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A3: If you think you may be a victim of investment fraud, report it to the SEC’s Tips, Complaints, and Referrals (TCR) System. https://t.co/mvga0lJg3A#NCPW2024 #SlamTheScamChat https://t.co/DMGORRH5G6
— U.S. Securities and Exchange Commission (@SECGov) March 7, 2024
Add Pakistan's financial regulators to the growing list of countries fighting counterfeit crooks. They have filed criminal charges in alleged stock market manipulation case.
— kristen shaughnessy (@kshaughnessy2) March 7, 2024
"The Securities and Exchange Commission of Pakistan on Wednesday filed a case against the suspects… pic.twitter.com/RWh0tEGgnr
Is it that every company and every CEO who takes money from Lind Partners is bad or is Lind Partners a toxic lender looking to make money by destroying companies? Go down this thread and see what you think. https://t.co/z4gAtjVge8
— kristen shaughnessy (@kshaughnessy2) March 4, 2024
India's financial regulators recently put new short selling rules in place after last year's alleged "short and distort" piece by Hindenburg Research last year resulted in billions in losses for the Adani Group.
— kristen shaughnessy (@kshaughnessy2) March 3, 2024
"...One critical safeguard implemented by SEBI is the mandatory… pic.twitter.com/iihbBW8txh
This is just the beginning of criminal prosecution for illegal naked short selling
Play by the rules, and you have nothing to worry about. Turn yourself in and be a Whistle Blower to make a better deal for yourself. Their is noware to hide we all know what's going on here in the equity markets.
$GTII $FNGR $WULF $KNW $TELO $ZJYL $GDC $OPK $BLUE $GERN $RWLK $PXMD $TSLA $GME $AMC $XXII $VUZI $CYDY $ROOT $NVDA $IBM $WMT $CVM $NWBO $CAT $CEI $MULN $SYTA
— HAM (@HAMShortkiller) March 2, 2024
Naked shorts now going to Jail in Hong Kong https://t.co/Ho5XFKBjOr
$FNGR NOT 1 share covered of the naked short
— HAM (@HAMShortkiller) March 1, 2024
210,000,000 total
1,730,000 real short they covered 70K. The naked short sold to real short since there are no sellers BUT them pic.twitter.com/2oEA3rNtOS
China's financial regulators suspend a hedge fund
— kristen shaughnessy (@kshaughnessy2) February 29, 2024
"China has slapped a trading suspension and fines on a hedge fund firm for high-frequency trading in index-futures contracts, signalling that a crackdown on so-called quantitative investments has widened to financial derivatives… pic.twitter.com/EnwP01M8ir
In after hours 5442 trade to 5442 trade what is that spoofing manipulation black market dark pool naked shorting BS going on
I'll say it again: This board is NOT about South Korean, Chinese, or Thai stocks or stock markets.
Chinese Regulators Tell Quant Funds to Stop Using a Popular Trading Strategy that allows them "to borrow as much as 300% of their investment from brokerages". .
— kristen shaughnessy (@kshaughnessy2) February 29, 2024
Regulators say they will "severely crack down on illegal activities and maintain the smooth operation of the… pic.twitter.com/4KxEU0n4VQ
South Korea's temporary short selling ban to protect its financial markets applauded.
— kristen shaughnessy (@kshaughnessy2) February 29, 2024
"...With this decisive action, South Korea sends a clear message about its willingness to intervene in the market to prevent abuse and promote fair trading practices. The coming months will be… pic.twitter.com/bZZagStCaG
China's top financial regulator "has a reputation of having 'zero tolerance' for wrongdoings"
— kristen shaughnessy (@kshaughnessy2) February 25, 2024
(Here's where I make my push again for Dr. @SusanneTrimbath to oversee US financial markets.)
"...China appointed Wu as its new markets chief earlier this month, replacing Yi Huiman in… pic.twitter.com/eLrCY93CFZ
Broker Dealer fined $50 Million
— kristen shaughnessy (@kshaughnessy2) February 25, 2024
"The large size of such fines underscores the point that regulators want this behavior to change quickly,' a compliance executive notes"
"The size of the penalty against LPL stands out, particularly as the SEC penalized 16 wealth management firms… https://t.co/sNj4WluBkQ pic.twitter.com/8EriK3zeaO
Have you considered trying to find a board or boards that are really ABOUT Indian, South Korean, and Hong Kong stocks?
You post nothing here that is actually on topic.
FNGR....................................https://stockcharts.com/h-sc/ui?s=FNGR&p=W&b=5&g=0&id=p86431144783
India warning brokers to guard against stock market manipulation.
— kristen shaughnessy (@kshaughnessy2) February 24, 2024
"SEBI Whole Time Member Kamlesh Chandra Varshney on Saturday cautioned against manipulations in the capital market and urged brokers to keep an eye and prevent such instances.
Clamping down on misdoings, the… pic.twitter.com/LuUP7IoUrr
Look at these Dow Jones Market Data numbers and ask yourself if every CEO and every company whose stock is getting destroyed terrible, or is naked shorting a bigger problem than financial regulators and mainstream media want to admit?
— kristen shaughnessy (@kshaughnessy2) February 23, 2024
Companies, mostly Nasdaq closing below $1.00… pic.twitter.com/PHKm1U3K1d
$FNGR my new number of COUNTERFEIT shares is 210.000,000. Based on Data
— HAM (@HAMShortkiller) February 23, 2024
yest it was 72% When this goes Like $GME did look out for sure pic.twitter.com/7FLOC7srLy
Thailand's Financial Regulators also cracking down.
— kristen shaughnessy (@kshaughnessy2) February 23, 2024
"...The Stock Exchange of Thailand (SET) is planning to raise the market capitalisation requirement for securities eligible for short selling and triple the fines for violators of short selling rules....
...The SET also wants… https://t.co/pL9WkeWfP1 pic.twitter.com/PRJdzw0CWv
A reminder to brokers who don't force trade settlement
— kristen shaughnessy (@kshaughnessy2) February 21, 2024
"Broker-Dealers Can Be Held Primarily Liable For Failing To Fulfill Their “Gatekeeping Responsibilities” Of Monitoring Their Clients’ Trading Activities"
"this decision is a clear and unambiguous warning to broker-dealers… pic.twitter.com/jn9NApXMxS
$FNGR LISTEN or READ.
— HAM (@HAMShortkiller) February 19, 2024
Trapped. LIND PARTNERS and Friends are Forked
205,000,000 to cover. And we all know. https://t.co/6xBSbjqyw2
$FNGR LIND PARTNERS dead
— HAM (@HAMShortkiller) February 19, 2024
11th U.S. Circuit Court of Appeals ruled that Ibrahim Almagarby was acting as an unregistered sec dealer in a series of transactions in which he acquired debt from penny-stock companies, converted the debt to stock & quickly sold off the new shares.
The stock market is full of an unknown amount of counterfeit shares created by illegal naked short selling
— Ian Carroll (@Cancelcloco) January 11, 2024
The regulators are asleep at the wheel at best and complicit at worst
Big money syphons wealth out of the system
Then they got caught by the balls#CounterfeitShares pic.twitter.com/FArkwdutY7
The stock market is full of an unknown amount of counterfeit shares created by illegal naked short selling
— Ian Carroll (@Cancelcloco) January 11, 2024
The regulators are asleep at the wheel at best and complicit at worst
Big money syphons wealth out of the system
Then they got caught by the balls#CounterfeitShares pic.twitter.com/FArkwdutY7
Watch @Cancelcloco's message to shorts and brokers
— kristen shaughnessy (@kshaughnessy2) February 19, 2024
"You might not have any way out, buying back this much stock would bankrupt you, and there has been ample evidence ever since that they are still trapped. That's why all the GameStop people are still holding, because they can… https://t.co/lWGQd0cMmf
Exciting Times in the #Tech World! According to the latest Gartner figures, global #IT spending is set to hit $5 trillion in 2024, with a groundbreaking shift – IT services overtaking communications services for the first time!@FingerMotionInc (@Nasdaq: $FNGR), a cutting-edge…
— FingerMotion (@FingerMotionInc) February 16, 2024
Great article about short selling and Naked short selling if everyone follows the rules their is no problems and have nothing to worry about
You have to be dumber than a box of rocks, not to understand what's going on here.
I agree. You are.
Apparently, not you. Illegal money Conterfieting is illegal in the equity markets, plain and simple. If you're not manipulating the markets, you have nothing to worry about. The bad actors are going to Jail. The markets are seriously corrupted. You have to be dumber than a box of rocks, not to understand what's going on here.
Who the hell cares? One more time: FNGR is not a Korean, Chinese, or Thai company.
"Prosecutors raid HSBC, BNP Paribas offices in short selling investigation"
— kristen shaughnessy (@kshaughnessy2) February 15, 2024
"Prosecutors investigating illegal short selling allegations against foreign investment banks raided the Seoul offices of BNP Paribas Securities, HSBC Securities and HSBC Korea on Thursday.
The… pic.twitter.com/TvkQsyx7Be
Thailand's regulators told to crack down on naked short selling and impose stricter penalties.
— kristen shaughnessy (@kshaughnessy2) February 15, 2024
"In the realm of reporting, the advisor recommended the SET simplify short-selling reports, making them more comprehensible regarding details and follow-up processes, including… pic.twitter.com/BioxMDM6T0
I for one am tired of the obsession with South Korea on this board. It is irrelevant to anything going on with FNGR.
"This problem is not just MMTLP, it's not just a meme stock. It's everywhere and if we don't fix it the system is going to come down. It's going to fix itself. The whole thing will collapse .."@WilliamPFarran1 & @HAMShortkiller coming soon to a @denniskneale "What's Bugging… pic.twitter.com/O67hxq3Jsx
— kristen shaughnessy (@kshaughnessy2) February 14, 2024
Worldwide concerns about short sellers and counterfeit crooks gaming the system, but skepticism over whether U.S. and UK regulators will act.
— kristen shaughnessy (@kshaughnessy2) February 14, 2024
"That view appears to be gathering steam. South Korea, of course, temporarily banned short selling last year in its entirety, and will… pic.twitter.com/apyrj8XW6k
CEO's are successfully fighting back against toxic lenders who try to destroy their companies. @BasileEsq has successfully gone after lenders who have violated federal securities laws. A lender must be registered as a dealer according to the Securities Exchange Act of 1934 and… pic.twitter.com/ocqK88ZWqR
— kristen shaughnessy (@kshaughnessy2) February 13, 2024
"Counterfeiting, Counterfeiting, Counterfeiting.
— kristen shaughnessy (@kshaughnessy2) February 11, 2024
They're creating shares that don't exist.
Go out and try to create money that doesn't exist, you go to jail.
T-shirt you go to jail.
Super Bowl tickets you go to jail.
Anything you counterfeit it's bad.
Only in the equity… pic.twitter.com/msomN1UFFA
Guess what? We do not live in South Korea or Hong Kong. And Finger Motion is not located in South Korea or Hong Kong.
So let's give the naked short business a rest, shall we? Too bad you weren't around for the first generation NSS craze.
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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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