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South Korea and China's Financial Regulators are working together to stop fraud in their markets.
— kristen shaughnessy (@kshaughnessy2) February 10, 2024
⁰"We intend to brief Hong Kong authorities on the developments regarding our short selling investigation when our working-level team visits them in February and seek their… pic.twitter.com/K9yYfM4TpE
$FNGR My UNBIASED Opinion on FingerMotion Stock!
$FNGR $2.37 is moving here
$FNGR $GTII
— HAM (@HAMShortkiller) February 9, 2024
South Korea's Financial Supervisory Service (FSS) introduces a roadmap to enforce a new law significantly escalating penalties for financial crimes, including life imprisonment for the most severe offenses pic.twitter.com/dISTKZQ4Mo
South Korea Plans to Enforce Harsher Punishments for Financial Crimes - Even Life Imprisonment.
— kristen shaughnessy (@kshaughnessy2) February 9, 2024
"South Korea's Financial Supervisory Service (FSS) introduces a roadmap to enforce a new law significantly escalating penalties for financial crimes, including life imprisonment for… pic.twitter.com/3JyzF8K32Y
To put it simply the world has woken up to the fraud in the financial markets.
— kristen shaughnessy (@kshaughnessy2) February 7, 2024
Sit down and get comfortable. It's quite a read.
"Hong Kong stocks have been plunging to losses for the fourth straight year. In South Korea, global banks have intentionally and illegally shorted…
Were you an adult when all that happened? If so, you've evidently forgotten about this:
SEC chief has regrets over short-selling ban
December 31, 200811:45 AM EST
... However, Cox said he had some regrets over a drastic action the agency took as markets were hurtling downward in September. For a few weeks, the SEC stopped investors from making bearish bets on financial stocks like Morgan Stanley and Citigroup .
The SEC's office of economic analysis is still evaluating data from the temporary ban on short-selling. Preliminary findings point to several unintended market consequences and side effects caused by the ban, he said.
"While the actual effects of this temporary action will not be fully understood for many more months, if not years, knowing what we know now, I believe on balance the commission would not do it again," Cox told Reuters in a telephone interview from the SEC's Los Angeles office late on Tuesday. "The costs appear to outweigh the benefits."
Less liquidity in the markets was one of the unintended consequences, experts have said.
The SEC imposed the temporary ban under intense pressure from the Federal Reserve and Treasury Department which insisted it was crucial to the short-term survival of these institutions, Cox said.
A few weeks after the temporary ban was lifted, global markets were again dropping precipitously, U.S. banks were begging the SEC to reinstate its short-sale ban and there was talk of shutting the markets down.
Cox said the chief executive of one major U.S. investment bank even urged suspension of normal trading rules across the entire U.S. market, likening the situation to how Abraham Lincoln suspended habeas corpus during the Civil War and Franklin Roosevelt sent Japanese-Americans to internment camps during World War Two.
The chief executive said, "that is how America made it through such crises, and we couldn't be too focused on maintaining the rule of law," Cox said. "That was advice we rejected."
https://www.reuters.com/article/idUSTRE4BU3FL/
Yes, I remember it well. The CEO in question was babbling like a penny stock scammer.
$FNGR AND Borders talking to shareholders LOL
Look what China's Financial Regulators are saying.
— kristen shaughnessy (@kshaughnessy2) February 6, 2024
"Market manipulation and malicious shorting seriously erode people's wealth, and stand on the opposite camp of individual investors," the CSRC said.
The CSRC vowed "zero tolerance" against ill-intended short sellers, saying…
Announcement expected in next couple of weeks.
— kristen shaughnessy (@kshaughnessy2) February 5, 2024
South Korea's financial watchdog said "the agency was investigating short-selling by foreign banks and will announce additional findings by March"
He also "announced a crackdown on careless risk management by financial firms as…
$MMTLP @SecretService @FinancialCmte @denniskneale @RepRalphNorman @Ricochet @anna_trades @JunkSavvy @busybrands @johnbrda @WilliamPFarran1 @HAMShortkiller @faulkingtruth @BasileEsq $FNGR $GTII $NWBO $ENZC https://t.co/PPICKcSSYM pic.twitter.com/NzX8dNyVPu
— kristen shaughnessy (@kshaughnessy2) February 3, 2024
https://t.co/ixnFt4Deib@HAMShortkiller @WilliamPFarran1 @faulkingtruth @BasileEsq $MMTLP $FNGR $GTII $NWBO $ENZC
— kristen shaughnessy (@kshaughnessy2) February 3, 2024
I'm afraid I do understand it. Quite well. The revival of the NSS conspiracy theories is... depressing. Now a whole new generation is falling for them.
But hey. Put me on Ignore. I'm sure it'll make you feel better.
Janice, you didn't try to understand or even read the msg on that tweet.
Sorry, you seem to be a fake guru and are becoming rather annoying. I am blocking you going forward.
🫢👋
My God. What utter bullshit. OF COURSE shares can be owed by non-U.S. citizens or residents.
And FINRA did not "admit" to that. It "explained" it.
Listen to the video below. @johnbrda explains how FINRA makes short positions disappear. Also read his tweet below.
— kristen shaughnessy (@kshaughnessy2) February 2, 2024
"... they called me back a couple days later and said FINRA told us that two million shares that were short moved offshore and therefore they are out of the… https://t.co/8pUnbbs2an pic.twitter.com/GheRrD1DrA
FINRA admits that shares can be held by foreign and overseas custodians, of which they have no jurisdiction. Which means short interest reporting and policing of naked short selling is a sham. Why would the @SECGov or @FINRA allow a US Security to be "offshored" and/or never… pic.twitter.com/mgTjQ6p4Gn
— John Brda (@johnbrda) February 2, 2024
@FingerMotionInc (@Nasdaq: $FNGR) CEO Martin J. Shen is making waves at the @DealFlowEvents #MicroCap Conference in Atlantic City, showcasing FingerMotion's innovative strides in the tech world!
— FingerMotion (@FingerMotionInc) February 1, 2024
FingerMotion is a trailblazer in the tech realm, uniquely positioned as one of the… pic.twitter.com/gqhxFe6ntW
$FNGR
— kristen shaughnessy (@kshaughnessy2) February 1, 2024
"..the short battle is going to happen regardless, let us focus on building a strong powerful company and that's why I'm excited about what I think we're going to announce in Q1 of this year a big new product for us.... the shorts will take care of themselves"… https://t.co/RjorJmEBzr pic.twitter.com/gD4LVaq7Ep
Go educate GNS and CRTD/VOCL. Both knew about toxic funding but still got funded by them and their stocks are getting killed. Lost 99% in POS CRTD/VOCL, btw.
On the other hand, both $FNGR and $GTII already paid off their notes more than 1-2 years ago. Invest in $FNGR & $GTII if you are interested.
No shit sherlock. Toxic funding kills companies. And most companies are entirely aware of it. But they take the money anyway.
It has nothing to do with your usual cause celebre, naked shorting. It's a genuine problem.
The CEOs of public companies have to be very careful who they take loans from and even who they talk to about needing financing.
— kristen shaughnessy (@kshaughnessy2) January 30, 2024
Toxic lenders can destroy your company.
In this video I took companies who accepted funding from Lind Partners and what happened to their stock… https://t.co/9buVZq9Oqs pic.twitter.com/sOVXbS1sUU
"This is the biggest crime in US history and fixing it will destroy so many things, banks, hedge funds. It's mayhem behind-the-scenes...
— kristen shaughnessy (@kshaughnessy2) January 29, 2024
You can destroy them one at a time is what we're trying to do. Bringing the attention to GTII, Fingermotion and MMTLP.
That's how you beat… pic.twitter.com/vdagxwcB2H
"...It's counterfeiting, remember the word. It's counterfeiting."@HAMShortkiller @WilliamPFarran1 @BasileEsq @faulkingtruth $MMTLP $FNGR $GTII $ENZC $NWBO https://t.co/s5gam06vkc pic.twitter.com/G7hDxF9Y53
— kristen shaughnessy (@kshaughnessy2) January 28, 2024
Look at this.
— kristen shaughnessy (@kshaughnessy2) January 28, 2024
The media in other countries actually reports on the fraud in their financial markets.
Here in the US the media consistently closes its eyes to the fraud, says naked shorting isn't a problem and blames uneducated retail investors.
That argument is blatantly… https://t.co/TqoR4fZWWH pic.twitter.com/Reta34AO7P
China making more moves to stop the counterfeit crooks.
— kristen shaughnessy (@kshaughnessy2) January 28, 2024
"China will halt the lending of certain shares for short selling from Monday, the securities regulator announced Sunday, in a move to support the country’s slumping stock market....
....Authorities are taking measures…
Malaysia's financial regulators also ahead of U.S. as they consider short selling ban...
— kristen shaughnessy (@kshaughnessy2) January 27, 2024
"In response to the situation, there is a growing discussion around enhancing circuit breakers and even considering a ban on short selling. While short selling is considered a price… pic.twitter.com/BVLCifOwJ4
China's financial regulators moving faster than U.S.
— kristen shaughnessy (@kshaughnessy2) January 27, 2024
"According to a Reuters report, the China Securities Regulatory Commission approached a select number of hedge funds to advise them to restrict short selling in the stock index futures market.
Of particular concern to the… pic.twitter.com/iwfVmVfgre
Sorry for your losses
Sliver lining...
At least the CEO wasn't stupid enough to hire ChuckleFace on X butt he sure had a DRE
If you feel this stock promoter stepped over the line by promoting FNGR, maybe register another complaint with the SEC.
"... If they were to shut it down in one day, we would have 5000 GameStops going off. They are tipping off the shorts to try to cover their positions...
— kristen shaughnessy (@kshaughnessy2) January 27, 2024
The SEC is making moves that we haven't seen before..
It's going to create havoc..."
For years U.S. and European regulators… pic.twitter.com/Xpn4DgQgaE
$FNGR pay attention.
— HAM (@HAMShortkiller) January 26, 2024
Get Ready for Faster Settlement in U.S. Markets, SEC's Gensler Tells Europeans
U.S. securities markets are on track to adopt next-day settlement for stock trades on May 28, Gary Gensler warned European regulators and and market participants Thursday.
All publicly traded companies should file a claim under their Terioist coverage if they feel they have been harmed with stock minuaplation
We hope, as we have done so for many years, for change.
Hope might never become a reality.
Time will tell.
FNGR should file a claim into their insurance company under their Terioist coverage on their stock minuaplation
to flush out all the unregistered toxic lenders and Naked shorting stock minuaplation. All insurance companies thro in Terioist coverage on their corporate policies. Let's get the insurance companies join the fight into the financial crimes
All these unregistered toxic lenders and market makers getting taken to court will delay, delay, delay to put discovery off as long as possible. Or they'll settle.
— kristen shaughnessy (@kshaughnessy2) January 25, 2024
"... Discovery is going to abuse these guys, their phone records, their bank records, their travel records.… pic.twitter.com/sXcJjLR5vt
That may be true but things will be changing.
We will never stop fighting for the criminal behavior on short selling in the equity markets. Third World countries are making the United States of America look like the safe haven for criminal stock manipulation behavior.
Unfortunately, that seems to be exactly what's going on. The criminal swamp runs very deep in the equity markets
Us will never ban it because congress HF buddies make too much money being complicit in the crime.
Thailand's regulators understand counterfeit shares are destroying financial markets. @HAMShortkiller @WilliamPFarran1 @faulkingtruth @BasileEsq $MMTLP $FNGR $GTII $RUM $NWBO $ENZC @BangkokPostNews https://t.co/Ci1u53NcA5
— kristen shaughnessy (@kshaughnessy2) January 24, 2024
China, South Korea, Thailand, India and Australia are all cracking down on financial fraud.
— kristen shaughnessy (@kshaughnessy2) January 24, 2024
Yet here in the U.S. counterfeit crooks operate without fear.
"...Over the past five years, the China Securities Regulatory Commission (CSRC) has investigated nearly 1,900 cases that… https://t.co/T9vbwar5Yh
Exciting news in the #tech realm: The Wi-Fi Alliance has kicked off the certification process for Wi-Fi 7, marking the dawn of a new era in #wireless connectivity!
— FingerMotion (@FingerMotionInc) January 23, 2024
Wi-Fi 7 brings a wave of innovations, especially in multi-user augmented reality (AR), virtual reality (VR), and…
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The Truth About Naked Short Selling
By JOHN OLAGUES
Full Bio
John Olagues has spent 15+ years as the owner of Truth in Options and 13+ years as president and owner of Olagues Trading Company.
Learn about our editorial policies
Updated October 24, 2023
Reviewed by THOMAS J. CATALANO
Fact checked by SUZANNE KVILHAUG
The basic form of short selling is selling stock that you borrow from an owner and do not own yourself. In essence, you deliver borrowed shares. Another form is to sell stock that you do not own and are not borrowing from someone. Here you owe the shorted shares to the buyer but "fail to deliver." This form is called naked short selling.
Naked shorting is the illegal practice of short-selling shares that have not been affirmatively determined to exist. Ordinarily, traders must borrow a stock, or determine that it can be borrowed before they sell it short. Due to various loopholes in the rules, and discrepancies between paper and electronic trading systems, naked shorting continues to happen.
These short sales are almost always done only by options market makers because they allegedly need to do so in order to maintain liquidity in the options markets; however, these options market makers are often brokers or large hedge funds who abuse the options market maker exemption.
KEY TAKEAWAYS
Naked short selling occurs when you sell short without having properly located and borrowed the shares to be sold.
To sell short, you normally have to borrow existing shares from your broker or clearing firm.
Naked shorting is illegal per Regulation SHO and can lead to a failure to deliver (FTD).
1
Shorting Without Failing to Deliver
There is another form of short selling, sometimes called a synthetic short. This involves selling call options or buying puts. Selling calls makes you have negative deltas (a negative stock equivalent position) and so does buying puts. Neither of these positions requires borrowing stock or "failing to deliver" stock.
A collar is nothing more than a simultaneous sale of an out-of-the-money (OTM) call and the purchase of an OTM put with the same expiration date. Another way to short sell is to sell a single stock future, a type of equities derivative not traded in the U.S. since 2020.
2
Prepaid forwards and swaps are sometimes used to carry out short sales; however, these are done directly between the customer and a bank or insurance company, many of which have become suspect in terms of their ability to guarantee the other side.
Holding any one of the above positions alone or in combination with another essentially gives you a negative delta position whereby you will profit if the stock goes down.
Margin Requirements and Money Transfers
The following is exactly what happens when you do a short sale as mentioned above. You decide to sell some shares that you do not have because you may wish to reduce the risk of other long positions that you may hold or you wish to make naked bets that the stock will go down.
For example, you borrow shares that you wish to sell short and you instruct your broker to sell 1,000 shares at $50. Upon the sale, the $50,000 is credited to your broker's account (not your account as some may think. This distinction is important).
Then you must advance the required initial margin into your account to guarantee to the broker that there is money in your account to cover any loss you may incur if you lose on the short sale. The short seller must maintain the minimum maintenance requirement in their margin account.
Of course, if the short seller is the broker, then both the broker's account and the short seller's account are essentially the same.
SEC Regulation SHO is a 2005 rule that governs short selling and bans naked shorts.
1
The broker earns interest on the lending of the proceeds of the short sale to other margin customers. That lender becomes the short seller when the broker is the short seller. When the broker acting as an options market maker does a naked short sale, they need not borrow shares and instead collect all of the interest on the proceeds for themself.
If the stock goes down after the sale of the 1,000 shares at $50—say to $45—then $5,000 is moved from the broker's account to the short seller's account, which can be removed by the short seller. Their margin requirement goes down by 50% of the $5,000.
On the other hand, if the stock goes up to $55, then $5,000 is moved from the short seller's margin account to the broker's account and the short seller's minimum maintenance requirement will increase.
These money transfers take place exactly the same way whether you do a regular short sale or a naked short sale. There are similar future transfers if you have sold calls or sold single stock futures. When you buy puts and fully pay for them, there are none of these money transfers after the purchase, although the value of your account certainly fluctuates as the value of the puts fluctuates.
All of the above ways to obtain negative deltas cause pressure on the value of the stock similar to how straight sales of long stock put pressure on the price of the stock. In addition, these short-selling methods are sometimes used by those who have inside information about some negative future event to illegally profit by selling or shorting stock prior to the announcement of that future event.
Combinations of the above positions with long positions, where summed net short equivalent stock positions are created, are often used to disguise illegal insider trades.
Media Pundits
Naked short selling was criticized by some in the news media who claimed that naked short sellers allied with "rumor mongers" caused the collapse of Bear Stearns and Lehman Brothers. They cite the large "failure to deliver" for a stock as evidence of naked short sales days after the stock had dropped.
Although the naked short sales happened after the collapse, they still hold onto the idea that those after-the-event naked short sales caused the collapse.
3
The large volumes of "fail to deliver" stock and the naked short sales after the collapse of Bear Stearns and Lehman Brothers show that there is an explanation for those large volumes; however, that strategy did not cause the collapse of those companies.
4
When Shouldn't You Short Sell?
It is recommended that new traders do not short sell as it is a much more involved and risky type of strategy that comes with a variety of rules. Only experienced traders should attempt to short sell and only when they have done the required research to justify their positions.
What Triggers a Short Sale Restriction?
Short selling a stock is restricted when the stock's price drops 10% or more than the previous day's closing price. The rule was implemented by the SEC to preserve market confidence and efficiency.
5
How Long Should You Hold Onto a Short Sell?
Traders should hold onto a short sell for as long as that trade is profitable. Once the trade stops being profitable, or, more likely, starts to move away from being profitable, the trader should close out their short sale.
The Bottom Line
Naked short selling is risky and not allowed, yet continues to happen in the market place. Traders and investors should always trade in a manner that takes risk into consideration while employing safety measures in their trades.
https://www.investopedia.com/articles/optioninvestor/09/naked-short-selling.asp
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