MUST READ! ABOUT NAKED SHORTING
1/19/05
It's about Money, Power, Greed
Same as it ever was.
A small cadre of guys in New York, no doubt mostly working within 4 blocks of one another, have gotten together and perfected a criminal scam to game the system and steal billions from investors.
It's been a good run. They've been able to make a lot of money, and if some of the rumors are correct, launder a lot for other criminals and terrorists.
But now they have a problem.
Like the problem the mob had with the Vegas Casinos, you can only pull the same scam for so long before folks get wise and want the laws enforced. So there's this network of bent guys at the regulators who are "buddies" with the hedge funds, and see so much money changing hands that they figure "why not get some to stick to me? The whole market's crooked, why shouldn't I get a little?" You have reporters being paid peanuts in the scheme of things, why not do a favor here and there and maybe get a free trip or a few bucks deposited in a Panamanian account?
You have honest regulators who are so jaded by the cesspool they are wading through, and so sickened by the power wielded by their crooked superiors who tolerate lawlessness on an epic scale and seem more interested in turning a blind eye than in doing anything, that they just put in their time so they can get a good gig on the "outside".
You have a group of probably no more than 300 guys who've created a larcenous enterprise to bilk a system of untold amounts of money.
Because money drives it all.
The clearing houses turn a blind eye - they get paid, so where's the harm? Whole world is crooked, why not make some easy cash? Same with the brokers - sure it's illegal, but nobody's really enforcing the laws on the books, so why not make a million and maybe pay a $10K fine every decade? Who wouldn't? There's a lot of money to be made by guys who aren't quite bright enough to do it legitimately, but can figure out ways to steal and manipulate it.
That's what you are seeing.
Frankly I'd be unaware of it if it wasn't for being in NFI. Most of the investing world is unaware of it. Nobody in the mainstream wants to write about it as their bosses who are collecting cash for "helping out" here and there don't want anyone rocking the boat. The editor of the C section of the WSJ seems to have an endless appetite for slam pieces on Rocker Partners short plays - witness the Weil piece and then the piece of dross they tried to pen about me.
The whole system is subverted, and money is the lubrication, and we, the small investors, are the grist for the mill.
It is time to put a stop to it. Demand that our elected officials fulfill their obligations and force reluctant regulators to do their job and enforce the rules on the books designed to keep us from having our futures stolen from us by 300 guys who want a better plane or a nicer townhouse on the upper East side. These are thieves and criminals, nothing more. The way you deal with criminals is you drag them kicking and screaming before a judge and jury so they can explain their behavior.
Works like a charm.
We've been on the Reg SHO Threshold list now for 7 trading days. Nobody will tell us how many fail to delivers there are. Why not? The NYSE isn't talking. Neither is the DTCC. It's all a secret - even though it isn't supposed to be.
It would be funny if it weren’t so sad - the agencies and exchanges that are entrusted to create "fair and orderly markets" are in fact big believers in secrecy and shielding their members from scrutiny. The NYSE has investigations that it can't tell you it ever had, you just have to trust it, nor can it point to any disciplinary action taken in the last two years - it's all a secret. Secret tribunals, jealously guarding the privacy of the criminals who are hard at work devising novel ways to rip us off.
When the SEC finally passes Reg SHO, with few if any teeth, as a reaction to a whole group of companies wanting to opt out of the trading system, are we seeing any of the rules being enforced? No. If you sold 2 million naked shares prior to Jan. 3 are you going to be forced to cover them and be held accountable? Of course not.
It's disturbing because the premise we base our moral superiority on as a nation is that we are a nation of laws, existing under the rule of law. And yet we are finding out that if the money's good enough, we are no better than the most corrupt backwater banana republic - you want an exception so you can keep stealing? Show me the money.
Perhaps places like Mexico are actually a bit more honest about it - everyone knows the cops accept bribes and that their system is cooked, that power corrupts as it has since time immemorial - no one's pretending that you can be an executioner and not develop a taste for it - have to kind of like it if you are going to stick with the job.
But we are supposedly better. We are above that. Our system protects us from a class of predators who prey on the old, the weak, the unsophisticated. But it turns out the system isn't really doing that, is it? What it's doing is rewarding thievery and larceny and fraud, and dismissing an expectation of due process as hopelessly naive.
I for one have had an ass-full. And as my friend from the SEC says, your worst nightmare as a criminal is a retired guy that is pissed, who will devote all his time and energy to bringing you down, make it his life's work.
How about a whole group of retired folks who are pissed?
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