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Vertex Pharmaceuticals Incorporated Message Board

  • swhitemd50 swhitemd50 Oct 28, 2011 12:13 PM Flag

    Naked short selling

    It is not a true market when naked shorting is taking place. There are powerful players in this stock that can move the price in the direction they choose (in the short term). Ultimately, the stock price will reflect the superb fundamentals. Picked up another $100,000 this morning.

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    • For a low float stock to trade 5 million shares in this tight a range is inexplicable...I defy anyone to justify this kind of action today! I know, I am like a Bulldog with a bone, but it is simply infuriating that nobody monitors or enforces the RULES!!!

    • johnf50 Oct 28, 2011 12:49 PM Flag

      When a naked short is 'sold'... who are they selling too?

      • 1 Reply to johnf50
      • As I understand it, naked short-selling is when investors sell fictitious (nonexistent) shares to other investors like you and me at a price determined by the market. This tends to drive the stock price down. At the same time the "float" of shares is increasing. These fictitious shares have value because the brokerage houses require that the short sellers to eventually cover these short positions by buying shares. However, this practice distorts the market and allows for manipulation of the stock's price.

    • UBS Facing $12 Million Fine Over Short-Selling Accusations (NYSE: UBS)

      Posted by toi on Oct 27th, 2011 // No Comments

      Swiss bank UBS has agreed to pay a $12 million fine to settle accusations that the company failed to provide proper oversight on millions of short-sale trades during the past 5 years. The bank was accused of “systemic supervisory failure” of the short-sale trades.

      The $12 million fine is one of the highest penalties paid recently to the Financial Industry Regulatory Authority. In a released statement, UBS neither admitted nor denied the accusations but stated that the company was pleased that the matter was resolved and all issues had been remediated. The Financial Industry Regulatory Authority is also investigating other banks for possibly failing to comply with the same rules UBS is accused of non-compliance with.

      UBS has been pummeled by several serious problems over the past few years. Most recently, a rogue trader drained the bank of $2.3 billion, causing the bank’s profit to plummet 39% and resulting in numerous cost cutting measures, including the elimination of 3,500 jobs. The bank has also had to notify the Securities and Exchange Commission about potential problems with its internal controls.

      The case against UBS Securities, an American arm of the Swiss banking giant, focuses on short-selling, where investors bet that the price of a security will decline. Short-selling permits investors to sell securities without owning them, provided that the investors eventually borrow the security when it is time to deliver.

      UBS is accused of permitting the firm’s employees to sell short without verifying that the traders could produce the underlying shares. The bank is also accused of misidentifying several short trades as being long trades. There were a number of instances found, touching equities trading across the firm. Regulators claimed that UBS had violated securities rules that require brokerage firms to have “reasonable” belief the shares will be delivered before placing a short-sale order.

      The enforcement chief of the Financial Industry Regulatory Authority, J. Bradley Bennett, said, “The fine reflected broad gaps in their compliance system. I think it’s very significant.” He also stated that the rules regulating the short-selling of securities were put into place “in order to prevent potentially abusive naked short-selling,” and added that “the duration, scope and volume of UBS’s locate and order-marking violations created a potential for harm to the integrity of the market

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