place but the rules are loose and I am unsure how anyone could point a finger given the speed and volume of electronic transactions.
II. "Naked" Short Sales
In a "naked" short sale, the seller does not borrow or arrange to borrow the securities in time to make delivery to the buyer within the standard three-day settlement period. 3 As a result, the seller fails to deliver securities to the buyer when delivery is due (known as a "failure to deliver" or "fail").
Failures to deliver may result from either a short or a long sale. There may be legitimate reasons for a failure to deliver. For example, human or mechanical errors or processing delays can result from transferring securities in physical certificate rather than book-entry form, thus causing a failure to deliver on a long sale within the normal three-day settlement period. A fail may also result from naked short selling. For example, market makers who sell short thinly traded, illiquid stock in response to customer demand may encounter difficulty in obtaining securities when the time for delivery arrives.
Naked short selling is not necessarily a violation of the federal securities laws or the Commission's rules. Indeed, in certain circumstances, naked short selling contributes to market liquidity. For example, broker-dealers that make a market in a security4 generally stand ready to buy and sell the security on a regular and continuous basis at a publicly quoted price, even when there are no other buyers or sellers. Thus, market makers must sell a security to a buyer even when there are temporary shortages of that security available in the market. This may occur, for example, if there is a sudden surge in buying interest in that security, or if few investors are selling the security at that time. Because it may take a market maker considerable time to purchase or arrange to borrow the security, a market maker engaged in bona fide market making, particularly in a fast-moving market, may need to sell the security short without having arranged to borrow shares. This is especially true for market makers in thinly traded, illiquid stocks such as securities quoted on the OTC Bulletin Board,5 as there may be few shares available to purchase or borrow at a given time.
<Naked Short Selling is defined on the SEC website and controls are in place but the rules are loose and I am unsure how anyone could point a finger given the speed and volume of electronic transactions. >
. . . NFi has been naked short for over 300 days, with a short float of 67% . . . speed and volume? . . . nah, just blatent abuse of the law . . . what we need is a government agency that is responsible for preventing the fraudulent abuse of the FTCC system . . . someone like the SEC, perhaps . . .
hey JB, i don't read financials, i see the whole market as a pump and dump insider scam . . . just trying to pick the big boys pocket while they rob the bank, that's all . . .
. . . did you read refco's financials? . . . which naked short seller is next? . . . i'll check on sedona, i'll download the refco mpg during dinner, 6.8m on 26k dial-up . . . see you in the morning . . .
That would be Sedona. A massive, pump'n'dump racket. (They recklessly squandered nearly all of their shareholder's working capital during one of the quarters in question. When they were done, their tangible net worth was down to $10,000.)
You'd really learn a lot if you took the time to find and read these companies' financials. They all tell interesting stories. Unfortunately, they're not the kinds of stories that you would expect.
. . . i didn't have time to read the financials, 30 points in 2 days and i was gone . . . having to take a company private to stop the naked shorting is being harmed in my book . . .
the tech company that was put under by refco's illegal shorting is the best example, but i don't remember the ticker, a NASDAQ that begins with an S . . . i think the stolen money was found in austria, but the company failed to recover . . .
. . . naked shorting is NOT responsible for impatient longs bailing out, but is does cause damage to the system . . . shorting a stock to the under 5 mark can force inst.'s to liquidate . . .
. . . let's see if the new laws get enforced . . . for now the SEC is still on your side, lol . . .
He overpaid. Tough break, but not really an example of a company harmed by "naked short selling".
(Your initial post identified them as "William Lyons Homes". There's no "s" in the "Lyon".)
As it turns out, they do have financials on EDGAR, if you use the right name.
Have you read any of them?
Do you know who can do naked shorts?
cannot believe this thread can go so long.
Open your eyes, who here can do naked shorts? not retail investor, not hedge funds, not program trading. Only one kind of institution can short without shares. That is market makers. and who setup NYSE and NASDAQ, remember, that is them, they own the exchange.
If big banks say NFI are going down, then it is going down. Because they see NFI's bank account, they know when to pull the line of credit. The only way we can survive is to join them.
YOu said: Do you know who can do naked shorts?
Reply: I centainly do. The major brokerages facilitate the naked shorts for themselves and the major hedge funds.
cannot believe this thread can go so long.
Reply: People are starting to wake up to what it is doing to the market. Some just don't want to believe it goes on at the level it does. As I recall, 4.5 billion dollars per day in FTD's. Yeah thats billion.
Open your eyes, who here can do naked shorts? not retail investor,
Reply: Correct but the retail investor facilitates it by loaning their shares to the broker who naked shorts them.
not hedge funds,
Reply: get real.
not program trading.
Reply: I don't know about that.
Only one kind of institution can short without shares. That is market makers.and who setup NYSE and NASDAQ, remember, that is them, they own the exchange.
Reply: thats the only one that can do it legally and they do it all the time. That exemption by Reg SHO is part of the rules change comming up end of the year.
If big banks say NFI are going down,
Reply: You mean like Wachovia, Mass Mutual, Babson Group and JCP ? They are betting its going down. I don't think so.
then it is going down.
Reply: I don't think so.
Because they see NFI's bank account, they know when to pull the line of credit. The only way we can survive is to join them.
Reply: Yet, good observation: they saw NFI bank account and scrutenized their holdings under a very fine magnefying glass so yep, I'm joining them.
this is the press release when he got himself delisted . . . after he went private he failed to file on purpose so he would get delisted ASAP . . . hard to cover a naked position in a stock that is no longer traded . . . they had to come directly to him and grovel . . .
here's the link:
NEW YORK STOCK EXCHANGE TO SUSPEND APPLY TO DELIST WILLIAM LYON HOMES
NEW YORK, June 13, 2006 � The New York Stock Exchange announced today that William Lyon Homes, Common Stock (Symbol WLS) will be suspended from trading immediately.
Following the suspensions, application will be made by the Exchange to the Securities and Exchange Commission to delist the Common Stock.
here's the edgar:
WILLIAM LYON HOMES
Form:8-K Filing Date:6/15/2006 Jump to : Format : File Back
Item 3.01 Notice of Delisting or failure to Satisfy a Continued Listing Rule or
Standard; Transfer of Listing
On June 12, 2006, the New York Stock Exchange (the "NYSE") advised William Lyon
Homes (the "Company") that the NYSE intended to suspend trading in the Company's
common stock, and on June 13, 2006, the NYSE announced that suspension. The
NYSE's announcement confirmed that this action will not affect the trading of
the 10�% Senior Notes due April 1, 2013 or 7�% Senior Notes due February 15,
2014 issued by the Company's subsidiary.
The NYSE indicated that it has information indicating that the amount of
publicly held shares of the Company's common stock available for trading is not
sufficient for auction market trading. The NYSE further indicated that it
intends to make application to the Securities and Exchange Commission to delist
the common stock.
hey JB, it was back in march '06 . . .
. . . here's one news story i found on goog . . . from here . . .
General William Lyon Announces Commencement of Tender Offer for Shares of William Lyon Homes
Monitor this Company
Stockholders to Receive $93.00 Net Per Share in Cash for each William Lyon
NEWPORT BEACH, Calif., March 17 -General William Lyon, Chairman of the Board and Chief Executive Officer of William Lyon Homes (NYSE: WLS), today announced that he commenced an offer to purchase all outstanding shares of common stock of William Lyon Homes not already owned by him for $93.00 per share in cash, without interest and less any required withholding taxes. The expiration date for the tender offer is Thursday, April 13, 2006, unless the offer is extended. On the expiration date, and assuming satisfaction or waiver of all conditions to the offer, all validly tendered shares not previously withdrawn will be accepted for purchase and paid for promptly pursuant to the terms of the offer.