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LDK Solar Co., Ltd. Message Board

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  • joopthedutchman joopthedutchman Apr 18, 2008 5:50 PM Flag

    NAKED SHORTING ON LDK

    I am always wondering about the buying side of naked short trades. Are those all naked longs? (i.e. they pay for imaginary shares with imaginary money)

    Surely a real buyer of such a trade would protest the non-delivery.

    What is really going on here. Are the naked longs just related parties?

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    • joop.

      you can learn alot about naked shorting from the powerpoint presentation at businessjive.com (it takes about an hour to watch but it is VERY informative)

      also if you go to the sec . gov website under Regulatory Actions box and click on Proposed Rules, you'll see an call for comments on "Naked" Short Selling Anti-Fraud Rule. Click on the "are available" link in that section then go to the bottom of the list and look for a submission by DeCosta. It also explains quite a bit about the technicalities involved in the naked shorting game.

      It's not for you if you are into sound bites and don't have patience for complexity or complication. It is intuitive that counterfeiting shares traded on the exchanges wouldn't be easy or obvious, so the mechanism involved cannot be expected to be thus. Check out the literature. Even the sec website has alot of info on it.

      p.s., naked long is kind of like folks who hold what they want to "keep" in a margin account

    • "Surely a real buyer of such a trade would protest the non-delivery."

      Regrettably they would not even know. This is the secret of the naked shorters success.

      The buyer's brokers add the phantom shares to their portfolios just as they would add real ones. The customer has no knowledge they own IOUs and not real shares.

      Many brokers are not "Prime Brokers" and in the DTCC club and do not sit in that dark room.

      They think real shares have been purchased too. That is why they post the IOUs to their customer's accounts just like real shares.

      They do not know they are victims of the "stock borrow" program at the DTCC!

      The FTDs are supposed to be rare clerical errors. How can this be claimed when the errors are never "corrected?"

      We all make mistakes and misplace things, but we fix them and find them.

      It stinks.