http://mms.tveyes.com/Transcript.asp?pl=2102230157944043103 GAsparino on Short selling investigation. VERY interesting. More here than meets the eye.
http://www.blogmaverick.com/entry/1234000230033533/ I think someone hears footsteps. This shocked me. But, I expected them to be men and ride this to the end. However, the rats are jumping ship.
the WSJ has published two letters from the SEC whistle blower. They are some of the most damning indictments of the brokers and system I have ever seen. He throws Mack under the bus big time. The second letter alone is 18 pages. Sorry I"m a novice and can't attach it, but it basically is the end for the SEC as we know it, IMHO.
Mark Cuban quotes in the preceding article ...."Which leads to one of the things I look for when I short a stock. The louder a company complains about the shorts, the worse the company. Companies bitching and moaning about shorts trying to hit their stocks are companies that are far too worried about their short term stock price and are looking for an excuse to give their shareholders. A smart CEO is out there telling shareholders that the numbers will speak for themselves, that the company is doing what we set out to do, and if you believe in what we are doing, buy the stock. If you donât, you probably shouldnât. A company with problems finds a reason to talk about anything but the company as a reason for the stock not doing well. It reminds me of the music industry. They didnât want to address what really was causing sales to fall, so they blamed it all on the internet and piracy. Piraphobia in their case, Shortophobia in the case of public companies. Rule of thumb, ITâS NEVER THE SHORT SELLERS, ITâS ALWAYS THE COMPANY. "........ -Mark Cuban Pay attention there slick, you dont seem to be smart enough to find articles which don't trash your prescious POS OSTK.
Watch Wednesday, Sonny, the landscape is about to change. Cuban is a punk that thinks money buys respect. I think Blumenthal et. al. may change that. NOTICE OF FULL COMMITTEE HEARING http://judiciary.senate.gov/hearing.cfm?id=1972 June 21, 2006 NOTICE OF FULL COMMITTEE HEARING The Senate Committee on the Judiciary has scheduled a hearing on "Hedge Funds and Independent Analysts: How Independent are Their Relationships?" for Wednesday, June 28, 2006 at 9:30 a.m. in the Dirksen Senate Office Building Room 226. By order of the Chairman ----- Tentative Witness List Hearing before the Senate Judiciary Committee on "Hedge Funds and Independent Analysts: How Independent are Their Relationships?" Wednesday, June 28, 2006 Dirksen Senate Office Building Room 226 9:30 a.m. PANEL I The Honorable Matt Friedrich Principal Deputy Assistant Attorney General Crime Division U.S. Department of Justice Washington, DC The Honorable Richard Blumenthal Attorney General State of Connecticut Hartford, CT PANEL II Gary Aguirre Former Investigator Securities Exchange Commission Washington, DC Marc Kasowitz Senior Partner Kasowitz, Benson, Torres & Friedman LLP Alliance for Investment Transparency New York, NY Joseph McLaughlin Partner Sidley & Austin LLP Managed Fund Association New York, NY Kim Blickenstaff Chairman and Chief Executive Officer Biosite, Inc. San Diego, CA Owen Lamont Professor of Finance Yale School of Management New Haven, CT Demetrios Anifantis Former Employee Camelback Research Alliance, Inc. Scottsdale, AZ Howard Schillit Chief Executive Officer and Founder Center for Financial Research and Analysis [CFRA, LLC] Rockville, MD Jonathan Boersma Director Standards of Practice CFA Centre for Financial Market Integrity Charlottesville, VA TESTIMONY MEMBER STATEMENTS Shorts had a tough day today. Seems the Prime Brokers are a little reticent to play their games lately.
Well for once we agree on something, we are making progress here Why did you post the article if you think cuban is a punk?? Sorry for cutting the quote wanted to get the point across.
Everybody needs to be heard. I wonder how long guys like Cuban, Gasparino, etc. , will spend their capital apologizing for this mess? Couple things. The PEIX and LBIX, big Neg Rebate stocks working out. Interesting. I am hearing from VERY reliable sources, the neg rebate "for real shares" of OSTK is 100%. So these shorts "maintaining" this position are being extorted by the Primes. Why would the qualifier be "real shares"??? Anybody? They've been kiting shares for years. Why now would the qualifier be "real".. Gasparino was on CNBC this morning trying, in a bullshit story, to discredit Aguirre. It really didn't work. He said an SEC source told him they couldn't enforce their muzzle on him. Well, Aguirre is a 66 year old attorney. Wouldn't he know that? He spent a year investigating this. Wouldn't there be evidence, or is out to just blow his life up? Spector is very motivated. Sources tell me his illness has focused him on a problem he has ignored in the past.
DJ SEC Looks To Close Gaps In 2004 Short-Sale Rules By Judith Burns Of DOW JONES NEWSWIRES WASHINGTON (Dow Jones)--The Securities and Exchange Commission is looking to close some of the gaps left open by a package of short-sale reforms adopted in 2004. At an open meeting Wednesday, the SEC will consider three modifications to its Regulation SHO, which loosened some short-selling rules while cracking down on abuses such as "naked" short selling. The changes being considered would tighten the 2004 rule by eliminating a "grandfather" exception for some hard-to-borrow stocks, according to individuals familiar with the matter. Short sellers sell borrowed stocks, profiting when stock prices decline and shares can be replaced at a lower price. In "naked" short sales, the seller doesn't borrow or replace shares sold short, a practice Regulation SHO sought to curb by requiring brokers to locate shares to borrow before executing customer short sales. The SEC imposed stricter requirements for hard-to-borrow "threshold" securities, but exempted previously existing short positions, which the SEC said would avoid potentially volatile trading that might disrupt markets. Market data suggest that a big chunk of delivery failures in borrowed stocks are in positions shielded by the SEC's "grandfather" provision, prompting the SEC to rethink its stance. Since the volume of shares covered by the "grandfather" clause is tiny compared with the overall market, "we're comfortable that this can be done without causing dislocations," said SEC Commissioner Annette Nazareth. At Wednesday's meeting, the SEC will vote to seek comment on a plan to eliminate the "grandfather" protections and bring previously existing short positions under the stock-locate requirements of Regulation SHO. The SEC will propose that pre-existing delivery failures be closed out within 35 days after the rule change takes effect, which will require a second vote by the commission, likely later this year. Individuals familiar with the plan said it should put brokers and other market participants on notice now to borrow shares or close out naked short positions in "grandfathered" stocks. At the same meeting, the SEC will consider two other changes to Regulation SHO. One would tighten an exception from the rule for market makers in stock options, requiring them to close out short sales that hedge an options position with 13 days after the option expiration date - the same deadline imposed by Regulation SHO for hard-to-borrow "threshold" stocks. Individuals familiar with the proposal said the exception for options market makers has been another source of stock-delivery failures and that tightening it should help reduce such failures. A third change the SEC will propose is a minor one that targets an exception from short-selling restrictions for unwinding net short index-arbitrage positions, which is available provided the market hasn't declined by 2% or more from the prior day's close. Individuals familiar with the plan said the SEC will consider whether to change the market-decline index used to limit the exception from the Dow Jones Industrial Average to the New York Composite Index. - By Judith Burns, Dow Jones Newswires, 202-862-6692; Judith.Burns@dowjones.com (END) Dow Jones Newswires 07-11-06 1612ET Copyright (c) 2006 Dow Jones & Company, Inc. Judith Burns Reporter Dow Jones Newswires (202) 862-6692 fax (202) 862-6644
Well, I'm shocked. I don't know what changed, but look here. Commentary Covering Up Naked Shorts Harvey Pitt 07.11.06, 3:00 PM ET Harvey Pitt Washington, D.C. - As crisis after crisis afflicts the business community and our capital markets, all too often the response is a form of reverse laissez faire. Business waits for government to tell it three things: if it has done something wrong, why it's wrong and how to fix it. The ineluctable result is that, like Rick's crooked police pal, Captain Renault, in the movie Casablanca, we're "shocked, shocked to discover" we don't like the government's responses. Unfortunately (or fortunately, depending upon one's perspective), the business community's repeated crises has given it an opportunity to modify its laissez faire attitude. But so far, it hasn't shown the resolve. A case in point is the current crisis in short-selling. Short-selling is a useful and critically important capital market phenomenon, but only if done appropriately. Among other things, it provides essential liquidity in thinly traded stocks, enables thoughtful traders to limit the degree of risk to which their portfolio holdings are subject and serves as an effective counterbalance to the herd mentality too many analysts and investors exhibit. In a real sense, short-sellers are marketplace lone wolves (or, more precisely, lone bears), ignoring the herd, trading against conventional wisdom and sometimes uncovering real corporate frauds far ahead of self-regulators, regulators, prosecutors or even plaintiffs' attorneys. On the other hand, companies have been victimized by professional short-sellers, some of whom, on occasion, resort to dubious tactics--and even market manipulation--to ensure the success of their bearish gambles. The problem with our current short-selling paradigm isn't short-selling itself, as many CEOs might prefer to believe. It's the ability of short-sellers to sell stocks they haven't actually borrowed in advance of their short sale. It's a phenomenon described, somewhat lasciviously, as "naked" short-selling. Naked shorts expose sellers and those "linked" to the sales to the risk that, when settlement day arrives and shares must be delivered, the short-seller won't have the necessary shares available. The U.S. Securities and Exchange Commission recognizes this is a problem, but its efforts thus far haven't generated much success. In 2004, the agency adopted Regulation SHO, which, among other things, requires short-sellers and their brokers to have reasonable grounds to believe securities being sold short can be "borrowed so that [they] can be delivered at settlement." What constitutes "reasonable grounds?" That depends on whom you ask. Many prime brokers, for example, satisfy the requirement of reasonable grounds by assuming that, if large long positions reside somewhere in-house, they can borrow from those long positions without bothering to check if the shares are actually available for borrowing and without ascertaining if those same shares have already provided reasonable grounds to permit another short sale of the same security. This can lead to "over-shorting" of securities, a phenomenon in which the number of shares shorted can even exceed the number of shares physically available for trading. To combat naked shorting of heavily shorted securities, technically known as "threshold" securities, the SEC's rule requires brokers planning to effect a short sale in a threshold security to have in place, prior to shorting, a definitive arrangement to borrow those shares. In addition, in May 2006, self-regulatory organizations adopted SEC guidance that any shares bought-in by a broker to satisfy undelivered shorted shares must be applied to the earliest undelivered shorts. This essentially requires brokers to buy-in all shares they've failed to deliver once any shares must be bought-in. In January 2005, there were 520 threshold securities. Today, even with the SEC's efforts, there are still 235, including some that were on the list of threshold securities back when the concept was first created. On Wednesday, July 12, the SEC takes its third stab at trying to solve the problem. Because of the legitimate concerns this situation engenders, state governments are roiling the waters. Utah has adopted its own law to dictate how short transactions should be effected, and Connecticut has threatened to enter the fray as well. We're in danger of facing a quilted patchwork of state regulations to govern an important facet of what are uniquely national (and global) markets. At the same time, plaintiffs' lawyers are pressing lawsuits accusing brokers of collecting fees for lending shares to short-sellers without actually having borrowed the shares. If these allegations are proved, the result could be a black eye for the brokerage community, large payments to aggrieved parties and much tighter regulation. The securities industry and clearing agencies don't seem to recognize that it's only a matter of time before these problems catch up with them and kill off the goose that is, at present, laying very golden eggs. The securities industry needs to seize control and propose effective remedies to increase transparency in stock lending and borrowing. Securities and clearing firms need to act quickly. Or else they, to paraphrase Will Rogers, will have to be content to live with even more government than they're already paying for. Harvey L. Pitt is the CEO of Kalorama Partners. He was chairman of the SEC from 2001 to 2003, currently serves on the audit committees of Approva and the National Cathedral School, and writes a monthly column for ComplianceWeek. The World's Best Big Companies