NSS ~ Counterfeiting Stock ~ MM Games Played

[dia duit]

Wait till they unseal the naked shorting cases. Lots of folks will be going to jail before all is said and done imho.

I find the article below interesting from the google search you provided.

While violating regulations, naked shorting is penalized by paying fines, disgorging ill gotten gains and perhaps a suspension.

As far as legal action is concern it would have to be proven that there was an intent to illegally manipulate the market. For instance, years ago a short seller released a false press release about Emulex and caused the stock to drop dramatically that day. I believe he was convicted and sentence to three or four years in jail. BTW, naked shorting was not involved in that case.

Another interesting point is how many false reports of naked shorting stocks the agency receives. Apparently there are investors who want to believe their stocks are naked shorted, but the evidence is not in their favor.


http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aB1jlqmFOTCA

While naked short sales resulting from errors aren’t illegal, using them to boost profits or manipulate share prices breaks exchange and SEC rules and violators are subject to penalties. If investigators determine that traders engaged in the practice to try to influence markets, the Department of Justice can file criminal charges.

Market makers, who serve as go-betweens for buyers and sellers, are allowed to short stock without borrowing it first to maintain a constant flow of trading.

Since July 2006, the regulatory arm of the New York Stock Exchange has fined at least four exchange members for naked shorting and violating other securities regulations. J.P. Morgan Securities Inc. paid the highest penalty, $400,000, as part of an agreement in which the firm neither admitted nor denied guilt, according to NYSE Regulation Inc.

Enforcement ‘Reluctant’

In July 2007, the former American Stock Exchange, now NYSE Alternext, fined members Scott and Brian Arenstein and their companies $3.6 million and $1.2 million, respectively, for naked short selling. Amex ordered them to disgorge a combined $3.2 million in trading profits and suspended both from the exchange for five years. The brothers agreed to the fines and the suspension without admitting or denying liability, according a release from the exchange.

Of about 5,000 e-mailed tips related to naked short-selling received by the SEC from January 2007 to June 2008, 123 were forwarded for further investigation, according to the report released yesterday by Kotz, the agency’s internal watchdog. None led to enforcement actions, the report said.

Kotz, the commission’s inspector general, said the enforcement division “is reluctant to expend additional resources to investigate” complaints. He recommended in his report yesterday that the division step up analysis of tips, designating an office or person to provide oversight of complaints.

Schapiro’s Plans

“Our audit disclosed that despite the tremendous amount of attention the practice of naked short selling has generated in recent years, Enforcement has brought very few enforcement actions based on conduct involving abusive or manipulative naked short selling,” the report said.

The enforcement division, in a response included in the report, said “a large number of the complaints provide no support for the allegations” and concurred with only one of the inspector general’s 11 recommendations.