re: [[ Hiding a short position is as impossible as hiding a withdrawal from your bank account from your bank. ... It is how the system operates. ]]
and yet, empirically, it happens, evidenced by legislation and regulations enacted by both states and SEC to discourage it.
and the impossible process can be explained in detail (see inlined article below)
to be clear, i've always enjoyed your posts here and appreciate the balanced reason you bring to this board.
but in this case i think you're assuming that the share-tracking mechanisms designed to track transactions operate without corruption and manipulation when there are literally billions in annual incentives for deep pocket power players to manipulate their reporting and accounting data.
and i've seen far too much evidence of corruption first-hand over the decades, as well as many detailed formal allegations against hedge fund titans like steve cohen when they got too greedy and swung bigger than was easily hidden under the table.
to point, why would elite bankers pay billions in fines if they hadn't cheated other aspects of SEC trading regulations and legal business practices?
and if prominent bankers who own market maker seats on major and pink exchanges are cheating on a scale that induces fines in the billions,
does it make sense to assume that their market makers and brokers dutifully record and publish all their internal trading transactions via the formal systems you are quoting?
or does it make more sense that absolute money corrupts absolutely and that billions in annual profit potential lubricates back room manipulation of the publicly published data you perceive to be honest and accurate?
aka: why do we have the expression, "cook the books," if illegal accounting were not a thing?
[[ Illegal naked shorting and stock manipulation are two of Wall Street’s deep, dark secrets.
These practices have been around for decades and have resulted in trillions of dollars being fleeced from the American public by Wall Street.
In the process, many emerging companies have been put out of business.
This report will explain the magnitude of this problem, how it happens, why it has been covered up and how short sellers attack a company.
It will also show how all of the participants; the short hedge funds, the prime brokers and the Depository Trust Clearing Corp. (DTCC) - make unconscionable profits while the fleecing of the small American investor continues unabated.
...
Another loophole that is the repository for millions or billions of counterfeit shares is the DTC - sponsored and SEC - condoned RECATS program. The DTC, as a service to its prime broker - member/owners, notifies the broker when a position is about to become a fail-to-deliver. The broker may send the position out of DTC by transferring it overseas or doing a match trade with another party. The position may be returned to the DTC where the account is marked to market (value) and all of the time requirements of naked shorting are reset. The cycle can be repeated as often as is necessary to keep the positions naked.
With loopholes like these, it is delusional to think that SHO or anything else done to date is going to have a meaningful impact on counterfeiting. It is also denial to think that the promulgation of illogical rules and the non-existent enforcement by the SEC is not aiding and abetting the counterfeiting of massive amounts of stock in U.S. companies
...
Naked Short – This is an invention of the securities industry that is a license to create counterfeit shares. In the context of this document, a share created that has the effect of increasing the number of shares that are in the market place beyond the number issued by the company, is considered counterfeit. This is not a legal conclusion, since some shares we consider counterfeit are legal based upon today’s rules. The alleged justification for naked shorting is to insure an orderly and smooth market, but all too often it is used to create a virtually unlimited supply of counterfeit shares, which leads to widespread stock manipulation - the lynchpin of this massive fraud.
Returning to our example, everything is the same except the part about borrowing the share from someone else’s account: There is no borrowed share – instead a new one is created by either the broker dealer or the DTC.
Without a borrowed share behind the short sale, a naked short is really a counterfeit share.
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The counterfeiting of shares is done by participating prime brokers or the DTC, which is owned by the prime brokers. A number of lawsuits that involve naked shorting have named about ten of the prime brokers as defendants, including Goldman Sachs, Bear Stearns, Citigroup, Merrill Lynch; UBS; Morgan Stanley and others. The DTCC has also been named in a number of lawsuits that allege stock counterfeiting.
The identity of the shorts is somewhat elusive as the shorts obscure their true identity by hiding behind the prime brokers and/or hiding behind layers of offshore domiciled shell corporations. Frequently the money is laundered through banks in a number of tax haven countries before it finally reaches its ultimate beneficiary in New York, New Jersey, San Francisco, etc. Some of the hedge fund managers who are notorious shorters, such as David Rocker and Marc Cohodes, are very public about their shorting, although they frequently utilize offshore holding companies to avoid taxes and scrutiny.
...
The Grandfather Clause was one of many loopholes in the initial SHO regulations enacted in January 2005. This exemption essentially granted amnesty to counterfeit shares sold prior to 2005. ]]
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