The Authoritative NSS Page

[breezin_chs]

patchman, interesting discussion.

I agree that the SEC has finally woken up, although it took a near meltdown of the economy to force them to acknowledge the problems.

Today we have transparency on fails in settlement.

Today we have more reporting cycles for short interest data.

Today we have regulators who are taking enforcement action against those that continue to violate Reg SHO rules.

All true, but all relative. I wish you could devote some time to the loopholes, which are darned near invisible. Yes, we need Ed 101.

When the SEC recently approved new short selling restrictions (tepid, IMO), for ex., it stamped Does Not Apply to unlisted stocks; OTCBB and the Pinks. In your opinion, why? To be clear, as I read it, the over-the-counter market below refers to the OTC derivatives market, which nobody has a handle on, a frighteningly unregulated $45 trillion market.

http://www.sec.gov/news/press/2010/2010-26.htm
SEC Approves Short Selling Restrictions

The alternative uptick rule generally would apply to equity securities that are listed on a national securities exchange, whether traded on an exchange or in the over-the-counter market.

Per the new restrictions above, my opinion is that the SEC and FINRA simply don't have the tools to read the Pinks with any accuracy, which is why the SEC is finally getting out a consolidated microscope.

http://sec.gov/news/press/2010/2010-86.htm
SEC Proposes Consolidated Audit Trail System to Better Track Market Trades

May 26, 2010 — The Securities and Exchange Commission today proposed a new rule that would require the self-regulatory organizations (SROs) to establish a consolidated audit trail system that would enable regulators to track information related to trading orders received and executed across the securities markets.

In your opinion, are the loopholes below valid? Invalid?

the other nooks and crannies of the system - broker-level netting, pre-netting, Stock Borrow Program, ex-clearing and off-shore failures.

Has any financial gizmo replaced Reg S?

Until the Reg S loophole closed, companies were able to issue unlimited quantities of free trading shares to "foreign entities" who were exempt from registration. This allowed small companies to engage in highly toxic financings and led to many abuses in illegal short selling.

We haven't even gotten to the stock-loan issue, which is unreal, IMO.

Finally, a revealing comment in testimony before the SEC by Dennis Nixon, CEO of IBC:

On March 23rd, the day it hit a ten year low of $6.55, the stock traded over five million shares. Short volume rose by 891% to eleven million shares. Nixon said, “We’ve spent thirty years building this company, only to have it destroyed in 45 days.”

Nixon detailed the lengthy process that companies are required to go through to issue new shares, saying “I don’t understand why the long side of the market has such stringent regulations while the short side of the market is the wild, wild west.” Gesturing to the industry insiders on the panel, he added, “Why does this go on? Because these guys make a lot of money doing this.”