SUMMARY PIECE ON ABUSIVE NAKED SHORT SELLING (ANSS)
1) Multi-billion dollar Wall Street firms and their co-conspiring multi-billion dollar
unregulated hedge funds can easily target relatively defenseless U.S. corporations
and cause the investment proceeds of the investors in those corporations to
invisibly flow to these billionaire behemoths despite the fact that these behemoths
absolutely refuse to deliver the (nonexistent) shares they sell to these unknowing
U.S. investors.
2) This practice is referred to as “abusive naked short selling” or (ANSS) which is
irrefutably a form of fraud.
3) Each time the seller of shares refuses to deliver that which he sold a “failure to
deliver” (FTD) results. These FTDs result in the creation of readily sellable but
incredibly damaging “securities entitlements” that look just like legitimate
“shares” when referenced on the monthly brokerage statements of unknowing
investors.
4) Although these “securities entitlements” are basically IOUs or “accounting
measures” and they aren’t real “shares” of a corporation their being treated as
being readily sellable makes them act like real “shares” whose price will be based
upon “supply” and “demand” interactions. The invisible accumulation of these
“securities entitlements” in the share structures of corporations will with 100%
certainty drive the share price of the corporation down. The intentional driving
down of share prices is referred to as “share price manipulation”. The sellers of
securities don’t “forget” to deliver that which they sell; they intentionally refuse
to deliver that which they sell.
5) The body of law that allowed these incredibly damaging “securities entitlements”
to be readily sellable is referred to as UCC Article 8. It recognized that there are
legitimate reasons for 2 or 3-day delays in delivery. To accommodate for these
delays the “securities entitlements” resulting from FTDs were made freely trading
because the damage done to share prices was thought to be minimized by the
assumed ultra-short termed nature of the delivery delays involved. The
assumption of the authors of UCC-8 was that the DTCC with 15 separate
mandates/responsibilities clearly empowering them to execute buy-ins would act
in good faith and quickly buy-in any FTD when it became obvious that there was
no intent to ever deliver that which was sold. The authors of UCC-8 assumed
wrong.
6) The drop in share price caused by the accumulation of these “securities
entitlements” then financially rewards those that have established “naked short
positions” via merely refusing to deliver that which they sell. The fraudulent
nature of this behavior is obvious as the investors paying full retail price for these
nonexistent shares thought they were buying legitimate shares of a corporation
with voting and other rights attached. They too were wrong as mere “securities
entitlements” have no rights attached. It is the individual rights within the
“package of rights” known as a “share” of a corporation that gives a “share” of a
corporation value. Mere “accounting measures” or IOUs have no such “package
of rights” associated with them.
7) The DTCC-administered clearance and settlement system used in the U.S. unlike
the clearance and settlement systems in almost every other country in the world
unconscionably allows the seller of even nonexistent shares access to the funds of
the investor getting hoodwinked even though they absolutely refuse to deliver that
which they sold. All they are asked to do is to “collateralize” the monetary value
of this failed delivery obligation. This is referred to as “collateralization versus
payment” or “CVP” as opposed to the congressionally mandated “delivery versus
payment” or “DVP” used in other countries.
8) One interesting aspect of these frauds is that a “self-generated leverage” becomes
accessible as the money stolen from investors can then be used to amass and
collateralize yet larger naked short positions that will accelerate the rate at which
the share price drops. This leads to the “self-fulfilling prophecy” that once
targeted for destruction and regardless of the company’s merits any U.S.
corporation, the investments made therein and the employment opportunities it
provides can easily be preordained to an early death.
9) These “securities entitlements” are damaging because they artificially inflate the
sum of the “supply” of readily sellable real “shares” of a corporation PLUS the
“supply” of readily sellable “securities entitlements”. “Supply” and “demand”
still interact to determine share price through a process known as “price
discovery” but the “supply” and “demand” variables can be manipulated.
10) Since those that refuse to deliver that which they sell need only “collateralize”
these positions on a daily “marked to market” basis this intentional manipulation
downwards of the share price unconscionably allows the funds of the investor that
unknowingly paid real money for nothing but air to flow to the sellers of these
nonexistent “share look alikes” despite the fact that they continue to refuse to
deliver that which they sold to unknowing investors. The previously agreed to
timeframe to deliver that which was sold was on “settlement date” which is 3 days
after the trade date or “T+3”.
11) Over the years these “securities entitlements” have invisibly accumulated in the
share structures of U.S. corporations targeted for one of these attacks. This has
resulted in the intentional driving down of their share prices to artificially low
levels well below where they would be trading without this fraudulent behavior.
12) There is only one solution available to remedy these frauds and that is to FORCE
the parties refusing to deliver to finally deliver the missing shares by reaching into
their wallets and taking out the money stolen from investors and buying the
equivalent amount of shares they had naked short sold out of the open market.
Then they must finally deliver the missing shares to their rightful owner in a
“better late than never” fashion.
13) The problem is that those that refuse to deliver that which they sell belong to a
“fraternity-like” organization referred to as the DTCC. Through a variety of
complex interactions and relationships the only people on Wall Street with the
legal power to execute these “buy-ins” is the management of the DTCC and two
of their subdivisions but they refuse to financially harm their bosses by executing
these buy-ins. Instead they curiously plead to be “powerless” to execute buy-ins
even though they have all of the power in the world as well as the congressional
mandate to do so.
14) This “attitude” of the DTCC management has resulted in the ability of abusive
DTCC “participants”/fraternity brothers to target any U.S. corporation for
destruction no matter how critical it is to our overall financial system or homeland
security.
15) The victims of these frauds include not only the investors in the corporation
losing their investment income but they include the employees of these
corporations losing their jobs as well as those U.S. citizens that may have
benefitted from the cancer cures or technological innovations that this corporation
could have been providing.
16) Currently we are in a bit of a “stalemate” in that all of the incredibly damaging
“securities entitlements” that have accumulated in the share structures of these
corporations are actively forcing the share price of these corporations downwards
as we speak while the DTCC management continues to plead to be “powerless” to
do anything about it.
17) Due to the fraudulent nature of this behavior the DTCC management as well as
the SEC refuse to warn prospective investors of the amount of “securities
entitlements” currently in existence in any particular U.S. corporation’s share
structure as this would be tantamount to admitting to the fraud. U.S. investors
have thus been relegated to be buying a “pig in a poke” while investing in our
markets.
18) The 1933 Securities Act also known as “The Disclosure Act” specifies that all
risks “material” to the prognosis for an investment in a corporation must be
disclosed to the investing public. There can be no information more “material” to
the prognosis for an investment than knowing whether or not a corporations has
so many incredibly damaging “securities entitlements” hidden in its share
structure that it has been essentially preordained to die an early death. Yet both
the DTCC and the SEC which by the way is mandated by Congress to enforce the
’33 Act refuse to disclose this information evidentiary of massive levels of fraud.
19) To exacerbate the situation the SEC mandated to oversee the activities of the
DTCC refuses to order the DTCC to follow up on their congressional mandate to
do whatever is necessary to make sure that all securities transactions “promptly
settle”. “Settlement” necessitates the delivery of that which was sold in exchange
for the purchaser’s money. When the seller of (nonexistent) shares absolutely
refuses to deliver that which it sold the only option left is for the DTCC
management to “buy-in” this debt and forward the missing shares on to their
original buyer and to hand the bill to the party refusing to make delivery. This is
referred to as a “buy-in”.
20) The “Deep Capture” name of this very website refers to the phenomenon of
certain regulators like the SEC and certain “self-regulators” like the DTCC
refusing to act in that capacity when the financial interests of those being
regulated takes precedence over their doing the job that congress mandated them
to do.
21) Part of this current “stalemate” has to do with the fact that the “buy-in” process
might naturally drive share prices back upwards to a more nonmanipulated level
which would force these fraudsters to pull more of the stolen money out of their
wallets to collateralize the associated higher collateralization requirements. If
these securities fraudsters have been pretty much the only sellers for a while then
the mere cessation of the daily naked short selling being done to keep
collateralization requirements in line would cause share prices to go up. The
covering of an astronomically large naked short position in a market already
moving upwards might be rather expensive. But it’s supposed to be expensive as
“buy-ins” serve as the natural market phenomenon to deter the commission of
these crimes in the first place. They represent a “risk”. Thus we sit in this
stalemate wherein U.S. corporations are left dying with the weight of all of the
preexisting “securities entitlements” weighing heavily on their shoulders while
the DTCC management continues to pretend to be “powerless” to do anything
about it.
22) Therefore today’s “status quo” involves the markets of corporations unfortunate
enough to be targeted for an attack being basically “rigged” to go nowhere but
downwards in order to look after the financial interests of the abusive DTCC
“fraternity brothers” and their unregulated hedge fund “guests” that choose to take
part in these frauds. This is all while the only parties with the ability to do
anything about this crime wave, the DTCC, its overseer the SEC and the
congressional committees overseeing the SEC refuse to throw a lifeline to these
corporations, their investors and their employees. Their reasons center around
various issues like financial conflicts of interest, “regulatory capture” and the
desire to attract political contributions from powerful industry and hedge fund
participants and lobbyists.
23) The critical role of “buy-ins” needs to be appreciated. Firstly, they allow the
investors unknowingly sitting on these hidden delivery failures to get what they
already paid for. Secondly, they remove the incredibly damaging “securities
entitlements” from the share structure of targeted corporations which stops their
share price depressing effect. Thirdly, the fear of buy-ins reinstates the one truly
meaningful deterrent from future misconduct i.e. reintroducing the “risk” that
DTCC policies had previously surgically removed.
24) All investors make risk/reward calculations. When the DTCC predictably refuses
to execute buy-ins then 99% of the “risk” associated with perpetrating these
frauds is removed as there’s pretty much no other unconflicted parties empowered
to execute buy-ins. This “facilitates” the commission of these crimes by creating
a “self-fulfilling prophecy”. This removal of the “risk” leaves only the “reward”
associated with being able to predictably reroute the less financially-sophisticated
investor’s funds into your own wallet without lifting a finger. Any risk/reward
calculation made results in a green light to attack with all you’ve got and
continually “double down” on your bet with the victim’s own funds.
25) Any fraud involving access to “self-generated leverage” like ANSS which in turn
creates “self-fulfilling prophecies” as easy to access as by merely refusing to
deliver that which you sell with hardly any risk at all being incurred will invite
participation by the more sophisticated criminal groups able to recognize this
powerful concept. This is very much a rich man’s fraud. Any self-regulatory
organization (SRO) or regulator like the SEC assigned to address these frauds
must be equally sophisticated and without any conflicts of interest whatsoever in
order detect and deter this behavior. Unfortunately the Wall Street landscape is
literally riddled with “conflicts of interest” as well as regulators “captured” by the
financial interests of those they are supposed to be regulating.
