Rocker Announces Retirement, Hedge Funds Sue Brokers Over Naked Short Selling, SEC Issues Guidelines
Location: Blogs Bob O'Brien's Sanity Check Blog
Posted by: bobo 4/11/2006
Notorious hedge fund operator and short seller, and currently one of the defendants in the OSTK lawsuit, abruptly announced plans to retire today. No explanation was cited.
Better stay in the country. Call it a hunch.
In other news, Electronic Trading Group LLC sued 11 of the largest brokers on Wall Street for naked short selling.
You know, the practice that Dr. Byrne and I and David Patch and Bud Burrell and Mark Faulk have been banging on at this website for some time, and that NCANS was formed to highlight last January?
The practice that we were vilified and mocked for stating was an issue that was widespread? That was denied by Wall Street as even existing, and then when proof surfaced that it exists, that it wasn't a problem?
Tut tut. Apparently it does exist, and is significant enough for a massive class action suit against the blue chip names on Wall Street.
Huh.
Want to bet that companies like NFI, where there is hard evidence of massive FTDs from 2004, 2005 and 2006, are also drivers of large class action suits - the damages being lost market cap (for the companies), and lost profits (for investors)? Because if the practice of creating huge supply of stock is one that is a Wall Street trick, then Wall Street is liable for the damage it does.
Yikes. This is going to be as ugly as anything you can think of. Hedge funds engaging in the abusive practice will be sued, and brokers doing it will be sued.
And the SEC issued its guidelines for issuing subpoenas to reporters. Appears that they followed the major ones in the Cramer, Herb, Remond, Thestreet.com instances, thus those fine folks are SOL.
I go on vacation for a week and all hell breaks loose.
Wonder how large the ex-clearing problem I have been saying is much, much larger than the FTD problem actually is? So far, that is the only way to clear large FTD positions that I can think of without causing the price of the security to rise - wanna bet that when companies like NFI or OSTK drop off the SHO list, it will be discovered that it is because the massive naked positions were just shifted elsewhere and called something else?
Stay tuned for that shoe to drop.
Unless, as I theorized earlier, that the suit is a PR sham that will be easily dismissed, thus "proving" that no problem exists, and painting the hedge funds as victims...
Copyright ©2006 Bob O'Brien
AI
