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Regulators, Industry Giants Seek To Curb Short Selling
By Matt Andrejczak, MarketWatch
Last update: 5:48 p.m. EDT Sept. 18, 2008 SAN FRANCISCO (MarketWatch)
-- Gathering anger over short selling of vulnerable financial stocks exploded into the open Thursday as top market regulators and industry giants took steps to limit the practice and begin investigation into possible abuses.
Britain's stock market regulator on Thursday banned short selling in financial companies and said it might extend the ban to other sectors. The move followed the Securities and Exchange Commission's curbs on the practice that went into effect Thursday morning.
In other steps aimed squarely at the bearish practice, the country's largest pension fund, the California Public Employees' Retirement System, said it was taking steps to limit the practice on three financial stocks and the New York attorney general called for a wide-ranging investigation of the short selling of some prominent financial companies, including Goldman Sachs.
The concerted reaction followed two days of sharp declines in global stock markets, triggered by mounting fears that the credit crunch would spin out of control and deepen the financial crisis. As stock declines have deepened, the role of short sellers has come under fire.
"The moves should help restrain the abusive short-selling practices lately rampant in the stock market," said analyst Thomas Brown of Bankstocks.com. "Short sellers can no longer deceive their brokers about their intention or ability to deliver shares."
The SEC on Thursday put a ban on so-called "naked" short selling, while Calpers said it won't allow lending of shares of Goldman Sachs, Morgan Stanley, and Wachovia
The California State Teachers' Retirement System made a similar move and it called on 60 other funds to follow suit.
"We don't want to inadvertently contribute to the instability of these companies or the market," Clark McKinley, a Calpers spokesman, told The Wall Street Journal. Calpers has one of the largest securities lending programs in the country, at $38 billion.
Much of the concern in the U.S. focuses on naked short selling. Naked shorting can allow market manipulators to force prices down much lower than would be possible in a legitimate short sale.
In an abusive naked short sale, according to the SEC, the seller doesn't borrow a stock, as would happen in an ordinary short sale. The seller also fails to deliver the stock to the buyer.
Bill Stone, chief investment strategist at PNC Wealth Management, supported the SEC ban on naked shorting. "They don't let me go out and buy stocks without paying for them, so they shouldn't be able to do that selling them. Fair is fair," said Stone.
Brown and others want the SEC to take its authority even further.
They argue the SEC should re-impose the so-called "uptick rule" that prevented traders from selling short unless there was a higher bid price in the stock.
"They shouldn't outlaw shorting but putting more controls on it is necessary," said John Langston, analyst at Hodges Capital Management.
The SEC repealed that the uptick rule in July 2007. They also want the SEC to dig into the option and credit default swaps strategies used by short sellers.
Short selling itself isn't illegal. Some investors contend short sellers are a reality check for the market, in some cases, shining light on possible accounting shenanigans at corporations.
"Short selling provides market liquidity and keeps management honest," said money-manager Russell Glass at RDG Capital.
In a regular short sale, the seller borrows a stock and sells it, with the understanding that the loan has to be repaid by buying the stock.
New York Attorney General Andrew Cuomo plans to investigate rumor mongering and illegal conduct. "The markets need to be stabilized," Cuomo said. "One way is to root out short sellers who spread false information."
In further moves that should rattle short sellers, the SEC is expanding its push into the trading records of hedge funds, which are less-regulated than mutual funds.
The agency said it is sending subpoenas to at least 50 big hedge funds, seeking trading records and communications about trading in specific companies.
The SEC is considering a rule that would force hedge fund managers with more than $100 million invested in stocks to report their daily short positions. This is drawing the ire of famous short-seller Jim Chanos, who helped expose the accounting gimmicks at Enron.
"For investment managers such a requirement is akin to the government suddenly requiring Coca-Cola to disclose their secret formula for free to all their competitors," Chanos said.
SEC Chairman Christopher Cox has been under scrutiny for his handling of the financial crisis sending shockwaves through the market. On Thursday, Republican Presidential candidate John McCain said SEC Chairman Christopher Cox should be fired.
McCain said Cox "serves at the appointment of the president and, in my view, has betrayed the public's trust. If I were president today, I would fire him."
Matt Andrejczak is a reporter for MarketWatch in San Francisco. Steve Goldstein contributed to this report from London. Nic Godt and Kate Gibson contributed from New York. Shawn Langlois contributed from San Francisco.
SEC Issues New Rules to Protect Investors Against Naked Short Selling Abuses
FOR IMMEDIATE RELEASE
2008-204
Washington, D.C., Sept. 17, 2008 — The Securities and Exchange Commission today took several coordinated actions to strengthen investor protections against “naked” short selling. The Commission’s actions will apply to the securities of all public companies, including all companies in the financial sector. The actions are effective at 12:01 a.m. ET on Thursday, Sept. 18, 2008.
“These several actions today make it crystal clear that the SEC has zero tolerance for abusive naked short selling,” said SEC Chairman Christopher Cox. “The Enforcement Division, the Office of Compliance Inspections and Examinations, and the Division of Trading and Markets will now have these weapons in their arsenal in their continuing battle to stop unlawful manipulation.”
In an ordinary short sale, the short seller borrows a stock and sells it, with the understanding that the loan must be repaid by buying the stock in the market (hopefully at a lower price). But in an abusive naked short transaction, the seller doesn't actually borrow the stock, and fails to deliver it to the buyer. For this reason, naked shorting can allow manipulators to force prices down far lower than would be possible in legitimate short-selling conditions.
Today’s Commission actions, which are the result of formal rulemaking under the Administrative Procedure Act, go beyond its previously issued emergency order, which was limited to the securities of financial firms with access to the Federal Reserve’s Primary Dealer Credit Facility. Because the agency's exercise of its emergency authority is limited to 30 days, the previous order under Section 12(k)(2) of the Securities Exchange Act of 1934 expired on Aug. 12, 2008.
The Commission’s actions were as follows:
Hard T+3 Close-Out Requirement; Penalties for Violation Include Prohibition of Further Short Sales, Mandatory Pre-Borrow
The Commission adopted, on an interim final basis, a new rule requiring that short sellers and their broker-dealers deliver securities by the close of business on the settlement date (three days after the sale transaction date, or T+3) and imposing penalties for failure to do so.
If a short sale violates this close out requirement, then any broker-dealer acting on the short seller’s behalf will be prohibited from further short sales in the same security unless the shares are not only located but also pre-borrowed. The prohibition on the broker-dealer’s activity applies not only to short sales for the particular naked short seller, but to all short sales for any customer.
Although the rule will be effective immediately, the Commission is seeking comment during a period of 30 days on all aspects of the rule. The Commission expects to follow further rulemaking procedures at the expiration of the comment period.
Exception for Market Makers from Short Selling Close-Out Provisions in Reg SHO Repealed
The Commission approved a final rule to eliminate the options market maker exception from the close-out requirement of Rule 203(b)(3) in Regulation SHO. This rule change also becomes effective five days after publication in the Federal Register.
As a result, options market makers will be treated in the same way as all other market participants, and required to abide by the hard T+3 closeout requirements that effectively ban naked short selling.
Rule 10b-21 Short Selling Anti-Fraud Rule
The Commission adopted Rule 10b-21, which expressly targets fraudulent short selling transactions. The new rule covers short sellers who deceive broker-dealers or any other market participants. Specifically, the new rule makes clear that those who lie about their intention or ability to deliver securities in time for settlement are violating the law when they fail to deliver. This new rule is effective immediately.
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Where do you see the price of this stock 6 months from now ?
THE ONLY THING THIS IS GOOD FOR AT THIS POINT
IS A TAX WRITE-OFF.
WHAT A WAISTED OPPORTUNITY.
How soon until the NEXT r/s ?
yep..
just celebrating !!!
I saw on Cam One when a LARGE tanker truck pulled
in earlier and now the lights are on in the
plant.
LOOKS LIKE BIO-DIESEL PRODUCTION IS ABOUT TO
START UP !
CONGRATULATIONS PHGI !!!!!!!!!
$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$
Perihelion Global Secures Purchase of 24 Tons of Feedstock; Chooses Purolite for Phase One Refinery
http://www.perihelionglobal.com/
8:45a ET March 11, 2008 (Market Wire)
Perihelion Global (PINKSHEETS: PHGI), a development company with interests in natural resources, alternative energies, and advanced communications, today announced that the Company has prepaid for initial delivery of 24 tons of feedstock to be received within 7 days at the Company's Phase One Refinery in Opp, Alabama.
As recently announced, Perihelion reached an agreement with Griffin Industries to supply certain feedstocks for use with Perihelion's BioFuels Division. Perihelion and Griffin management moved expeditiously to secure the initial purchase agreement, which will bring a substantial quantity of high-quality feedstock to the nearly completed Phase One Refinery location in Opp, Alabama. The supply of feedstock is believed ample to begin initial production immediately following completion of construction, which management anticipates should occur during the current calendar month.
The Company and its contractors are currently finalizing the interior components of the refinery, including the on-site laboratory and internal electrical and mechanical mechanisms. Management notes that at the conclusion of construction, the Company will process several evaluation BioDiesel batches to ensure they meet the highest quality standards. Securing a significant amount of feedstock prior to the refinery's completion has enabled the Company to create a seamless transition path to a production environment. Prepayment of this purchase protects the Company from unexpected agricultural/commodities increases and allows for more detailed initial laboratory work.
To make certain the Company will be producing the highest-quality BioDiesel available, Perihelion has chosen Purolite Biodiesel Purification Adsorbent for use at its Phase One Refinery. Purolite is a dry polishing media specifically formulated for removing by-products remaining after transesterifcation to produce BioDiesel. Purolite's PD206 ION exchange resin will enable the Company's finished BioDiesel product to meet ASTM/EN specifications by removing residual glycerin, water, and trace methanol, among other key properties. The Company recognizes Purolite as an industry-leader in this field, and management analysis concluded Purolite to be the superior and most cost-effective choice for the needs of the Phase One Refinery.
Investors are apprised that the Company has purchased the feedstock and Purolite products outlined in this release with funds created from the issuance of equity. The Company has incurred no debt as a result of these purchases, and continues to maintain a strong policy of utilizing its share capital to acquire assets and operations that will best create future revenue and earnings.
About Perihelion Global:
Perihelion Global focuses on the acquisition, development and management of technologies, strategic commodity reserves and assets in the energy, natural resource and communications markets. Perihelion's management team specializes in providing solutions for the strategic challenges of 21st Century. We lead with decades of experience in environments that are mission critical in today's global marketplace: Technology, Energy and Communications.
Website: http://www.perihelionglobal.com
Caution Regarding Forward-Looking Statements
This press release contains historical information as well as forward-looking statements that are based upon our estimates and anticipation of future events that are subject to certain risks and uncertainties that could cause actual results to vary materially from the expected results described in the forward-looking statements. The words "anticipate," "believe," "estimate," "expect," "hopeful," "intend," "may," "optimistic," "preliminary," "project," "should," "will," and similar expressions are intended to identify these forward-looking statements. There are numerous important factors that could cause our actual results to differ materially from those in the forward-looking statements. Thus, sentences and phrases that we use to convey our view of future events and trends are expressly designated as Forward-Looking Statements as are sections of this news release clearly identified as giving our outlook on future business.
These forward-looking statements are subject to significant risks, assumptions and uncertainties, including, among other things, the following important factors that could affect the actual outcome of future events:
-- General economic conditions, either nationally or in our market area, that are worse than expected;
-- regulatory and legislative actions or decisions that adversely affect our business plans or operations;
-- price competition;
-- inflation and changes in the securities markets that adversely affect the fair value of our operations; and
-- changes in our organization, compensation and benefit plans.
We wish to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made, and wish to advise readers that the factors listed above could affect our financial performance and could cause actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements. We do not undertake and specifically decline any obligation to publicly release the result of any revisions that may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.
Contacts: John H. Beebe Chairman, Chief Executive Officer & President 866-748-7610 (Toll Free)
SOURCE: Perihelion Global
Great History Lesson !!!
I gave up on this one about a year ago.
After 4 years, made no money but managed to
break even. Got tired of the same old
dog and poney act year after year.
Check out these modular plant designs
in the January edition of biodiesel
magazine.
http://biodieselmagazine.com/article.jsp?article_id=2011
it is 100 feet x 60 feet
In my past construction experence, delays were ususally
caused by over-worked county building inspectors which
showed up days or weeks late and had to inspect the
completed phase of the job before the
next phase could begin.
There is no such a thing as a "on schedule construction job".
HOPE NOT !!!
*** I wish we had some sound to go with the video so we could
listen to the action. ****
I suppose Big Brother is Watching !!
Cam 4 has been moved back into position so the whole
construction site is now in view !!
Well, at least we see the red truck thats there !!
Looks like to me at this point, PHGI will leave all of there assets in there current stock. (everything as is.)
When they can qualify to move up to the otc-bb, they will do it without rnvo.
And with the bio-diesel plant starting up soon, and revenue coming in, that move up should'nt be to hard to do.
and of course, as the value of gold goes up the value of the mine goes up also.
Thank You Uncle Meatball,
I've gotten to the point to where I only check this site once or twice a week bacause of all of the bashing.
it gets old after-a-while.
WE BOTH KNOW THAT PHGI IS GONNA BE BIG. IT JUST TAKES TIME.
I'm looking at the cams and the
construction continues.
Should start seeing some walls and
doors going up soon.
The stock price will go up when the company starts generating revenue. **Soon. **
This is a buy and hold opportunity.
Work is progressing on the bio-diesel plant.
JB is doing this right. Set up the small facility first for training purposes ( and to fill contracts, ) while building the larger facility. When the larger facility comes on line, there is staff to handle production and other task.
WE'RE GOING TO BE SUCCESSFUL.
Captain, Yes.
Since gold is going up, I would sale that mine for a nice profit and put the money on the bio-diesel plant.
That is where the real money is going to be at with oil going over 100.00 per barrel. Alternative fuel.
The bio-diesel plant (maybe) would then be free of any debt.
The cameras being used make everything look smaller than it really is. Also, the foundation that is being poured is at a distance, so its hard to figure out the size.
That was alot of concrete poured today.
The other day, one of the guys walked by one of the storage tanks on cam3 and I saw for the first time just how big that tank really is. ** THAT TANK IS BIG. ***
They started pouring the cement for the foundation.
You can see the
cement truck on webcam4.
Double E...
It looks like that area has been cleared and possibly
dug out for a foundation.
phgi cams are up !!
I can't tell for sure because of the distance, but it looks like some of the foundation has been concreated.
Cannot get on the web cam this morning.
Is anyone else having the same problem ?
Uncle Meatball,
Yep, looks like the web cam is down.
there went my week-end entertainment !!!
They Just Cut Off The Lights At the
Construction Site: 9:42 PM OPP Time.
Calling it a night.
Cement trucks tomorrow ?????
I'm on vacation tomorrow and saturday, so i'll watch my new entertainment... THE PHGI WEBCAMS !!!
Heck, its better than what I see on cable tv !!!
and at least its something constructive !!!
Thank You Doggone !!!
Great DD !!!
I think we would spend more POSITIVE energy
concentrating on the construction of the OPP
Bio-Diesel Plant ( which looks like the concrete
trucks will be there soon ) and the gold mine
operations.
My Opinion !
Thank you Kuan2007 !!
I have not had a chance to look at the details.
Interesting post put out by the company yesterday evening.
My question is: "When is PHGI going to start minning operations and are they going to do it all their-self or partner with someone else ?"
My guess now is probably not happening until Spring 08, because of weather conditions in Utah. But, I could be wrong. The sooner the better to get revenue going.
Uncle Meatball,
Thats very true, BUT ITS NICE TO DREAM !!
More realistic, we MAY see this eventually
top out around $15.00 per share, depending on
how hard up we get for fuel.
I'm in for the long haul and don't expect anything
big for at least a year, two or three. This is the time to
load up and wait for the land slide !!
I have the time to wait.
Doggone, great vision of the near future !
OPP Alabama, Bio Diesel Capital of the U.S. !
THAT WOULD BRING THE PPS UP TO ABOUT $75.00+ IN MY OPINION !!
Thanks PQL !!
It worked fine for me saturday and late yesterday afternoon i was able to get on for a few minutes. Just have to keep trying i suppose.
Has anyone been able to see the webcams
this morning ? I keep getting a black
screen.
my new saturday afternoon entertainment:
PHGI OPP Webcam !!!
PQL !!
its great to be in the right investment at the right time !!
I'm looking at OPP on my computer.
!!!!!!! FANTASTIC !!!!!!!!!!!!!