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Bought well more than I should have over the past couple of weeks. Once again I have a position cost well averaged below its CMV and PPS.
So, no one thought a 100K Share Buy at the MKT was funny?! I laughed my arse off!
BOT more this morning, and grabbed some 2.50 calls.
Picked up a few more shares yesterday and today.
Howdy! AIS groupies! I am back in ATRS this week, and have been adding every day on the dips. Core position is admirable, but nothing like I had a few years ago. The longer it stays at these artificially depressed levels from the dilution event, the more I will add.
Happy Trading!
Got a feeling some crazy Sh** is about to happen on a short squeeze.......
Barclays reinstates AKS at equal weight with $7.00 Price Target.
http://www.streetinsider.com/New+Coverage/Barclays+Starts+AK+Steel+%28AKS%29+at+Equalweight/10166751.html
GLTA
TD and Jab... Getting through all the recent developments, email me and bring me up to speed on the appeal with Medac when you have a moment.
Got through most of it last month, but like your opinions.
Thanks...
Toe Dipping on a few oldies but goodies.
Got my A** spanked on HERO. Absolutely worst stock/trade I ever had, fortunately exited before it really got rocky. Thank GOD for covered call writing!
Building a position back in AIS over the past few weeks.
Happy Trading!
Well, Time to dump. Management is going to get exactly what they deserve, and I am taking my lumps and moving on.
See you in the two dollar range or lower.
OOOH! This is going to be awesome!!
Hearing that an Article is coming on HFT manipulation, regSHO violations and the use of illegal options trading to hide manipulation. Currently it is in copy edit and showcases Hercules Offshore, GoGo Inflight, Groupon, Antares and a few others.
I am told that even the editor is nervous about the article and the implications and evidence contained in the copy.
@Joe - The answer is complicated, but here is the high level.
Up until about 2010 you used to be able to lock up your shares in some sort of fashion, whether it was through a limit sell order GTC or covered calls, or by simply informing your broker to cancel your hypothecation agreement with the firm.
It was a tactic used to force short squeezes but really no longer prevents your shares from being leveraged.
There are a number of reasons:
First is the advent of HFT. There are so many phantom shares trading on nearly all equities, that trading desks simply ignore your sell order and hypoethecate your shares anyway, whether for a few minutes or for weeks. They can always execute your order with phantom shares if something happens and the order is triggered.
Second, if you place the order too high, it is most absolutely ignored for hypothecation reasons and your shares are still used. Especially if the "computers" calculate there is no risk in hypoethecating shares that have orders more than 30% greater than current price per share. The thresholds are all different depending on the firm.
Third, since FINRA and the SEC fail to enforce their own rules and regulations on regSHO and fails - to - deliver, a majority of the time trading desks simply ignore that your shares have been locked up and continue to lend them out. And if you think you can sell covered calls and lock up your shares think again, all it does is lock up your shares to your own trading now, the firms can still trade your shares as described in your hypothecation agreement, but interestingly you can't, unless you have a higher clearance for options trading, and guppies are usually not allowed to get higher than a level 2 options clearance.
Fourth, some dink figured out how to use deep in the money call options to reset the close-out requirements for reg-SHO, so even if the violation pops up, like ATRS for the past 3 days, the traders will buy calls to satisfy delivery requirements and stay short instead of covering. http://www.sec.gov/about/offices/ocie/options-trading-risk-alert.pdf You can read it for yourself at this link.
It has become virtually impossible to lock up your shares and even 100% of all the shares were locked up, HFT and manipulators would simply side step the rules and use phantom shares within settlement periods and illegal options calls.
But if you still want to lock up your shares, there are only two true ways left. Request a stock certificate, which is pretty archaic or transfer them to a cash account. If they are not in a margin account they can't be lent.
Trust this helps.
Happy Trading.
Couldn't resist. Bought back in a few minutes ago at 2.25. Just a few trading shares. Was just joking with BsAAV that it took 84 trades to get total execution.
DOH! and went regSHO this morning.
Happy Trading!
AND yes before everyone points it out. I am getting my A** handed to me on HERO right now. On the wrong side of the trade by 12.5%. UGH!
Same strange phenom that started yesterday around noon. Approx. 90% of all buy orders bid are marked buy to cover and ask orders marked sell short.
Very little "real" buying of selling. The shorts are merely trading phantom shares at this point treading water. Very unusual deep in the money call buying as well.
It is quite possible that due to all of the reg SHO violations and fail to delivers that margin and compliance desks have begun looking into their own trading activity on this one.
Shares still priced as if the company was facing BK, and not as a 2 Billion Enterprise value with 900m in revs. with a nearly 1B plus backlog and 200M in cash.
As previously stated. Idiocy.
No real buyers or sellers now.
Short Sellers wanting to cover are buying new Short Sellers short sales.
Trader at BOAML says that nearly all buy orders on the bid are marked buy to cover and nearly all sell orders are marked sell short. What idiocy!
The rest remaining are mostly High Frequency Traders continuing to manipulate the stock down.
I can't recall the last time I was on the wrong side of the trade, especially by a negative 13.5%.....
The fact that Hercules is now valued similarly to Zion Oil and Gas which has never had revenue since inception is a joke.
Also, a lot going on behind the scenes per my previous posts......
Seriously doubt the short NASDAQ report of 18+ million short. Over 4 million short shares from market makers are on waiver and only 8 million available according to the exchanges for short sales as of today. Before the bear raid there were just over 30 million available for short sales. The math doesn't work. That would mean there are another 20 Million + short shares unaccounted for.
Plus all of the options in play to the short side. I guess we were unaware that Herc was filing BK this month. (j/k). Have these morons seriously gotten short nearly 40 Million Shares? Or a 3X of the available float......
This is getting deep.
The very next phone call yielded something interesting. After the article was published and legal meetings, not only did Global Hunter hire a number of credible CFAs, and issued a number of news releases touting the hires, they did revamp the website.
It was also discovered that there is great scrutiny occurring over Global Hunters VP of Equity Trading based out of Chicago, Ary Zomorodi, and a number of their registered reps getting u-4 dings for trading in their own accounts at outside firms, and failed to disclose such accounts, and allegedly were trading (front running their own research reports AND encouraging clients to do so), prior to issuing research reports on the equities they were trading, and was all being coordinated by Ary Zomorodi and his analysts.
And it has been confirmed that Global Hunter clears through Goldman Sachs on a Fully Disclosed basis. The big speculation is they were recommending shorting in HERO to all of their clients and were telling the clients they were going to front run the downgrade!
Forget the sniff test, it is time for the DOJ to get involved!
Ok, Found the article. But it appears the link has been broken or removed.
Brent Atwood | Seeking Alpha
seekingalpha.com/author/brent-atwood
Credibility And Compliance Are Foreign Concepts At Global Hunter Securities http://bit.ly/OyVTJs Mar 18, 2014.
If anyone has a copy of the article, I would be excited to read it! I am told it was beyond damaging, factual, and that a lot of legal stuff happened after the article was published.
Apparently it was swept under the rug before anyone could really get a good read on it.
The Plot Thickens.
A number of legal meetings has happened since Mr. Atwood's firm, Box Audit was asked by shareholders to investigate trading in shares of Hercules.
One of the first legal meetings occurred between the CFO, Stephen Butz, and GC of Hercules with Outside counsel, Dr. Kai Haakon E. Liekefett at Vinson & Elkins, LLP, in Houston. The details of those meetings are unknown but occurred within days after he met with executives at Hercules.
Shortly after that a number of legal meetings occurred between the Compliance Officer David Zack, and GC, Gary Meringer of Global Hunter Securities, with their outside counsel, Tad Bartlett at Jones, Swanson, Huddell & Garrison in New Orleans. Also, within days of that legal meeting, Global Hunter revamped their entire website, which I am assuming occurred, because I don't know what it looked like before.
The same week the meetings occurred, the alleged investigation was referred from New Orleans FINRA offices to Delaware FINRA offices, sometime between mid February and early March 2014. I am also told that he published an article, that I am unable to locate a copy of, that somehow exposed all of Global Hunters regulatory and compliance tangling with the SEC regarding the research reports they were issuing, and that somehow it was tied to Goldman, who clears all of Global Hunters trades.
I wouldn't even begin to speculate what has been going on, but I guarantee, that behind the scenes something serious is really going on.
Time to start pulling the curtain aside and see who some of the wizards are.
I am now on the hunt for all of the dirt on IronRidge and it's owners, their screen names, home addresses, trading rooms they use, etc.
Gonna expose the manipulation and the bullshit they pull with their toxic financing and how the try to destroy companies with lies and lawsuits.
Bullies biggest tool is fear, and I am gonna turn the tables around.
Heck I could buy this entire company's shares outstanding in my margin account.
Bob, should have come to me before engaging some stupid hack firm notorious for short and distort schemes and for getting nearly every company it touches tied up in lawsuits in order to take management away from day to day.
Also, going to speak with my contacts at CVS, RAD, WAG and start getting the ball rolling in assisting with big retail attention back to the specialty drug apothecaries.
Keep it up IronRidge, John, Richard and Brendan...BE PREPARED, sending private investigators to follow you and I am going to give every recorded conversation directly to my friends at Knight for publication. Gonna expose you for the hacks you are!
Buyout Rumor has been confirmed.
A group of Ultra High Net Worth Investors, lead by Brent Atwood of Dallas, Texas were in the process of preparing a bid for Hercules Offshore.
It has also been confirmed they notified the CFO, Stephen Butz of their intentions in an email dated June 4th 2014.
It was further confirmed that he is the driving force behind the newly formed entity, Shareholders for the Future of Hercules Offshore, LLC (Proposed), and that they have met a number of times with management over the past few months.
It was also, confirmed that it was his firm, BoxAudit, LLC that was engaged by the original shareholder group to investigate the allegations of Securities Fraud, Manipulation, and Collusion, and that they turned over the investigation to FINRA in early February, and the SEC more recently.
He is also the same person that was writing articles of the illegal abusive naked short selling on Seeking Alpha.
Any more questions on speculative actions that may or may not occur with FINRA or the SEC.
As you can see, absolute corruption, corrupts absolutely. Now that we have established that the SEC and FINRA as well as Congress and elected officials are all in on the fix, we should probably stick to fundamentals and earnings.
It is obvious that everyone knows the doggone stock is far beyond being manipulated. The question is, is there a catalyst that will screw the shorts, and the answer is yes, and it commeth that right soon!
Ex-Finra Employee Claims He Was Fired for Whistle-Blowing
By Bob Van Voris Apr 5, 2013 4:19 PM CT
A former Financial Industry Regulatory Authority employee filed a whistle-blower suit in federal court, claiming he was fired after detecting a flaw in a Finra’s risk-rating system that allowed large broker-dealers to be over-leveraged.
Joseph Sciddurlo, 58, claimed in the suit filed today that he worked as a principal examiner for Finra in 2010 when he discovered that the regulator’s system allowed large firms to circumvent a Securities and Exchange Commission rule limiting leverage to 15 times net capital.
Sciddurlo was initially “commended for his financial expertise and asked to design a better risk-rating methodology with respect to broker-dealers,” he claimed in a complaint filed in federal court in Manhattan. Later, he was downgraded, placed on probation and fired in May 2011, without a legitimate reason, Sciddurlo said.
In the suit, Sciddurlo claimed Finra illegally discriminated against him on the basis of age and fired him for threatening to disclose the risk-rating flaw to other regulators and to the public. He’s seeking at least $25 million in damages.
Michelle Ong, a spokeswoman for Washington-based Finra, had no immediate comment on the suit.
The case is Sciddurlo v. Financial Industry Regulatory Authority, 13-cv-02272, U.S. District Court, Southern District of New York (Manhattan).
To contact the reporter on this story: Bob Van Voris in U.S. District Court in Manhattan at rvanvoris@bloomberg.net
Banned Stocks Held by SEC Employees Trigger Agency Ethics Review
By Dave Michaels Jan 16, 2014 1:01 AM CT
Securities and Exchange Commission attorneys are reviewing the stock holdings of about 3,400 employees after some New York staffers were found to own securities prohibited by ethics rules.
The agency’s ethics office has begun an examination of all personal financial disclosures to ensure that employees don’t have a financial interest in companies they regulate or investigate, SEC ethics counsel Shira Pavis Minton said in an interview.
The ethics review raises questions about the effectiveness of SEC programs for ensuring compliance with its trading rules, which bar workers from owning shares of most Wall Street firms, including Bank of America Corp. and BlackRock Inc. (BLK) The agency relies on employees to disclose their investments and doesn’t have a tool to automatically scan employee holdings for violations.
“Given the extensive nature of the SEC’s restrictions on stock ownership that go well beyond government requirements, it only makes sense to help staff comply,” Minton said. “Having an extra set of eyes on these filings is a proactive way to help staff ensure the forms are completed correctly.”
The ethics office’s review isn’t considered an investigation, Minton said. The ethics attorneys advise SEC employees on how to follow internal rules with the goal of preventing conflicts of interest; investigations of violations are handled by the SEC Inspector General.
November Arrest
Minton said previous reviews have identified assets that needed to be divested. She declined to speculate on how widespread the problem might be or discuss whether recent reviews of New York-based employees turned up improper holdings.
The change follows the arrest in November of Steven Gilchrist, a New York-based SEC examiner, charged with misleading investigators about bank stocks he owned. In addition, several other employees in the New York regional office were recently told that their personal holdings violated trading rules, according to a person familiar with the situation, who asked to not be named because the matter is private.
One case was mentioned in a December report by the SEC’s Inspector General, who wrote that a senior employee failed to properly report stock owned by a spouse; U.S. attorneys declined to prosecute the case, according to the report.
Bolstering Confidence
Michael Smallberg, an investigator for the nonpartisan Project on Government Oversight, a nonprofit that promotes government accountability, said the SEC has done more than other federal agencies to guard against employees’ abilities to profit from nonpublic information. At the same time, the agency is justified in expanding its compliance effort, he said.
“The recent episodes in the New York office make you wonder how many other employees are failing to comply with the rules,” Smallberg said in a phone interview. “Even if the abuses aren’t systemic or deliberate, conducting a full review would bolster public confidence in the agency’s work.”
About 75 percent of the SEC’s 4,500 employees, or 3,400 workers, are required to report financial holdings annually on a confidential disclosure form. That includes many of its attorneys, auditors and financial analysts and all of its accountants, economists, and examiners. Supervisors are supposed to review the forms to ensure their workers don’t have a financial interest in companies they regulate or contracts they oversee.
Ethics attorneys also review the forms, and in past years have sought to examine 25 percent of the disclosures each year. This year, they will review all of them, Minton said.
Internal Audit
The discovery of prohibited holdings among some New York-based employees may also prompt a separate internal audit of the quality of past compliance reviews, the person said.
Some employees disclosed ownership of certain stocks for years before being informed in 2013 that they are on a list of roughly 220 banned securities. That’s because the SEC’s compliance system is designed to vet new trades and doesn’t flag holdings that became prohibited after an employee acquired them, the person said.
The SEC tightened limits on the stocks employees could own in August 2010, the year after former Inspector General David Kotz investigated allegations of insider trading by three enforcement attorneys. The stricter rules forbid employees from owning shares in any financial company directly regulated by the SEC, such as a broker-dealer or investment adviser, and any firm under an enforcement investigation. The agency also began requiring that all of its employees provide their brokerage statements to the SEC and get approval for any trading.
The SEC sought in 2009 to acquire an automated system for monitoring employees’ trades and hired Financial Tracking Technologies LLC, to provide software for the job. The SEC terminated the contract in 2011 after finding the Connecticut-based company shared employees’ data with an unapproved subcontractor.
Proprietary System
The SEC then built its own system, known as the Personal Trading Compliance System, to monitor employees’ personal investments. Employees who enter a trade into the system are told whether the transaction is permitted.
The SEC’s system doesn’t automatically detect prohibited holdings that aren’t actively traded. For that reason, some employees have argued they weren’t told that some longtime holdings became prohibited after the company made an acquisition or changed its business model, the person said.
Some of the banned stocks are in bank holding companies that acquired SEC-regulated firms -- such as a broker or clearing firm -- after the 2008 financial crisis, the person said.
To contact the reporter on this story: Dave Michaels in Washington at dmichaels5@bloomberg.net
To contact the editor responsible for this story: Maura Reynolds at mreynolds34@bloomberg.net
Nothing you can do when the corruption goes all the way to your elected officials - Who elect the SEC Chairman.
House Resists S.E.C.’s Insider Trading Inquiry
By PETER J. HENNING
June 23, 2014 11:54 am
Members of Congress certainly like to talk the talk, but when it comes to insider trading there seems to be little interest in walking the walk by cooperating with an investigation into a possible leak of confidential information that allowed for lucrative trading.
In 2011, Congress was embarrassed by a “60 Minutes” report that highlighted well-timed trades by representatives and senators that appeared to be based on government information and questioned whether they were subject to the prohibition on insider trading. In response to President Obama’s State of the Union address calling for action, Congress adopted the Stop Trading on Congressional Knowledge Act, commonly known as the STOCK Act, in April 2012.
The law provides that members of Congress and their staff “are not exempt from the insider trading prohibitions arising under the securities laws.” Before its passage, the chairman of the House Judiciary Committee, Representative Lamar Smith, Republican of Texas, praised the legislation because “the American people deserve to know that no one in any branch of government can profit from their office.”
For all the talk about making Congress subject to the insider trading laws, the hard question was whether it would cooperate with the Securities and Exchange Commission in an investigation into questionable trading on information emanating from Capitol Hill. The answer appears to be “no.” The S.E.C. has sued a House committee and its staff director in Federal District Court in Manhattan to enforce subpoenas for documents and testimony about possible tipping of confidential government information.
The investigation concerns trading in insurance companies in April 2013 after a change in the Medicare reimbursement rates by the Centers for Medicare and Medicaid Services leaked out before its official announcement. The S.E.C. traced a potential source of the information to Brian Sutter, the staff director of the House Ways and Means Committee.
The S.E.C. issued subpoenas to Mr. Sutter and the committee in May for documents and his testimony about contacts with lobbyists at the law firm Greenberg Traurig. Federal prosecutors in Manhattan also served a grand jury subpoena for Mr. Sutter to testify, and it is not clear whether he has responded.
According to the S.E.C.’s filing to enforce its subpoenas, Mr. Sutter spoke with a Greenberg Traurig lobbyist just a few minutes before the lobbyist emailed a brokerage firm that “very credible sources” had confirmed the Medicare change. The brokerage firm then issued an alert to clients about the reimbursement policy that resulted in a jump in the share price of insurance companies that would benefit.
When the investigation first started, Mr. Sutter told an F.B.I. agent and an investigator from the Department of Health and Human Services’ inspector general’s office that he did not recall speaking with the lobbyist on his cellphone about the reimbursement policy.
A few days later, a lawyer for the House of Representatives sent a letter stating that “with the benefit of some time for reflection” Mr. Sutter may recall speaking with the lobbyist and that other statements he made “might merit clarification.” That type of admission is a red flag for investigators that they may have caught someone in a lie, making it a potentially fruitful avenue for further investigation.
Typically, the next step in an investigation is to subpoena records about any contacts the person might have had with sources of the information and potential tippees, which usually includes having them testify under oath. Whether the person will actually testify is an open question because a lawyer most likely would advise a client to assert the Fifth Amendment right against self-incrimination to keep from making any further damaging statements.
The S.E.C. tried to obtain information about Mr. Sutter by asking the Ways and Means Committee to voluntarily turn over records related to his government issued cellphone and records of any contacts he had with Greenberg Traurig lobbyists. The committee, however, refused to provide the requested information.
On May 6, the S.E.C. took a more confrontational approach by issuing subpoenas requiring production of the documents and Mr. Sutter’s testimony. In response, the general counsel’s office for the House sent a letter giving a number of reasons for not complying that sound like typical legal boilerplate.
Among those cited in the letter were that the subpoenas were “vague, confusing, overbroad, unduly burdensome, unlikely to lead to the discovery of admissible evidence, and otherwise improper.” The letter even contended that the subpoenas were “repugnant to public policy,” an odd position to assert in light of the STOCK Act’s proclamation that Congress is subject to insider trading laws.
The most important basis for resisting the subpoenas concerns the protection afforded members of Congress and their staff under the Constitution’s so-called speech or debate clause. That provision, which can be traced to the English Bill of Rights adopted in 1689 to protect Parliament from harassment by the monarchy, states that “for any speech or debate in either House, [members] shall not be questioned in any other place.”
The clause protects against any outside inquiry into “legislative acts” in Congress, although the scope of that term is unclear. In United States v. Brewster, the Supreme Court said that it had “consistently been defined as an act generally done in Congress in relation to the business before it.” On the other hand, political acts are not protected from investigation, which the court said includes “a wide range of legitimate ‘errands’ performed for constituents, the making of appointments with government agencies, assistance in securing government contracts, preparing so-called ‘news letters’ to constituents, news releases, and speeches delivered outside the Congress.”
Mr. Sutter’s contacts with the Greenberg Traurig lobbyist could fall into either category. The lobbyist contacted him to complain about a client being dropped from a Medicare insurance program, which sounds more political than legislative as a type of constituent service. But the information about the Medicare reimbursement policy involved Congress’s acting to prevent a reduction in the physician payment rates, something that is clearly a legislative act.
The larger question is whether Congress has any interest in allowing an investigation to move forward that involves a member of its staff. In a letter to the S.E.C. last week, the House offered to consider a proposal to release a limited number of records as long as there was a “firm commitment that the committee’s making available to your agency of certain documents would end the committee’s and Mr. Sutter’s involvement in this matter.”
That sounds like the price for getting the documents is dropping any further investigation of Mr. Sutter, thus insulating him from potential liability for insider trading. I doubt the S.E.C. is willing to set a precedent that effectively prevents pursuing an insider trading case involving a member of Congress or its staff.
So the S.E.C.’s hand was forced if it wanted the investigation to move forward by turning to the federal court for an order requiring compliance. A hearing is scheduled for July 1 on whether to enforce the subpoenas, and the losing side can be expected to appeal the case to the United States Court of Appeals for the Second Circuit, and perhaps even to the Supreme Court.
Regardless of the outcome of the battle over the subpoenas, Congress has shown that the STOCK Act was more about responding to negative publicity than a step toward greater accountability for misuse of confidential information. In November 2011, soon after the “60 Minutes” report, I wrote on DealBook that the law “would do little good if the S.E.C. and the Justice Department would be stymied in trying to conduct an investigation by an assertion of the speech or debate clause to stop the case dead in its tracks.” It certainly looks as if that’s what the House wants.
Peter J. Henning, a professor at Wayne State University Law School, is a co-author of “Securities Crimes (2d edition).” Twitter: @peterjhenning
Report: SEC staffers watched porn as economy crashed
April 23, 2010 12:31 p.m. EDT
(CNN) -- As the country was sinking into its worst financial crisis in more than 70 years, Security and Exchange Commission employees and contractors cruised porn sites and viewed sexually explicit pictures using government computers, according to an agency report obtained by CNN.
"During the past five years, the SEC OIG (Office of Inspector General) substantiated that 33 SEC employees and or contractors violated Commission rules and policies, as well as the government-wide Standards of Ethical Conduct, by viewing pornographic, sexually explicit or sexually suggestive images using government computer resources and official time," said a summary of the investigation by the inspector general's office.
More than half of the workers made between $99,000 and $223,000. All the cases took place over the past five years.
"It is nothing short of disturbing that high-ranking officials within the SEC were spending more time looking at pornography than taking action to help stave off the events that brought our nation's economy to the brink of collapse," said Rep. Darrell Issa. The Republican is the ranking member of the House Committee on Oversight and Government Reform.
"This stunning report should make everyone question the wisdom of moving forward with plans to give regulators like the SEC even more widespread authority," he said. "Inexplicably, rather than exercise its existing regulatory enforcement authority, SEC officials were preoccupied with other distractions."
Video: SEC staffers caught surfing porn
SEC spokesman John Nester said the employees involved have been disciplined or are being disciplined. Some have been suspended or dismissed, he said, adding that the SEC has further increased penalties for misusing government resources in recent months.
"We will not tolerate the transgressions of the very few who bring discredit to their thousands of hardworking colleagues," he said.
The investigation came to light on the same day President Obama gave a speech in lower Manhattan, calling for reform in the finance industry.
On Capitol Hill, the Senate is working on a financial reform bill that would set up regulatory oversight of the financial industry's practices with the goal of preventing another Wall Street meltdown like the one in 2008 that launched the U.S. recession.
The bill includes an "early warning" system intended to spot signs of crisis, as well as a $50 billion liquidation fund created with money from banks and other finance industry corporations to ensure an orderly transition in closing down failing entities. It was recently approved by the Senate's Banking and Agricultural committees. The House passed its version of the bill in December.
The inspector general's report includes specific examples of misuse by employees.
A regional office staff accountant tried to access pornographic websites nearly 1,800 times, using her SEC laptop during a two-week period. She also had about 600 pornographic images saved on her laptop hard drive.
Separately, a senior attorney at SEC headquarters admitted to downloading pornography up to eight hours a day, according to the investigation.
"In fact, this attorney downloaded so much pornography to his government computer that he exhausted the available space on the computer hard drive and downloaded pornography to CDs or DVDs that he accumulated in boxes in his office," the inspector general's report said.
How The Big Players Manipulate The Stock Market - G. Hudson
Sep 3, 2012 7:12 PM | about stocks: HLF, NUS
I have always wondered if the big stock traders were able to manipulate the stock market and how they did it. Now I am confident that I know the answer to both of these questions, and you will too, after you read this article, and view the information in the links provided. I describe and illustrate the process they use to manipulate stocks in easy to understand terms. First, so you don't think I am totally out of my mind making these allegations, here is a link for you to view a YouTube video of CNBC's Jim Cramer titled, "Market Manipulation is a fact" and a link to Jim Cramer's Wikepedia where you can find the following excerpt-
"In March 2007, a December 2006 interview from TheStreet.com's "Wall Street Confidential" webcast stirred controversy after it appeared on YouTube.com. In the video, Cramer described activities used by hedge fund managers to manipulate stock prices - some of debatable legality and others illegal. He described how he could push stocks higher or lower with as little as $5 million in capital when he was running his hedge fund. Cramer said, "A lot of times when I was short at my hedge fund...When I was positioned short-meaning I needed it down-I would create a level of activity beforehand that could drive the futures." He also encouraged hedge funds to engage in this type of activity because it is "a very quick way to make money"."
"Cramer stated that everything he did was legal, but that illegal activity is common in the hedge fund industry as well. He also stated that some hedge fund managers spread false rumors to drive a stock down: "What's important when you are in that hedge-fund mode is to not do anything remotely truthful because the truth is so against your view, that it's important to create a new truth, to develop a fiction." Cramer described a variety of tactics that hedge fund managers use to affect a stock's price. Cramer said that one strategy to keep a stock price down is to spread false rumors to reporters he described as "the Pisanis of the world". The comment was a reference to CNBC correspondent Bob Pisani, who reports from the trading floor of the New York Stock Exchange. "You have to use these guys," said Cramer. He also discussed giving information to "the bozo reporter from The Wall Street Journal" to get an article published. Cramer said this practice, although illegal, is easy to do "because the SEC doesn't understand it." During the interview Cramer referred to himself as a "banking class hero.""
Even though I have traded in the stock market for many years, it wasn't until I recently starting trading stocks using TD Ameritrade's ThinkorSwim trading platform, where I can quickly analyze stock trading over various time periods (day(s), month(s), year(s)) as well as over short intervals (even as short as a minute), that I began to realize how shorts were manipulating the market. Since May 1st of this year when a short attack began against Herbalife (HLF), I have been following all of the activity surrounding that company including all news stories as well as all daily trading activity.
Before I began researching the information for this article, I began to see (HLF) trading activity that didn't make sense to me. In fact, it really didn't make sense that two companies under different ownership and management but mainly just sharing the commonality of being MLM's, Herbalife's and Nu Skin's (NUS) shares were both attacked at the same time. Here is a link to both company's charts- HLF chart and NUS Chart , where you can see how their share price has traded over the last few months. (SUGGESTION: Use 6 month time period as well as candlestick format for the charts)
Even though I believe there has been manipulation of Herbalife's (HLF) shares on a daily basis, I want to focus on the manipulation that occurred immediately after Herbalife reported Record 2nd Quarter 2012 which I discuss in greater detail in my article- "Herbalife Shorts Shorted More Shares To Stop Upward Share Price Momentum" In order to stop longs enthusiasm and the momentum created by a great 2nd quarter, shorts continued to added 585,409 shares of HLF shorted to their short positions over the period August 1, 2012 to August 15, 2012 to not only stop Herbalife's share price from rising but to also knock it back down by $1.85-
Settlement Date Short Interest Closing Share price
8/15/2012 13,007,577 $53.05
7/31/2012 12,422,168 $54.89
You might think an additional 585,409 shares shorted sounds like a small number of shares shorted since Herbalife has over 100 million shares outstanding. However, when you realize that there was only actually 11 trading days during that time period, and when you also understand that the shorts used computerized selling and buying of shares at opportune times to manipulate the share price, you should understand why they were able to control Herbalife's share price during that time period, to stop the upward share price momentum, and then to drive the share price slightly down.
How it works
This process can be used by hedge funds to either pump up a stock or to trash a stock but since I am using Herbalife as an example, we will discuss that situation. First information is widely distributed to make investors wonder about the company and to put fear into those longs that hold the stock. Next, high volume shorting takes place to drive the company's share price down.
As the short attack continues, more people parade out news to continue to put questions in the back of investors' minds. On a daily basis, shorts use computerized trading to control the direction of the share price. At opportune times, the shorts overwhelm the buyers (bid price) of the stock by selling short large number of shares to drive the share price down and to eliminate the buyers for the stock at that given time. For people who are not familiar with the bid/ask process of trading stocks, here is a link to explain that process.
Shorts need to control the stock's share price over a long time (often several months to well over a year), and can't afford to just accumulate an unlimited number of short positions in the stock, so they have to be buying shares at the same time they are selling shares too. When the shorts drive the share price down, eliminating buyers as discussed above, some of those investors trying to sell their shares at that same time will follow the share price activity downward lowering their ask price.
Now the shorts can buy back some of the shares they have shorted at lower prices including some shares where longs have put stop-loss sale orders to protect against downside losses. The shorts will only buy shares part of the way back up as the share price rises, and then wait to see if new buyers come into the market. If the share price continues to rise up to much again during the day, the shorts will repeat the same selling and buying process to control the share price.
As mentioned above, the shorts need to control the share price over an extended period of time. They need to wear down the longs with rumor mongering as well as by creating fear as the longs continue to see the share price go down from the computerized trading. They hope the longs will give up and sell their shares at the lowest possible share price.
Another observation, shorts try to wear down the longs by making sure that the share price closes down as many days in a row as they can put together. At the close of each day, I witnessed volume dramatically increasing as the shorts tried to insure Herbalife's share price closed down. Shorts are hoping the longs frustration with the share price continuing downward will end up in capitulation where as many longs as possible just give up and sell their shares.
I don't know how low the shorts will drive the share price of Herbalife during this current short attack, but I do believe Herbalife is a strong good growing company. As with all false short attacks, the share price will bounce back. After the share price bottom is reached, I expect the shorts to continue their rumor mongering so they can continue buying to cover their shorts as the share price rises back up.
Since Herbalife is already in its 5th month of being attacked by shorts, and if history repeats itself, anyone buying shares of Herbalife (HLF) at this time should be in for some nice gains over the next 6 to 12 months as Herbalife's share price rises back to and above where it was when this short attack began. The shorts greatest fear is that people will figure out their lies to soon, and the share price will rise up to quickly. I think there is a good chance for that to happen as a lot of people will be learning more about this scheme.
Also I have to believe this manipulation has to involve collusion between all the major players in the Herbalife short attack since it wouldn't work like it has if they didn't work together. If one or more of the major short players decided they didn't want to participate further in driving the share price down, and decided to buy to cover, this would create a major problem for those other major short players. The remaining major short players would not only have to drive the price down based on selling shares to new longs but would also have to sell shares to those other major short players buying to cover their shorts. The remaining short players would not be able to manipulate the stock share price as easy as they did working together.
If you are wondering why would they short more shares even when a company like Herbalife is obviously a healthy growing company. Here is the reason. Since the shorts already have the investment community wondering about problems, introduced by the shorts themselves, concerning the company; since shorts have already shorted $745 Million+ (12,422,168 X $60 per share (my guess at average share price shorts sold their shares at)) shares of Herbalife; and by just adding almost $32 Million (585,409 X $54 average-?) more shares shorted, the shorts were able to take the steam out of a lot of the longs' enthusiasm over the 2nd quarter financial news, and now the shorts believe they will have a better opportunity to buy to cover their shorts at a lower price as well as they will have more time to do so. At least that's what the shorts hope for.
Also from the shorts view, they have offset that additional $32 Million of shorting by reducing the basis of the 12,422,168 shares they already had on their books by an almost $23 Million (12,422,168 X $1.84 share reduction) of increased unrealized gain. On top of trying to obtain direct profits from controlling the share price, and since shorts know more about the direction of the share price, shorts are able to make more profits from selling and buying options. I would have to believe these option profits could run into the millions of dollars too.
As you can see from the large dollar amounts involved in Herbalife's short attack, these must be big players and they must have a lot of influence over the marketplace which brings me to my next subject.
I am really concerned about the investment reporting we are getting from the media especially from CNBC's reporters Jim Cramer and Herb Greenberg. Jim Cramer, who apparently couldn't recommend Herbalife's stock during the last short attack in 2008-2009 which included the same short arguments currently being used, "Herbalife Short Attack: History Repeats Itself."; changed to repeatedly recommending to buy the stock as the stock climbed up to the $70+ range, and then abandoned longs once again by changing to not recommending Herbalife's stock as he tells everyone per this 8/8/12 video "Lightning Round" (see video at 2:50).
It appears Cramer just abandoned those Herbalife longs again including those that purchased their shares based on his recommendation to join his hedge fund buddies that are short Herbalife. Cramer claimed that he couldn't recommend Herbalife based upon a decision made over 4 years ago by Herbalife to not fight a legal battle with Barry Minkow, a convicted felon which his fellow CNBC reporter Greenberg brought to his attention and discusses in his article, "Why Did Herbalife Pay Felon Barry Minkow $300,000?: Greenberg". I have fully explained, in the following linked article, why Herbalife made the decisions they made surrounding this issue and have emailed this information to both Cramer and Greenberg with no change or response by either of them- ""Response To Greenberg: Reasons Why Herbalife Paid Felon Barry Minkow $300,000"
As far as to Greenberg's reporting, I don't know what his connections are to the big hedge funds shorting Herbalife, but I think he seems desperate to come up with "what if this happens" issues to the point that even Per this CNBC 7/31/12 interview of Michael Johnson, Herbalife CEO by Cramer and Greenberg (at 10:18 of video), Johnson seemed puzzled when Greenberg frantically blurted out his last question as if he was trying to search for one last dagger to put in Michael Johnson's back-
Greenberg's question: "You are very big in Mexico- Wal-Mart had problems in Mexico- How do we know you are not paying bribes in Mexico?"
Johnson's response to Greenberg: <laughing> "You are coming from a very interesting place. We got to get you wired for positive."
Other CNBC commentators: <laughing in background> "How was that a follow up for the Avon question?"
How to tell a correctly shorted stock versus a short attack bluff
Since David Einhorn's innocuous questions on Herbalife's conference call seems to be the event that started the short attack on Herbalife, and since Einhorn loves poker, I will use poker terms to explain how you can determine whether a stock is shorted for good reasons or just a bluff.
If you believe you have a winning hand in poker, you want everyone else to put in as much cash as they possible can. You don't want to tip them off in any fashion that you have the winning hand. You want the pot to as big as possible when you show your hand. If you don't have a good hand and are bluffing, you need to be sneaky putting in bets when you really know you don't have a good hand hoping that the other players fold their winning hands. You don't even want others to put more cash in the pot since you want them to drop out of the game.
First you need to understand that the object for shorts is selling as high as they can and then buying as low as they can if they have to cover their short position. For those of you who are not familiar with selling stock short, here is a link to explain short selling. Also when longs are selling their positions, they will always try to sell their shares at the highest price they can get.
If you knew a company's share price was really overpriced for any reason, you would not do anything to tip anyone else off until you had shorted all the shares you could. Then, given the right opportunity to show your hand, you would explain your position as to why the shares were over priced in a logical fashion. Yes, there would be other shorts jump in to help drive the share price down but it wouldn't necessarily be about driving the share price down based mainly upon high volume trading. You would be ok with longs coming into the market to drive the share price up (more cash in the pot) since it would give you more of an opportunity to short at a higher price before your real prediction came true.
If you were a short bluffing (basically manipulating a shares' price) about a company's overvalued share price, you might not want to draw attention to yourself since you could get accused of stock manipulation so you would hope (or plan for) others to get involved and to present seemingly good reasons to short the stock. You would want to put as much fear into longs as possible and would use high volume short trading as well as buying to drive the share price down as low as you can and as long as you can. You really want the longs to fold and to get out of the game. If you are consistently seeing sellers overwhelming buyers driving a share price down as a stock seems to be going up, I can assure you it's probably shorts selling since longs are totally motivated to sell their shares at the highest possible selling price.
Here is what one stock investment reporter from one of America's premier financial magazines, who had wrote some articles about Herbalife's situation which I disagreed with, emailed me (I will not give his name out as I don't want to cause him problems.)-
"I'm no lawyer but doesn't it reek of stock manipulation? I would think so. A lot of hedge-fund types I come across are skittish about appearing in the media whatsoever, much less being portrayed (correctly) as tanking a stock.
It could be as simple as a (well-advised) desire to not invite more regulatory scrutiny."
I believe that stock market manipulation by big players is a major problem. I know this article focuses on one stock, but just like cockroaches, if you can find one, I am sure there are a lot more out there. The only way we are going to make changes in this society is to make as many people, especially our elected officials, aware of this problem as we can. I am sure this problem steals money from the vast majority of our investments and retirement programs. If you agree with me, and you want to help me try to do something about this problem, by getting the word out, please email this article, post to facebook, twitter, LinkedIn, etc. links to this article, of my blog, to as many people as you can.
As for me, I am long HLF shares and I still believe that Herbalife shares are a great buy as per my article, "Herbalife Shorts' Problems Could Be Great Buying Opportunity For Longs".
Well,
What it really boils down to is this.
THE SEC and most of it's so-called investigators, analysts and Directors, are utter Phuking morons!
They couldn't uncover manipulation, options strategies resetting regSHO buy in requirements, or unauthorized trading in outside accounts if you spelled it out in a comic strip.
They couldn't wipe their own A** unless told how to do it. Most of the Directors are lawyers that worked for wire houses or broker dealers as interns, and when they finished school, they went to work at the SEC or FINRA, for that matter, to protect all of their "buddies".
The biggest source of conspicuous consumption on the planet comes from SEC employees. On top of that Chairman actually believes the markets and stocks aren't rigged, when a number of mathematicians prove them wrong all the time.
That is exactly why investors began turning to outside forensic firms and law firms. Complaints come in and get deleted. No one can do shit at the SEC because they get smacked around by big time law firms that make them look like the complete morons and idiots they are.
Halt a stock? Are you kidding, and end up dead in a dumpster because the High Frequency Traders that are offshore and out of the reach of the US legal system rape our markets?
There is a whole section at the SEC that is dedicated to making sure investigations DO NOT HAPPEN. Unless someone breaks silence or whistleblows to the extent that it gets media coverage, tra la la.
Hell, they even trade based on the complaints they get, and the DOJ terminated the investigation into SECs and their family's own trading activity.
What exactly do you expect to happen when the the Foxes are charged with feeding the hens to the masses. They want their cut just like everyone else.
SEC? What a phucking jester you are! They are undereducated, totally clueless, dinkless, have no concept or thought that anything illegal is happening, and no way it could be Jerry the head trader at XYZ who's kids Birthday party they were just at on Long Island.
I once submitted a complaint to the SEC where I had a private investigator follow two traders for 7 months recording conversations between them and others about short and distort scheme. Had recorded conversations with analysts, journalist, etc. on how the whole thing was being set up. You know what they wanted to know? How the heck I got the tape recorded conversations.
They didn't give two craps about the evidence or the proof of what was done to the company (which went under by the way when they breached their loan covenants.) They were more concerned if I had violated privacy laws or gained unfair access to non-public information.
SEC - What a Phuking Joke!
Well, we will see what happens if I have to go down that road. I may do something crazy! You never know......
Addendum - After I posted the update, I received an email through iHub, condition of anonymity, who stated they could validate a hostile bid was in the works AND the debt was going to be converted to equity and that a bigger hedge fund was already prepared to take on the new equity stake, which would have made Hercules debt free with 320 Million outstanding on top of a proposed buyout! Apparently that is how they planned to get control, was through the debt!
FOOK ME!!!!!
Today's Update.
Well, heck on the Goldman downgrade, but it is well overblown, and the research note has now been revised a number of times for all of it's errors. "Nice Short and Distort."
A few fun facts after massive phone time in the last 56 hours.
Facts Outside of Hercules:
1.It has been confirmed that there is an ongoing FINRA Investigation that began in the February 2014 time frame in District 5, New Orleans regarding a number of claims regarding the trading in Hercule's shares by a group of whistle-blowers that were fired from a trading firm. Couldn't get much more than that. (the innuendo is that the whole bear raid was planned in advance around July of 2013, to recover a short that was losing nearly 165 million at $2.25 a share, established in 2009.)
The investigation was referred to district 9 or 11, the source wasn't sure but it was picked up by FINRAs office of the Whistle-Blower and Market Integrity and there is no visibility beyond that.
2. There is another investigation being spearheaded by a group of High Net Worth Investors, who hired a forensic audit and accounting firm to ascertain whether securities laws or fraud had occurred. That investigation was ongoing until late May, when the firm engaged the US Attorney's Office in Ft. Worth, and that was then in turn referred to the Ft. Worth Office of the SEC and was picked up at a director level, as a result of the individuals' cumulative net-worth and the engagement of a forensic accounting firm. Couldn't get any more info on that.
3. The buyout rumor. Still can't get any more insight there, but the multiple sources have stated, "some sort of deal was being prepared", "and at least one C level at the company knew." As far as now, it is unclear if the financing or underwriting stayed in tact as the recent "so-called" contract loss could be seen as material. I asked a few to "speculate" on what the deal may have looked like, and no one would peg a real guesstimate, but did throw around 20-30% premium including a debt restructure.
4. Got an email from someone on the board that pointed me to a guy on Linkedin, and on his profile it clearly states - "Shareholder Committee for the Future of Hercules Offshore, LLC (Proposed). It also references a number of shareholder proposals in the works. It doesn't appear that he is being secretive, but I will leave it up to you to learn the identity.
5. I have to assume that most of this is spot on, because the guy on Linkedin is connected recently to a few people at the SEC and FINRA, so that validates that possibility. The fact that he is listing himself in a possible activist role validates a few others points herein, and the same person also is a partner in a Forensic Accounting Firm that works with the Federal Government and the SEC, another validation. It also, looks like the guy is a former Investment Banker and has a number of deals, news releases and M/A activity listed on his profile, so I have to think that validates the buy-out rumor.
6. Another source, and she "wasn't really sure" said, that she knew that outside counsel at Vinson and Elkins was working on something for Hercules, but that was all she knew.
7. One of my close contacts who is independent and trades options and oil futures eluded that the big short on HERO is also the big short on DO and that they had some sort of hand in contract losses for both DO and this one for HERO, trying to generate bad news to get the stock down. He also stated that a couple of journalist timing of articles was highly suspect and that if I dug deeper I would find some collusion. SAY IT AIN'T SO! He also said, "to watch the 3210 violations, that HERO should go threshold by close of trading Wednesday". According to his trading platform, and his number is pretty close to mine, there are close to 27 Million Shares Short as of yesterday's close not including exemptions which are around 1.2 Million, and dark pools which no one knows. We both agree that significant damage has now been done, and Hercules will have to do much more than perform fundamentally now. This is day 3 on regSHO and the fail to deliver SEC report reads like a train wreck, and you can guess who the biggest culprit is violating the buy in requirements.
I think that GS analyst just stepped knee deep into a huge investigation that has been ongoing, and until you start connecting the dots, it wasn't apparent.
Thank you, to the person that brought the Shareholder Activist on Linkedin to my attention. This is really not passing the sniff test, and if I had to guess there are gonna be a few surprises on the regulatory horizon.
I guess it is unfortunate that if a deal was coming to fruition, it got all screwed up over dodging a potential FCPA violation and an overzealous institutional short trying to save their job and not be the next headline as a rouge oil manipulator.
Ok, now I believe the rumor was true...
This comment was just made to me by an options trader of Diamond Offshore.
"Don't you find it the least bit curious, that Diamond Offshore lost a contract a couple of weeks ago, where a Goldman trader based out of Colorado has a huge short interest?"
"Interestingly the Analyst that downgraded HERO this morning is also, based out of Colorado."
Think about the stock action. The stock had begun to move very violently to the upside last week, and had begun to see volume and break out.
It was behaving exactly like a stock that was in play. I am thinking it was already reacting to the rumor of those that were supposedly in the know, and when those that found out close to the last minute that they were going to lose big time on the short found out.....
Well, here we are. Look at all of the OMC calls that traded last week at 6, 7, and 8.
I think the rumor had some credibility and the deal itself got killed with the material adverse event clause with the underwriters or purported acquirer.
Of course we will never know.... But the trading pattern fits the rumor.... Seriously 30M in HFT in 3 trading sessions after a rumored deal gets scrapped and loss of a teenie weenie contract.
Doesn't pass the sniff test.
So, here is the skinny....
AND of course this is merely based on a rumor, and can't be confirmed.
I am hearing that a hostile offer was coming on Monday morning, and executives caught wind of it Thursday, and had no way to keep control. And now that the deal is dead, people on the street are now chatting about it.
They purposely scrapped the contract in Angola using FCPA and anti-bribery law as well as released the FSR early to purposely kill the deal, as it was contingent on a very tight window of market cap, etc.
Also, GS caught wind of the deal through another underwriter and began to position themselves to drive the price lower knowing it would create a material adverse event and the underwriter would hold off to perform another round of due diligence with their interested buying party, especially given a 25% drop in stock price in 3 trading sessions. Why pay X when you can now get it cheaper?
No one seems to be able to ascertain the value of the rumored hostile bid, but everything that occurred was supposedly done to kill the deal and protect the massive short position that GS had in the stock, and so management could stay in control.
Getting filled at $4.05. As I am buying; all I can think is, we have gone beyond absurd.
Well beyond regSHO buy in requirements now. regSHO being ignored and nearly 85% short ratio to buys today thus far. Massive amounts of deep in the money calls being bought to attempt a reset of regSHO buy in requirements.
Talk about Securities Fraud and Manipulation.
Actually, only 11 Million shares traded, and nearly 6 million of that was shorted. The stock once again is in regSHO, however this time it's not intra-day. It will end up on the Threshold list in the next 24 hours or so. The additional 13 million shares were phantom shares of HFT and UHFT manipulating the stock lower.
It was also eluded to in a previous post that Global Hunter an introducing broker for Goldman Sachs on a fully disclosed basis could be leading to some less than desirable results in the near term.
Would not be surprised for Hercules to go into play now. Controlling interest can be had for nearly what they have in cash.
Goldman is still short with it's clients back below 3.00, as they were betting on failure. It would also not be surprising to learn that GS had a hand in attempting to derail the African contracts while attempting to lure HERO into an FCPA violation, which they walked away from. Either way it was nearly a flawless execution.
Someone could steal this company for 500 million including cash on hand and a 15% premium. Literally 2 Billion can be had at a 65% discount.
20140620|HERO|5850115|673769|11356454|Q
HERO avoids potential FCPA and anti-bribery violations by walking away from a bad deal and this is bad?
Interesting.....Blip on the radar screen.
*Yawn* Wake me when the manipulation over 91 M backlog loss ends.
It has become obvious that the broker dealer based out of New Orleans, still has yet to figure out there is a buyer with a checkbook bigger than all of their assets under management combined on the buy side.
They are the biggest naked short position and have already been called out for the downgrade in January.
The rumored naked dark pool short is a whopping 18.51 million shares in addition to the short reported float of 15.04 million, and nearly 3.11 million in naked short options calls at 5.00 on various expiration dates. (That is 27M short).
I would be short selling all the phantom shares I could and manipulating out of a Colorado and New Jersey trading room, too, if I was that screwed on a short position on the third largest jack up driller on the planet with oil at an all time high, civil unrest in middle east, improving fundamentals and earnings, a 1.9 Billion Enterprise Value, 700 Million market cap, 690 million in new contracts, a now disclosed activist investor making shareholder proposals, and a paltry analyst forecast for .02 cents for the quarter, which will most likely get beat by a wide margin.....
Yeah, short all the phantom shares you can....
Good Evening. Have been extremely busy, but just responding to Ed, not sure what type of comment you're looking for, but as everyone suspected, HERO buyers are starting to kill the remaining open float.
Of course the turmoil, unfortunate as it is in Iraq, is giving a little tail wind.
My hedge is significantly higher than current 52 week high.
CIAO
Macquarie Initiates Coverage on Hercules Offshore, Inc. at Outperform, Announces $6.00 PT
Read more: http://www.benzinga.com/news/14/06/4607843/macquarie-initiates-coverage-on-hercules-offshore-inc-at-outperform-announces-6-0#ixzz33fkdEPcE