This board has been created for people with concerns about naked short selling. Ideas about how to combat NSS are welcome. Articles, questions and general information about specific stocks are also welcome.
Shorters are not welcome here any vulgarity will not be tolerated.
Board Rule OFF TOPIC HE SAID/SHE SAID will be deleted
Yes there is a strategy which we have put together -
which we believe would resolve the NSS situation.
The information is free and available to any company CEO -
that requests it.
Further details are available from -
must enclose a company letterhead -
Pass this on to any company if you feel
they have been victimized by nss -
Do you have any suggestions? -
please, let's hear them -
Getting to the heart of the matter.
Try Explaining Naked Short Selling (NSS) to any regular joe and they are likely to shake their heads and think you are bonkers. Before you run off screaming with your hands covering your ears please hear us out.
There are many many publications on this subject which cover a myriad of topics from internet bashing to an SEC cover up and we are going to throw our ideas into the ring in an attempt to simplify it for you - If you have any questions (no matter how trivial) please do not be afraid to ask - We are not experts but will attempt to answer.
Q. What is naked shortselling?
A. The selling of a share that you do not own, basically stock market counterfeiting.
Q. How is this possible?
A. The stock market in the US does not link transactions. For example, you buy a flight ticket over the internet and pay with your credit card, your ticket and payment are linked together and you receive your itineray within about 5 minutes. You buy shares over the internet your payment is not directly linked to those shares.
Q. Is this legal.
A. It is legal for a Market Maker to Naked Shortsell.
Q. Can I find out how many shares have been naked shorted in a particular stock?
Very oversimplified but you get the picture. Now there are a great many fantastic sites out there which explain this in more detail. Our point is, that it is possible to counterfeit shares - WE DO NOT THINK IT SHOULD BE POSSIBLE.
There are petitions for market reform and complaints are flying in to the Securities and Exchange Commission by the bucketful. We salute the efforts and work of the pioneers of these actions.
Our stance is "Hit the NSS where it hurts", in the pockets. Reform can only happen if the truth is revealed, the correct action will reveal the TRUTH
A (Very Brief) Encyclopedia of Securities Fraud -
Naked short selling:
Where a trader sells short a security (i.e., borrows a security
and then immediately sells it, hoping to buy it back at a
lower price in the future for a profit) without owning,
or having arranged to borrow, the security.
THIS 101 TEACHING ABOUT ETF'S AND NAKED SHORTING...
From Atag: This Link Is Good For 101 Trading.[Naked Shorting] -
To: SEC, U.S. Congress -
Market Reform Petition -
Whoa! 40 new Sinatures! C'mon everybody -
Spread this around and Lets Get it Off to Congress! -
by: fish777 - thanks!
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NAKED SHORT SELLING:
(All information is true and accurate to the best of my knowledge - Hilander Posted: 2-1-07)
There has been rampant abuse in the OTCBB stocks over the past decade of naked short selling.
Naked Short Selling is stated to be illegal by the SEC, but goes on every day. For up to date issues discussing naked short selling go to:
Investors-Hub: Cobs NSS Solutions Message Board. Post#476 Tecch10000 posted a one hour video “Darkside of the Looking Glass” about Hedge Fund’s Naked Short Selling. http://www.businessjive.com/nss/darkside.html
NOTES & TERMINOLOGY:
• (DTCC) Depository Trust & Clearing Corporation = Back office for Wall Street to settle accounts daily between MM. The DTCC is not the government. Far from it, it’s a private company chartered under the banking laws of NY, partially owned by the Federal Reserve and by the NYSE. It’s a for profit entity.
• (NASD) National Association of Securities Dealers: To take appropriate action against the violators of naked short regulations.
• (FTD) Failure to Deliver: Big boards have 150M to 200M/day shares outstanding. Other boards have a 1/2 to 1B outstanding shares/day.
• Non Objecting Beneficial Owners (NOBO) The NOBO listing, allows the company to identity a portion of its beneficial shareholders who maintain their ownership through a brokerage and who have instructed their broker that they do not object to the disclosure of certain ownership information. The NOBO list shows a more complete corporate ownership profile than is available from the transfer agent alone.
• Ex-Clearing-Two brokerage houses clearing trades between themselves
• 97% of all trades are electronic
• Regulation SHO-Short selling fighting back against NSS
• Reg SHO Grandfathering has been illegal since 1934
• Short Squeeze-Buy In IOU Shares drives the price up
• Iomega went up 5X, due to short squeeze. This would cause Wall Street and Hedge Funds to lose money and would go bankrupt.
• SEC created July1, 1934 as a self-regulatory organization (SRO)
• What can we do? Settle the trades & disclose the fails
• Go To: www.the sanitycheck.com
News by QuoteMedia
Sent By: GOLDENBOLLOX
Date: 11/20/2006 11:39:26 AM
From Private Message Post
The single greatest DETERRENT measure to naked short selling abuses on Wall
Street is by far and away the FEAR of an untimely buy-in leading to a “Short squeeze”. What the SEC has to realize is that DTCC policies have surgically removed any fear of a buy-in from the risk-reward analyses done by even securities fraudsters before engaging in naked short selling campaigns. Of all of the studies done in this realm the one by Evans says it the best.
Geczy, Musto and Reed (2003)
Clearest research revealed the stunning statistic that 99.875 % of even “Mandated” buy-ins were successfully circumvented by DTCC participants. This battle is not going to be easy.
At the 11/30/05 NASAA Forum on Naked Short Selling: (Paraphrased Notes)
The moderator asked why the SEC and NASD were so intently interested in preventing an artificially manipulated lower share price from ever rising. Your terminology “Manipulative short squeezes” is missing some context. The manipulation has already occurred and the share price was irrefutably “Manipulated” to the downside. You at the SEC must have trouble with this concept?
Silence filled the room.
Can you not understand that a cash-strapped and manpower-lacking SEC should welcome naturally occurring DETERRENT phenomena like short squeezes or more accurately the fear thereof to act as an invisible regulator to DETER this type of activity? Astronomically high naked short positions and their delivery failures and resultant issuer-damaging “Share entitlements” being MISSREPRESENTED as legitimate shares on monthly brokerage statements do not just happen. Ethical MMs move up their “Offer” levels after naked short selling a moderate amount of shares into buy orders in dominated markets. Predatory MMs apply a “Blanket” of naked short sale orders because they can’t allow the share price to advance due to the cost of collateralizing their previous astronomically high naked short position. This is not the “Accidental” behavior of naïve market participants unaware of how the system works as there is clear intent to defraud.
Overvoting is a considerable problem in our markets. An April 2006 news story reported that the Securities Transfer Association reviewed 341 shareholder votes in 2005 and found overvoting in every instance. Drummond, Corporate Voting Charade, Bloomberg Markets, Apr. 2006, p. 98. According to information found on the Corporate Counsel web site, overvoting may be occurring at 95% of shareholder meetings.
The following article summarizes the naked short selling situation that has developed over the last decade.
Financial Terrorism in America
By: Mark Faulk
Editor's note: "The Faulking Truth" was showcased on IBC radio on Monday, March 29, 2004, concerning our articles on naked short selling. Also, this article was quoted and linked by financialwire.net and reprinted by investrend.com and wallstreetcity.com and we have been given our own section in the investigatethesec medialinks: http://www.investigatethesec.com/MediaLinks.php
Part One: The Sucker
Picture this: You are a small-time investor who stumbles onto a start-up company that has just developed an innovative new product, a cutting edge technology, or maybe a medical breakthrough that could very well be "the next big thing". In the back of your mind, you can't help but think, "This could be the next Microsoft", and you have a chance to get in on the ground floor of a hidden gem that the big investors and analysts haven't even heard of yet. You do your homework, research the outstanding shares, study the recent press releases and filings, and read about the company on the stock message boards. Finally, you take the plunge, and decide to buy 500,000 shares at a nickel a share. That's right, you now own 1% of (there's that thought again) the next Microsoft, for a paltry $25,000. Sure it's a bit of a risk, but you know the saying, "no risk, no reward". You hit the buy button, turn off your computer, and wait for the money to roll in. A couple of weeks later, the company announces that they have secured a major financing deal, and now have the money to take their product to market, and you know you made the right decision. The volume picks up, the message boards are buzzing, and all is right with the world. But then, something goes terribly wrong. For no apparent reason at all, the stock price begins to tank, and before you even have time to react, your 500,000 shares are down 80%, and you've just lost $20,000 of your hard-earned money. What the hell happened?
This same scenario is being played out time and again in every corner of America, and although there are many reasons for the failure of small, struggling, publicly-traded businesses, including mismanagement and outright corporate fraud, another, more sinister, plot is carried out every day, robbing investors of their money, businesses of their chance to achieve the American Dream of success, and hard working, dedicated employees of their dreams and even their livelihood. Worst of all up to now, this fraud has been ignored, and in many cases even condoned, by the SEC and our very own government.
This is how it works. Remember that great news that the company just released about securing financing to allow them to take their product to market? It's nothing more than an elaborate scheme perpetuated against the company, its employees, and the shareholders by a network of skilled con artists. It begins with the financial institution (usually an offshore "lending institution" based somewhere like Bermuda or the Cayman Islands), who approaches the company with promises of funding to "help" the company get their product off the drawing board and into the market. The company, who is usually strapped for cash and desperate for some financial support, considers the terms of the offer. The lender promises them say, five million dollars in exchange for company stock at a 20% discount to the market price at the time they are converted into shares (although some deals are much worse, and the lender gets their shares at as much as a half price discount from the current market price). The company does the math: five million dollars converted to shares at 80% of the current price of around a nickle a share, not too bad a deal. Plus, once the news of the financing is released, investors will swoop down in a stock-buying frenzy, the trading volume will go through the roof, and the share price will soar, meaning the company will give up even fewer shares for the money they receive. The lender makes a nice profit, the company gets their product to market, their employees are finally rewarded for their years of dedication, and the loyal shareholders hit the jackpot. Everyone is happy.
Except that none of that actually happens. Before the ink on the contracts has even had time to dry, the lender is on the phone, calling his co-conspirators.
What happens next is complex, and involves the offshore lender, US Brokerage firms, and Canadian Brokers. The lender calls his broker, who is instructed to short sell the company's stock into the ground. Short selling involves the selling of imaginary shares into the market in the hope that the price will drop, and the short seller can then "buy back" the shares (that they never actually owned in the first place) at a cheaper price, and pocket the difference. Once a stock is sold short, a seller (or their broker) must cover their position by "borrowing" shares from other stockholders (usually those shares that are held in a brokerage house, such as ETrade, Ameritrade, etc.), and sell them into the market. It sounds unethical, and bit confusing as well? Maybe, but it is a legal practice that has flourished unchecked for years. The real problem arises when the short sellers dump so many "imaginary" shares into the market that the selling overwhelms any buying pressure, and artificially causes the stock price to crash. And this is exactly what the lender and their cohorts do.
Canada: Co-Conspirators From The North
In order to sell short enough shares to truly cause the stock to tank in price, the broker often has to sell more shares than they can "borrow" from legitimate stockholders. This practice is known as naked short-selling (meaning the short sellers never intended to cover their position by borrowing real shares from legitimate stockholders). There is only one problem. Short selling is illegal in over-the-counter stocks (known as OTC, or penny stocks), and naked short selling any stock is illegal. That's where the Canadian connection comes in. While American brokers have to follow the National Association of Securities Dealers (NASD) rules, Canadian brokers don't. Canadian investors and brokers are allowed to sell short as many shares as they want, and never have to borrow the shares from legitimate stockholders, effectively flooding the market with counterfeit shares. In fact, they can legally sell more shares into the market than even exist in the entire float. So, to circumvent the rules, the American brokers funnel their short selling activities through their Canadian connections. If there are buyers for a million shares, they short sell three million into the market, and on and on, until the stock price eventually collapses under the weight of millions and millions (or billions and billions, if necessary) of fake shares flooding the market.
So, in simple terms, our lender loans the company a small part of the money they promised them and then immediately calls their co-conspirators in America and Canada, who then flood the market with hundreds of millions of counterfeit shares, causing the share price to collapse. Often, as an insurance policy, bashers are hired to discredit the company on stock message boards such as RagingBull, in effect creating an even darker picture of the company. Then, the lender converts the loaned money into shares of company stock, not at 80% of the nickel stock price that the company envisioned, but at 80% of the market price after they've effectively manipulated the stock price down to almost zero. Instead of the few million shares that the company expected to give the lender, they are forced to give them hundreds of millions (and sometimes even billions) of shares. The lender turns around and dumps those shares into the market, and the price is driven even lower, and they collect their next payment in shares at an even cheaper price. This type of arrangement has become known as "death-spiral financing", because the company is often driven into bankruptcy by the lenders, their American brokers, and their Canadian cohorts.
In the end, this practice amounts to financial terrorism against the United States. Legitimate companies are forced out of business, dedicated employees (who often received stock as part of their compensation) lose their jobs and their stock investments, communities lose out on the opportunity to earn substantial revenues and the employee base that a successful growing business can provide, and the stockholders lose their hard-earned money. Even more, they lose their faith in the stock market as a whole, and vow to never take a risk on a small, unproven, start-up company again. Legitimate lenders stop loaning money to small businesses (which appear to be a much higher risk), and eventually, the entire entrepreneurial spirit of America is put at risk. Make no mistake, lives are literally destroyed by this insidious practice.
What Can Be Done About It? Settle the trades & disclose the fails.
Both the SEC and the NASD have known about this practice for years, yet have stood idly by while Canadian brokers, offshore financial institutions, and their American co-conspirators have systematically financially raped and pillaged our small businesses, their employees, and small investors. Recently, numerous lawsuits have been filed by victim companies naming dozens of brokerage firms as defendants. Individuals and small independent organizations such as www.investigatethesec.com have attempted to draw attention to the problems, and finally, a few small publications such as www.faulkingtruth.com have begun to provide some coverage of the situation.
Proposed NASD and SEC rules don't go far enough to prevent this practice. Until Congress steps in and forces everyone to play by the same rules, and makes those rules tougher in regards to short selling in general (and naked short selling in particular), the OTC market will continue to be a rigged game, and the well being of America will continue to be threatened by unscrupulous foreign (and yes, domestic) interests.
Stockbroker Information -
COMPANY NEWS; KNIGHT EQUITY TO PAY $79 MILLION IN FRAUD SETTLEMENT
Archives-Published: December 17, 2004
Knight Equity Markets will pay $79 million to settle charges that it defrauded its institutional investors by delaying trades and intervening in transactions to raise the price, regulators said yesterday. According to the Securities and Exchange Commission and the National Association of Securities Dealers Inc., a former institutional sales trader at Knight used deceptive sales practices to give Knight $41 million in illegal profits. Knight Equity is a subsidiary of the publicly traded Knight Trading Group Inc.
NSS Time Clock Ticking
INFO VIDEO: Naked Short Selling Part 1
INFO VIDEO: Naked Short Selling Part 2
INFO VIDEO: Naked Short Selling Part 3
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