On SHO RULE and Naked Shorting
1/25/2005
If I wasn't Laughing I'd be Crying
It's a strange and fascinating time we live in. Apparently the NYSE and the DTC and most importantly the SEC have elected to give hall passes to everyone involved in the failing to delivers that are the basis of the Reg SHO Threshold list.
It's really akin to letting the robbers keep their illegally gotten gains from past robberies, even though robbery has been illegal since 1934 and the SEC Act's passing. But THIS TIME they REALLY have to promise not to do it anymore.
That's the essence of the Reg SHO grandfathering provisions.
The hedge funds and market manipulators that have enjoyed billions and billions of dollars of illegally gotten gains from selling shares they don't own, haven't borrowed, and have no intentions of borrowing, get to keep it all - those shares failed to deliver prior to January 7 don't count.
You are reading this correctly.
Even though our forefathers had enough understanding of the manipulative capabilities of unrestricted short selling to pass a comprehensive set of rules in the 1934 Act, which have been systematically ignored by our regulators for at least the last 20 years, while the DTC, a private entity chartered under the NY banking laws, went about the lucrative business of creating an electronic printing press for the issuance of shares to cover for those who didn't ever get around to complying with the affirmative determination rules and actually borrow the shares they were supposed to. Even though there shouldn't be ANY Reg SHO companies on ANY list if the laws were being enforced, they are going to just allow all the historical fails to be regulated by the old rules, not the SHO rules, essentially allowing them to benefit from the rampant violations that have made Reg SHO Lists possible in the first place.
Am I the only one that feels like this is the old boy network covering their cronies' behinds while the American investing public and thousands of small cap companies are fleeced blind? Am I along in my sense of rage over an ongoing farce of supposed regulation, that, when exposed and targeted, results in yet more farcical regulation?
The game continues.
We watched NFI get manipulated today like it was going out of style. Every complaint to the NYSE has met with assurances that it is all good, that all is well, never you worry.
Why, after listening to the Reg SHO Q & A, am I more worried than ever?
Today an email was sent to the SEC and the NYSE predicting more illegal manipulation tomorrow and Thursday. They have been put on notice, and several other regulars have joined in sending emails. Let's see if they do anything, or if they allow one of the most egregious abuses of the system I've ever seen continue unabated.
Should be interesting.
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