From another Board regarding NSS
you can Google if you want to find it:
by BRECCIABOY
Here's what I'm getting on the status of things these days with regard to naked short selling:
(1) Problem Number 1 is the fact that deliveries are not being made in accordance with the alleged "intent" of the Stock Borrow Program instituted by the NSCC (a subsidiary of DTC).
(2) New Rule 204T under Reulation SHO is not effective enough to deter abusive naked short sellers from doing their deed - the only penalty is that they are precluded from engaging in any further naked short selling in THAT security (no penalties, no civil cause of action for an aggrieved party, etc.).
(3) The anti-fraud provision of Rule 10b-21 is nice in theory, but because the DTCC (and its subsidiaries, DTC and NSCC) are owned by the "big boys" on Wall Street and regulated by the SEC, I can see lots of problems with proving up a case.
In addition, my review of the case law in this area indicates that the SEC has a total LOCK on enforcement. For example, in Whistler Investments v. DTCC, 539 F.3d 1159 (2008), the Ninth Circuit took the same approach that other federal courts have been taking in this area - and that is that federal securities law PREEMPTS state law claims (involving fraud, etc.), and so any suit brought under state law to enforce such rights will be dismissed. The SEC is the regulator in this area, and you can't get around that by asserting state law claims (grounded in fraud, etc.) in federal (or any other) court.
So, where does that leave us? It leaves us with the fox (the SEC) guarding the henhouse. It leaves us with a federal government that COULD fix the situation but has not and refuses to do so (c.f. Christopher Dodd's "admonition" to the SEC representative at the committee hearing that the SEC should have caught this and that he "expects" the SEC to look into this, and Timothy Geithner's apparent participation in setting up the "bear raid" on Bear Stearn starting on March 11, 2008). Sure, with the advent of New Rule 204T under Regulation SHO, I have read that delivery failures have been reduced - but not enough. Still, you have to ask yourself WHY the politicians refuse to put a fire under the rear-ends of the SEC to get them to enforce its own rules. I think we all know the answer to that - politicians receive political contributions from Wall Street.
Let me know what you think of my conclusions.
Posted: Sat Oct 08, 2011 3:51 pm
AI
